Why invest in the money market fund?

People think that the best way to safeguard their money is by opening a savings account. By putting their money as deposit, they can save it for a rainy day, and earn interest too! Of course, aside from the interest rate, people also like the fact that savings accounts are insured by the FDIC so in cases when the financial institution files for bankruptcy, they can get a payback.

While it is true that you earn from keeping your money in the bank, the truth is that there is a better way of keeping your money. By using a good investment tool, you can keep your risk at a minimum, and earn higher interest rates than the ones offered by a regular savings account. People think that you need millions to start out an investment, but this is untrue. With just a few thousand dollars, you can put your money in a money market fund and make it grow!

The money market fund assures safety for your money despite the fact that it is not insured by FDIC. In a report released by the SEC, it is one of the safest tools to invest in. Aside from that, most money market funds mature in the short term, hence. the return on investment can be seen within the year. Market funds do not have the highest rates compared to other investment tools but they at least are higher than bank rates.

Both savings account and money market funds involve several kinds of fees and both of them also have minimum requirements. In money market funds, the highest of all fees that may apply is the expense ratio but rates are typically lower than 0.5%. 

More often than not, you are given a 3% gain out of your investment but this is not a constant figure. It may go down but with just a very slight decline.

The greatest challenge for a money market investor is where to buy his funds. Like all the other investment types, money market fund has a risk with it but lower than the others. It is then important that anyone considering of investing in it should do their research. Go to as many credit unions or financial institutions as you can so you can have more options. Having more options mean having the greater chances of finding the best provider. You too can make an online inquiry. Compare each and every site that you visit and highlight the good and bad points of each.