Money Market Funds
What are Money Market Funds?
Money market funds are similar to mutual funds but are restricted to low risk invests by law. Money market funds typically invest in government securities, certificate of deposits (CDs) and other low risk ventures – none of which are insured by The Federal Deposit Insurance Corporation (FDIC).
Money market funds attempt to keep their net asset value (NAV) at a constant $1.00 per share — only the yield goes up and down. More....
According to the US Securities and Exchange Commission, “Net asset value,” or “NAV,” of an investment company is the company’s total assets minus its total liabilities. For example, if an investment company has securities and other assets worth $100 million and has liabilities of $10 million, the investment company’s NAV will be $90 million. Because an investment company’s assets and liabilities change daily, NAV will also change daily. NAV might be $90 million one day, $100 million the next, and $80 million the day after.” If the stock performs poorly a money market’s per share NAV may still fall below $1.00. Having said that, it is still relatively difficult to make a loss with a money market fund investment due to their low risk nature. Before starting a money market investment fund: Make yourself at home in our Forum and find out what everyone else thinks about money market funds in America. There is also our up-to-date News section for all the latest on personal finance. If you need help finding a provider or would like to review a company, please don’t go without checking out our A-Z directory.
Money market fund tips
1. Learn as much as possible about the stock you are investing in
2. Study the funds prospectus (aka profile)
3. Analyse the most recent shareholder report
