The Lowdown on Money Market Funds
There's just no way around it: Most stock funds have had a lousy year. But if there's one thing to learn from the year, it's that short-term investing pays off no matter how stocks are doing.
All equity funds are considered long-term investments by financial professionals and performance trackers. One reason is it usually takes years before a portfolio of stocks registers healthy gains-particularly if it includes load funds with upfront sales charges to work through.
of U.S. stock market investors say the September 11 attacks won't affect the likelihood they'll invest in the future.
SOURCE: The Gallup Organization
Money market mutual funds, on the other hand, are considered short-term investments because they invest their assets in money market instruments-in other words, short-term debt securities that pay interest and have a maturity date. To insure safety, the average maturity on securities held in a money market fund can't exceed 90 days.
That's great news for any fund investor, from the saver to the high-flier, as money market mutual funds make sense for anyone seeking a way to accumulate wealth, a savings spot for their rainy-day fund or a place to park investment profits.
Expect yields on money market funds to far exceed those on savings accounts; investment minimums usually begin at about $250. To learn more, check out www.imoneynet.comand www.moneyletter.com. You'll be glad you did-and so will your portfolio.
Dian Vujovich is an author, a syndicated columnist and the publisher of fund investing site www.fundfreebies.com.