The Lowdown on Money Market Funds
This story appears in the December 2001 issue of Entrepreneur. Subscribe »
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.
75% 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.
