Personal Finance – The Benefits of a Money Market Account
April 19th, 2011 | Author: weissheiss
Many people tend to put some of their savings into money-market accounts for several reasons as there are many advantages of investing your money in a money-market account. Money markets are one of the most conservative ways of investing and saving compared to riskier stocks and mutual funds, and more short-term than certain bonds.
Money-markets hold a value of $1.00 per share, and that rarely changes for better or for worse. It provides some security in that sense, however if money markets are kept for a long time, inflation can eat away at the investment. Money markets are more of a short-term secure way of investing money in hopes of earning a small percentage of a yield that would get reinvested back into the money market until withdrawn.
There are many advantages to money-market funds in terms of their accessibility. It usually takes a few days to get your money out of a money-market account, which is a relatively quick turnaround time. You can also invest in a money-market account at almost any bank or other financial institution.
Money markets also do occasionally present a yield, which automatically gets reinvested back into the money-market account. Therefore, your shares will grow as time goes on if you treat this account as a savings account.
Since money-markets also rarely fall below the $1 share price, on the occasions that this may occur, the sponsor of the fund or the fund company itself may step in to absorb the losses that may be incurred.
Posted in Money Market Funds | 
Tags: Bonds, Few Days, Institution Money, Investment Money, Losses, Money Market Accounts, Money Markets, Mutual Funds