Who Are These Investments For?

The money market mutual funds are designed to work well for those who are small investors. This often means those who will make an initial investment of just $500 up to about $5000.  The qualifications for buying these investments are fairly simple.  Most investors will buy them through their investment brokerage.

In most situations, you can purchase the money market mutual fund directly from your brokerage as you would buy stock or any other type of equity mutual.  You can also talk to your local bank. Many banks that offer mutual funds will also offer money market mutual funds to their patrons.  Some will have their own proprietary funds that give you the money market investment opportunity. Be sure to be comparing the right options, though. Many confuse money market accounts with money market mutual funds;the two are completely different. A money market account is an interest baring account, which is not the same as a money market mutual fund’s structure.

As an investor, you may want to consider these mutual funds for other reasons, as well. Perhaps the most substantial other difference between these accounts and others is the withdrawal method. These types of withdraws are very similar to the procedures used for withdrawing funds from a bank or from a trust.  You may be able to structure the money market mutual fund accounts to allow you to write checks directly from the accounts. You may have to meet specific minimums to do so (usually no less than $500 per withdrawal.) You may be able to use electronic funds transfers and wire transfers as well from the fund to your bank account.

Caution When Using Them

Although these are very good reason to invest in money market mutual funds, you still must consider them as an investment rather than a bank savings account.  The risks of losing your money here are low, but there are still some risks in place.  You should also work with your broker to determine the best type of investment for the type of funds your need. You may be able to benefit from another type of investment, depending on your particular needs.Prior to investing in any type of investment, including money market mutual funds, talk to your broker about your options.  Plan an investment that works for all of your financial goals, especially those goals having to do with liquidity and earned returns. Many investment opportunities can be highly lucrative in this sector.