What is a money market fund ?
Money market funds are a great option for investors who are afraid of loosing their money in the market. Of all the investment vehicles discussed in the on this website money markets are the safest option and carry the least risk. A money market fund is an open ended mutual fund that invests in very safe bonds or short terms loans. You as the investor get your initial investment as well as some additional interest.
The benefit of a money market fund:
- It is an extremely low risk as investments vehicle that is only issued by well established corporations or organisations (government) with excellent credit ratings and history.
- It is a short term investment and the duration for maturity is very short , some span across several days and others over a months. The maturity period cannot exceed 397 days.
- Money market funds expose the investor to a diversified range of assets.
- The interest rates offered by a money markets beats the one you will get if you kept your money in a saving account.
The associated risk with money markets is low, low risk should not be mistaken with no risk. With all investing there is a risk, but in the case of money market funds the risk is extremely on the low side.Money market funds can be considered as the lowest risk investment option in comparison to other investment vehicle options.
Money market funds are an ideal vehicle for investors who wish to remain conservative and do not want high risk investments in their.
If you wish to learn more about specific money market funds feel free to follow the link below () and have a look at some of our reviews on some of the existing money markets in South Africa.
The cost of investing in a money market fund will vary depending on the money market fund.