Is money market investing a good option for your money? Fits of all, here is a brief explanation of what a money market fund is. A money market investment fund is essentially a mutual fund.
However, instead of taking your money and investing it in stocks, the fund manager will invest it in safer options such as government t-bills, savings bonds, certificates of deposit, etc. So, is money market investing a wise option for your money?
Again, as I’ve said before, it all depends on your level of financial expertise. If, for instance, you are very financially savvy, can read a financial statement of a company and determine its profitability and future outlook, then there really is no reason for investing in a money market account, or any mutual fund, for than matter.
The basic premise behind a mutual fund is that the investor is not money savvy enough to make their own investment decisions for themselves, and that’s why they are depositing their money to be handled by an expert.
For most people, this is a wise option, as most people generally aren’t interested in learning about reading the financial statement of a company and determining sounds investments. However, if you are one of the few who is capable of this, than there is no need for you to invest in a mutual fund.
Therefore, whether or not you should be investing in a money market fund really depends on your investment savvy. Keep in mind that a money market fund offers less of a growth potential than a traditional mutual fund.
Often times, you can actually end up losing money with money market investing if the growth rate doesn’t keep up with the inflation rate. Therefore, you definitely want to be sure that his is the best option for you before investing.
As always, it is highly recommended that you do your own research, become financially savvy, and be able to make your own investment decisions. If, however, this isn’t possible, then a money market account may be the way to go for you.
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Source: www.ezinearticles.com
