Money Market Fund Yields Significant Earnings

2008-01-17 15:35:35

( Legal )



Money market funds are becoming popular among depositors because of the benefits they offer. If you are a prospective investor of a money market fund, try to find out what type of instrument you are purchasing. Money market fund yields are net yields, which mean the expenses of the money funds are already deducted. The money market yields are adjusted to make up for the gains and losses. It is important to study the performance of the money fund over a long term period. Some funds temporarily boost their yield to attract investors, but it could mean uncertainty for the investor’s investments.

Investors who choose to invest in money market funds must consider the yield and risk factor. Try to figure out the money market fund yields you can expect and how much risk you are willing to take. Even if money market funds are generally considered low-risk, it does not mean it has no risks. An investor must be informed that money market funds are neither insured nor guaranteed by bank insurance. The most common and safest money market funds are the ones invested in treasuries and high quality commercial papers.

Banks offer the traditional certificates of deposits and money market funds. Money market fund yields a significantly higher interest rate than traditional savings accounts. Money market funds are short-term investments designed for investors who are interested in preserving and accumulating their earnings. The advantage a depositor can get from a money market fund is that it is highly liquid. An investor can add or withdraw cash any time he wants.

Money market fund yields are given to the investor as his percentage of the investment. These money market yields are often stated as simple or compounded yields. Simple yields are the interest earnings of the principal amount of the investment and when the interest earnings are added to the principal amount of the investment, these yields are called the compounded yields.


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