Snoqualmie Market

Archive for the ‘Money’ Category

Money market funds are one of the three major types of mutual funds — the other two being those that focus on bonds (bond funds) and those that focus on stocks (stock or equity funds). Many people think of mutual funds as being risky investments, partly because they equate funds with stock market investing. However, the reality is that under Securities and Exchange Commission regulations, money market funds can invest only in safe securities, and money funds’ investments must have an average maturity of less than 120 days. The short-term nature of these funds eliminates the risk of money market funds being sensitive to changes in interest rates in the way that bonds and bond funds are.

Although some bank savings accounts pay reasonable interest rates, nearly all pay less in interest than the best money market funds. Why? Because banks aren’t as efficient and low-cost as money markets. Who do you think is paying for the rent in all those bank branches, anyway?  If you really want to save through a bank, shop, shop, shop around. Smaller savings-and-loans and credit unions tend to offer more competitive yields than do the larger banks that spend gobs on advertising and have branches on nearly every corner. Remember, more overhead means lower yields for your money.