Money market funds offer a relatively low return, but offer little risk.
Money market funds are a popular investing choice for many people because they are known for being low risk and the investor can cash out relatively easy to get their money back. A money market fund is generally provided to investors through their stockbroker; that is where the cash not yet used for investments gets placed to earn a little interest in the interim. Because money can be moved out of the money market fund quickly, brokers pull money from there to use for stock trades when needed.
Instructions
1. Review your current income and output and compare that to your debt and savings. From these figures, determine how much money you have available to invest.
2. Open an online trading account or an account through a traditional stockbroker if you do not already have an account for investing. If you currently have an account, check the cash balance of your account to see what funds are sitting there not being used.
3. Review your account to determine whether or not your cash balances are currently being placed into a money market fund. If they are, you can add the additional funds to your account and verify that they are being placed in a money market fund until you move them out to use for stock trading.
4. Contact your broker or contact the online trading firm to inquire about money market funds. This is important if you currently have an account and the funds are not being held in a money market account. Money market accounts provide investors with a little bit of a return on their money before it is placed in other investments.
5. Choose a money market fund based on what your broker or online trading agency currently offers. Compare that against funds offered by other firms and decide which one suits your needs. Keep in mind minimum account balances, monthly fees, trading fees and other expenses that vary according to which firm is selected. Keep a list of all options and decide which one is best suited for you after comparing them all.
6. Track your account at least once a month. Make sure to move additional funds into the money market fund when they become available to you or you have extra money available for investing. Know that the money market funds are available at any time should you decide to use those funds to purchase stocks or other investments.
