high yield money market funds

Money market mutual funds involve pooling the investments of numerous investors, including both individuals and institutions, to buy low risk securities. The return on investment is relatively low, requiring people to invest in high volume to get a good return, but the tradeoff is that a money market mutual fund is designed to be very safe.

difference between a money market account and a money market fund

Money Market Accounts - Are savings accounts that earn interest, are liquid and have limited check-writing capabilities. These accounts typically require a minimum deposit to open and that you maintain a certain balance in the account.

Money Market Fund - A fund that invests only in highly liquid and safe short-term money markets like Treasury bills, certificates of deposit and commercial paper. The fund's goal is to preserve the investors' principal with some small dividends. Each share is kept at $1 for easy accounting, but the interest rate changes. A money market fund investment is not insured or guaranteed by the FDIC or NCUA, and it is possible to lose money by investing in a money market fund. Most funds are not federally insured but some are covered by private insurance

high yield money market Fund Tips

There are three things you need to consider when choosing a money market fund.

Expense Ratio.Expenses matter when choosing investments, and money market funds are no exception. Expenses come directly out of returns and on an asset class with such low expected returns, you need all the extra yield you can muster. Vanguard is the low-cost leader here, as usual.

Current Yield. The current yield of a money market fund is comparable to the interest rate paid on a traditional savings account. The higher the yield, the higher your return. Just like the interest rate on a savings account, yields can and do fluctuate on an almost daily basis.

Creditworthiness Of Its Holdings. Since money market funds invest in short-term securities, some of them are a bit riskier than others. While no money market fund has ever lost money for investors, several would have in the past had the fund sponsors not intervened.