Money markets are the source for you to invest your money and save it from any threats. These accounts are offered by the banks. Money market accounts are actually deposit accounts that are designed for you to earn interest at higher rates. These accounts are safe as they are insured by FDIC. In fact the money market funds and the money market mutual funds are not the same entities.
Smart Money
These funds are the mutual funds that are designed for the sake of investors that are conservative. Money market funds help these investors to earn interest. All they have to do is to buy low-risk treasuries, savings bonds and commercial papers. These funds are quite safe and their purpose is to preserve your capital. Despite all these facts these funds are still not insured by the FDIC.
FDIC insured Money Market Accounts:
Till December 31, 2013 the level of insurance protection provided by FDIC is up to $250,000. This limit will regress back to original $ 100,000 after 2013 unless there is any change in the policy by Congress. People who have cashed beyond these limits should consider different investments with these money market mutual funds. This will also lead you to preserve your capital and will ensure safety as well.
Money Sense
What Money Market Funds have for you?
The major purpose of these money market funds is to maintain a value of $1 per share. Some money market funds have also gone below this limit but it happens quite rarely. One advantage that they have over money market accounts is that they earn more interest. These funds are not insured by any insurance program. Even the money market funds that are sold by the banks are also not insured by FDIC. US treasury introduced programs that offered guarantee temporarily for these money market funds.
This program implemented on the funds that were already invested. In September 2009, this program also finished its time frame. In the year 2009, due to the Federal Reserve rate policies, cash investments had very low interest rates. Many money market accounts paid much more than what money market mutual funds did. The reason was that interest rate between the two entities was nearly zero.
Different money market funds:
Government and the municipal money market funds are two options for you to invest. Some money market funds only allow you to invest in US government securities. These funds are known as government funds. Investing in US Treasuries is the safest option for you. These investments are fully guaranteed and have full faith of the US government. But still if they held to maturity, mutual funds are not guaranteed at all.
Local government agencies and the state itself guarantee some money markets funds as well. These money market funds are known as single state and the municipal money market funds. One major advantage is that most of the tax payers don’t have to pay any federal or state taxes for these funds. They also provide you with high rates of return. These pros of money market funds should be considered by the investors who have cash in excess. It will be a safer option for them to invest.
