What Can Low Risk Money Market Funds do for You?

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As an investor you would be keen to maximize your earnings at the lowest possible risk. Mutual funds are investments mobilized from hundreds of investors that are channeled into stocks of varying risk profiles. The money market fund is one such mutual fund that offers a high degree of liquidity but promising modest earnings. They are very different from money market accounts that are maintained by banks and which enjoy FDIC insurance cover.

The money market fund is seen as a good short-term savings opportunity

You can cash these funds at any time to fulfill various short term goals:

  • Usable as an emergency relief fund.
  • Saving money for a down payment on a new home some five years down the road.
  • Saving for education expenses of your son when he moves to college some years hence.
  • Saving for a family event like the wedding of your daughter.
  • Setting aside funds that can be routed to other savings schemes and for retirement planning.

Higher earnings are generated by a money market fund by routing your investment and that of thousands of other investors into safer US Treasury bonds, Certificates of deposit (CDs) of reputed US and foreign banks, and Commercial papers (CPs) of blue chip companies. The very high reputation enjoyed by treasury bonds and banks and companies ensures the highest liquidity for your investment.

It is the default investment option for many retirement funds

In retirement funds like IRA 401k the fund managers invest your money in elected options that are permitted by your particular plan. The portion of the deposit that is unelected is normally invested in money market funds as a default option.

Your money is entirely safe but grows modestly

Unfortunately, when you are taking on the lowest risk among all categories you cannot expect high returns. The biggest money market funds listed on NASDAQ like Fidelity Investments Cash Reserves, Vanguard and Schwab ensure annual growth rates between 0.02 and 4.67 percent that are just like bank savings accounts, and only higher volumes in trading can create a bigger impact on savings.

Losing the principal investment is out of the question

As your savings grow at a nominal rate, the principal amount you invested remains untouched and there is little likelihood of losing this money. A rare exception was in 2008 following the collapse of the Lehman Brothers that turned quite a few Lehman based money market funds illiquid, meaning that investors were unable to withdraw their cash. Despite these rare hiccups money market funds continue to be the cautious investor’s first choice for safety and stability wedded to modest growth.

Sourcing cash for making investments in money market funds

One of the best ways is through a fast car title loan. The auto collateral loan ensures you generate cash equivalent to 60% of the commercial price of your car, instantly as you apply for the loan. The auto equity loan interest rate is usually within 25% APR and that makes such loans more competitive than credit card cash advances and pawn loans. The car pink slip is the only collateral for a pawn car title loan and eligibility norms are relaxed even for bad credit customers. Such loans for vehicle title are easy to manage because repayments are not tied down to thirty day deadlines like payday loans. The installment loan in California can be repaid in small convenient monthly installments over a longer duration.

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