Money market funds (MMF) are otherwise known as money market mutual funds. Bruce Bent II and Henry Brown established the first MMF in 1971. Brokerages, mutual fund firms and banks offer MMFs. Those who sell stocks often place their funds in a mutual market fund. These accounts, however, are ideal for people who want to save cash for short-term goals and well as emergency funds. It’s important to understand that MMFs aren’t FDIC insured. Therefore, they’re associated with a little bit of risk. Nonetheless, compared to basic bank accounts, they offer better interest rates.
According to Wikipedia, the risk associated with money market funds is minimal because these accounts are highly regulated. The proceeds in the fund are invested in short-term debts securities. The primary goal of an MMF is to keep the share price at a dollar. Even though we can’t be certain that the share price will stay at $1, investors don’t lose money on these mutual funds.
There are two kinds of MMFs: tax-free and taxable. The main different between the two money market funds is the ROI. Taxable funds have a higher return on investment. Before picking an MMF, be sure to calculate the yield of each fund to determine the one with the best returns.
When you sign up for money market mutual funds, you’ll have to pay the expense ratio. This money is used to pay for the services of the individual managing your investment. It’s important to find an MMF with a low expense ratio. Avoid mutual funds that charge above the average rate.
About Bruce Bent II
Bruce R. Bent is popular for creating the first ever money market mutual fund. He’s the president of a financial technology firm called Double Rock Corporations. Bruce is also a senior executive at Landing Rock Group LLC, Intrasweep LLC and other affiliates of Double Rock.
Mr. Bent’s excellent entrepreneurial skills have helped him come up with some of the best products in the financial service industry. He has spent many years developing cash management solutions for several clients. Bruce Bent II is part of the Young Presidents’ Organization.
For more information on Bruce Bent II follow him on Twitter.