Overview of the Money Market
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Overview of the Money Market
The money market is a market where very short-term debt investments are bought and sold. It allows both individuals and institutions to invest money into a liquid account that pays interest (dividends at a credit union). These earnings are typically higher than those of traditional savings accounts and are typically competitive with rates offered by certificates of deposit (called "certificate accounts" at credit unions). Examples of the short-term investments found in the money market are money market deposit accounts, US Treasury bills, repurchase agreements, commercial paper, negotiable certificates of deposit (called credit union share certificates by credit unions), banker’s acceptances, and money market mutual funds. A money market mutual fund is simply a ready-made portfolio of short-term debt investments held by that mutual fund. Money market mutual funds are not insured by either the Federal Deposit Insurance Corporation or the National Credit Union Administration.
Things To Know
- Most financial institutions offer money market deposit accounts.
How you can benefit from the money market
Normally, government bodies and large institutions invest in the money market to make reasonable returns on large sums of liquid cash. However, now individuals can access this market as well (though rarely directly). Many do so through money market mutual funds. Others access it through money market deposit accounts (called money market accounts by credit unions), which are a type of savings account with some money market features. Both of these investments pool money from thousands of individuals and companies to buy money market securities on their behalf.
Most financial institutions offer money market deposit accounts, and many offer money market mutual funds and money market checking accounts as well.
