There is an important difference in the way in which interest is paid to depositors of bank money market deposit accounts and to shareholders in a money market mutual fund.

Money market mutual funds must pay out most of theirs earnings to the fund’s shareholders.Only a small percentage is retained to cover the cost of running the fund.

Banks,on the other hand,are not required to pay out all that your account earns.They are obliged by law,however,to post each month the interest rate they are paying.

Although banks can pay whatever rate they want,in general you can expect bank rates to be lower than those paid on money market funds,as noted above.

Money Market Mutual Fund

1. Best for those who switch from bond to stocks to money market funds,as interest rates change.

2. Best for those who plan to write checks against their account .

3. You can write as many checks as you like,with $100 or $400 minimums per check being quite common.

4. No service duties.

5. Not protected

Bank money market deposit accounts.

1. Best for those who want their savings federally insured

2. Best for those who do not need to write more than three checks.

3. You can write only three checks per month to third parties.

4. Penalties for dropping below the minimum balance.

5. Covered up to $90,000.00

You may acquisition stocks in any openly held corporation one whose shares ate traded publiclt.In addition to individuals,institutions also buy stocks.Institutional investors include mutual funds and employee pension funds.

Stocks are sold to the public in two steps, originally in the primary market,and thereafter these same stocks are resold to other investors through a stock exchange in what is called the secondary market.

The secondary market is not any one place but includes the New York,and regional stock exchanges as well as the over the counter or NASDAQ market.The exstocks,approved by the changed,may list their shares for buying and selling,known as trading.

In the company is profitable,you as a shareholder,can make money in 2 ways,through dividens and preciation.A dividend is a periodic payment made from a company’s earnings to stock holders.Most dividend are paid out four times a year.The board of directors can increase,decrease,or even cancel devidends,depending upon the company’s profits.

Dividend payments vary from company to company.In fact,some never pay dividends.Those that consistently do are known as income stocks,and investors buy them precisely because they want the steady cash payment

The stocks of companies that pay no dividends,or very small ones,are known as growth stocks.Profit vested in the company rather than used to make dividend payments.Investors buy them because they expect the price of the stock to grow over time.Growth stocks are riskier than income stocks,but they offer greater money making potential.

Before becoming complicated in the stock market,it’s only logical that you understand what a stock is.A stock epitomizes parts ownership in a company,and anyone who owns a stock is called  a stockholder or shareholder. When a company wants  to raise capital,it can do several things.It can copy the money from the bank,it can issue stocks to the public,it can sell connections.

In order to manuscript the fact that someone has purchased a stock,the company issues stock certificates to shareholders.This piece of paper shows the number of shares purchased at any one time by that person.If you buy more shares subsequently,you’ll be given yet another stock certificate.

Once you have pushed away a small savings,believe it or not,$1000 can move you into the stock market.There are several interesting programs designed for the for the minimum investor,but remember,stocks are much riskier than any of the previous discussed.

These miniature platforms are not designed to replace your savings.They are merely an inexpensive way to buy stocks they sidestep using a stockbroker and reduced commissions.Please do not participate until you have saved at least three month’s worth of living expenses in your money market account.

Top score protection and liquidness .This almost unbeatable combination is available when you open a money market deposit account at your bank.These accounts are insured for up to $20,000.00 and also pay money market rates.You can tap your money at any time without penalty as long as you maintain the minimum required deposit.

These accounts are not very complicated,but there are a few points you should be aware of:

1. Usually there is no minimum amount on the size of the checks you write.
2. You are allowed to withdraw money in person as often as you like,as long as you maintain the required minimum balance.
3. You can write only three checks per month against your balance
4. Penalties can be imposed if you fall below the minimum

The bonuses you can earn on must funds are fully dutiable. Yet there are some funds that invest solely in tax-exempt securities  and theirs dividents are not taxed by the IRS at the Federal level,only at the state and local levels.

Unless you’re in a high tax bracket,it doesn’t pay to buy into a tax exempt fund because their yields are considerably lower than those paid by taxable money market funds.

But, for the day when your taxable income puts you in a high tac bracket,you will want to consider investing in a tax free money market fund.

How harmless are money market funds?Although they are not federally insured,they are considered very safe.

Since they were launched 1970s,only two out of hundreds have run into trouble.The reason money market funds are considered so safe is that regulations require that 5% of a fund’s assets may be held in the obligations of any one institution other than the held obligations of the US government.

If you have a money market mutual fund,call the toll free customer service number and ask if the fund is participating in the government’s guarantee program.

Though many funds require a minimum deposit of $1100.00 0r just $ 2100.00 just open the account,there is one fund with no minimum opening requirement.

With a money market fund,you have what’s known as liquidity you have immediate access to your money without penalty.You can cash in your shares by phone,mail,or through your broker if you have a brokerage sponsored fund.Funds will wire money directly into your local bank if you so arrange in advance.

You can also tap your money by writing checks against your shares.Usually a fund permits unlimited check writing just as long as the checks are for amounts over $600.

Many money market funds will waive their opening minimum if you sign up for their automatic savings plan.In some cases,there’s no opening minimum.You agree to invest a certain amount,usually $50 a month,which is taken automatically from your checking account and wired into your money market fund.