Money Market Account:

A Solid Solution

Money market mutual funds offer a convenient

and liquid opportunity for investment.

They may not be glamorous or bring extreme returns. But then, they arent meant to. Recently, money

market mutual funds have found their way into a broad variety of investors portfolios as their returns have

increased and their attractive reliability has continued.

Between June 2004 and September 2005, money market yields increased from over a half a percent, to

2.89 percent, according to an Associated Press story in early-September 2005. 1 A rather large jump to

say the least.

Serving as a temporary investment vehicle for those not ready to invest, money market mutual funds are

generally a short-term savings tool that, in comparison to many investments, is considered safer and

more reliable.

Using the advantages of a mutual fund. a money market version typically invests in a variety of things

including CDs, U.S. Treasury securities and debt-obligations. By investing in a money market mutual

fund, youre also benefiting from a possibility of higher returns than those available from individual

investment in a CD or money market account.

An investment in a money market mutual fund is not insured or guaranteed by the Federal Deposit

Insurance Corporation ( FDIC ) or any other government agency. Although money market mutual funds

seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by

investing in these funds.

Tax savings are another potential plus. You may be able to take advantage of a tax-free money market

mutual fund. These are usually funds that purchase short-term debt from tax-free organizations, like state

or local government. While their yield is usually lower, you have the potential of saving the difference in

taxes.

Many money market mutual funds also offer an advantage if youre invested in several other types of

mutual funds within the same fund company. A money market mutual fund can act as temporary storage if

you sell off assets in a mutual fund and wish to keep them in the fund company before investing in

another fund. In comparison to other options, this is a relatively easy way to transfer money between

funds and still potentially benefit while you choose your next mutual fund investment.

Money market mutual funds can serve a variety of investors but can be most attractive to smaller

investors. Many have easier withdrawal features including check writing or wire transfer if you choose to

close or move money from an account. Always consult with a financial professional before deciding what

investment moves to make. They may be able to guide you to a better option.

Investing in a money market mutual fund is meant for an investor with a specific set of circumstances and

objectives. They certainly arent glamorous, and they wont help you retire in style any time soon. But they

may be able to offer you tax savings, which is always attractive.

1 Meg Richards, Money-Market Mutual Funds Surge, Associated Press, September 4, 2005.