| How does Money Market Account Work |
How does Money Market Account Work
Money market funds are designed to maintain a stable price (or net asset value) of $1.00 per share. The high quality, short-term nature of a money market fund’s holdings virtually assures this share price stability. In addition, money market funds must adhere to strict regulations of the U.S. Securities and Exchange Commission, the government agency that regulates mutual funds, with regards to quality and maturity of the issues in which they invest. Note, however, the $1.00 per share price is not guaranteed, and neither the Federal Deposit Insurance Corporation nor any other government agency insures money market funds against loss.
The income earned by money market funds is typically paid to shareholders on a monthly basis. The yields on money market funds are tied directly to prevailing interest rates and will fluctuate as interest rates rise and fall. Current yields range from 4% to 6% on taxable money market funds and 2% to 4% on municipal money market funds.
You may establish a money market fund for a relatively modest sum, usually $1,000 to $3,000. Shares of most funds may be purchased without a sales charge or load. And money can be withdrawn without fees or penalties.
Most funds also offer free checkwriting privileges for amounts of $250 or more, which enables you to write checks to cover your major monthly expenses, such as a mortgage or car payment. And since the money market fund is a member of a mutual fund family, you can usually exchange shares into a stock or bond fund at no charge with a telephone call.
| " | Money market funds are designed to maintain a stable price (or net asset value) of $1.00 per share. |
