Financial Question re: Money Market

[tiggerlover]

I have a mutual fund and it is not performing the way I want it to, so I am taking the money I was putting into the mutual fund and have been advised to put it into a money market account. What exactly is a money market account and how does it compare to a savings account? I want to put the money somewhere for about two - three years and then I would like to use it in addition to other money we have saved for a down payment on a house when DH retires from the military.

Any advice?

 

[AirForceRocks]

A money market fund is basically a type of mutual fund that invests in short-term debt issued by governments or corporations. As they involve short-term debt, the interest is usually lower - it's pegged to short-term interest rates.

Depending on the type of money market fund you go with, they tend to be safer than stock mutual funds, but the returns are also lower. Higher than a savings account, but lower than most mutual funds.

We have a number of mutual funds for our long-term savings, but we use a money market account for our shorter term or rainy day fund. The returns are higher than we can get from our credit union, and we can access the funds by check at anytime.

If you are looking at long-term savings, I would shop around for a better performing mutual fund. Do you have a First Command office near you? If so, I would contact a representative there and discuss your options. They work only with military members, veterans and retirees (and their families).

Good luck whatever you decide!

 

[tiggerlover]

Thanks AFR!

Are there any risks in money markets?

 

[Dan Murphy]

http://www.sec.gov/investor/pubs/inwsmf.htm

 

[Dan Murphy]

http://www.sec.gov/investor/pubs/inwsmf.htm

 

[tiggerlover]

Thanks, Dan, that is an excellent source of information.