The money market is an area of the economy that offers short term, secured funds. The money market basically deals in short term loans, usually for a span of a few weeks to a few months. This area of the finance market helps both small businesses and individuals to borrow money in an emergency situation. It also helps them manage their money so that they do not face bankruptcy.
The money market funds are a part of the financial system that offers low risk investments. Therefore, this area of the financial system allows people who are looking at a good income to build a strong financial system. You can even start your own money market mutual fund if you are looking to make some quick investments in the area of finance.
There are many ways you can invest in the money market funds, whether you are investing through mutual funds, bonds or certificates of deposits. All these instruments come with various risks and rewards, and investors should be aware of all these before making investments. If you want to invest on an extensive scale, you should look for banks that offer such products. For individual investors, money market funds can be bought from registered brokers or financial institutions. All of these methods will help you increase your savings, while reducing your risks.
There are certain rules and regulations that govern the money market investment. These rules are put in place to protect both the investors and the financial institutions that deal with the money market funds. They are primarily designed to protect the investors against fluctuations in the prices of securities within the markets. The prices are primarily determined by supply and demand and the government decides which factors need to be controlled. For example, the supply of securities will be controlled by factors like inflation, unemployment rates, economic growth and other economic indicators.
Regulations regarding the money market funds are set by the U.. Government, and this is why only registered investment advisors dealing with these securities must be allowed to trade. This is done to ensure that the prices of these products are not manipulated by the powerful U.. Government.
The rates of interest on money market mutual funds are fixed and they cannot vary at any given point. The rate may change according to the general price index, but this is mainly due to the intervention of the government. The money market accounts can be traded only by registered investment advisors.