A mutual fund is typically fashioned by an investment firm. The whole thing is publicized and the share holders are then encouraged to put their money in this mutual fund.

Tips to Buying Money Market Mutual Funds

Best money market mutual funds almost follow similar criteria for investment and asset management. In addition to these they have investor loyalty owing to ethical practices and professionalism in their approach to every thing. However, it is wise to follow your instincts than repenting later. Here are some tips:

  • Money market funds like the general funds and other stocks and securities are rated by Standard & Poor and Moody's rating agencies. So, check for the ratings of your short listed funds. (example: 'A1' by S&P and 'P1' by Moody's)
  • Look for the kind of instrument your mutual funds are utilizing their assets to purchase. Some funds limit their activities to purchasing, say US treasury bills. US T-Bills command highest safety points from both the rating agencies.
  • In almost all the cases, the NAVs of money market mutual funds are fixed at $ 1.00. And look for the minimum initial purchase when you are not sure so that you will not get your money blocked unnecessarily when your fund doesn't perform to expectation.
  • Normally these instruments are sold on no load. If you want to minimize your cost out go, go for tax free funds. Keep in mind to evaluate whether the low returns of tax free funds are worth while buying in comparison to taxable funds with high returns, especially when you are investing more than moderate amounts.
  • Reading the prospectus might reveal a point or two on the management and their expense ratio too. A top ranking mutual fund may perform well but their expenses can be sky high at the same time.
  • Always keep in mind that no investment in this world is entirely risk free.

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