Money market specializes in short term debt securities. The advantages of these securities are its flexibility and transparency. It is transparent because you can immediately know the yield in a short period. Money market is a place to manage short-term cash needs. The funding by large institutions and government can be accessed by individual investors through different types of securities.
Tax- Exempt Money Market Funds are mutual funds since it is required to invest in low-risk securities. Its goal is to get current income exempt from federal tax while investing in various high-performing but short-term municipal securities. It’s funding is maintained by a constant $1 per share net asset value (NAV) and it should have a 90 days or less dollar-weighted average maturity. Since this is a money market fund, the funding is essentially low risks compared to other mutual funds.
Generally, tax-exempt money market funds are managed by advisors to maintain and earn relatively good interest value. With this, you are assured that through research and comparative study they can determine and qualify major issues of different business sectors. We are aware that the business industry is always changing. This trend is part of the industry and we need to be aware of the causes and effects as well as the results that it would give. These changes may affect the funding of this type of mutual investment. This funding program allows investors to get stable yield while your available income is exempted from federal tax. With this type of fund it would allow more investors since it can accommodate majority of the public. The advantages a person can get while earning would attract individuals to join many investors. This is actually one of the easiest ways for individual to join and gain access to the money market. Just like any other method of investment, we should also read the terms and agreement. We need to carefully read the funds major information. We need to check and learn their system for us to better understand their funding growth or performance pattern. Any available information should be studied that includes company profile, their advisors and its latest shareholders’ report. This report will allow you to know how the fund was managed. It is just like any funding institution and investment where you need to take the risk.
In summary, the product seeks to provide source of income where the investment is liquid because it is easily convertible to cash in a short period of time with a stable price of $1.This funding would exempt you from paying personal federal taxes as well as give higher returns issued by local governments.