Does money market funds generate more income than mutual funds?

Question

I'm looking for mutual funds based on growth and income. I'm also looking into Money market funds. Which one makes the most interest and profit?

Answer 1

Money market funds make more money when the stock market goes down. And vice versa.

Answer 2

Money Market funds yield around 3 to 4%. Oftentimes they're used like a checking account but you would have to have a certain minimum such as $3000 to open one with one of the mutual companies (Vanguard, Fidelity, T.Rowe Price, etc.) Money Market accounts strive to maintain a $1 per share shareprice - no higher or lower. There is tremendous (though not complete) safety in a money market fund but very little opportunity for growth of your money that you have deposited there. There are Growth and Income funds that contain stocks that are likely to grow (share price increases - excess profits are rolled back into the business) and those that produce income (dividends - excess profits are distributed to shareholders). There are also balanced funds - contains both stocks (usually mixed growth type and income type) and bonds (provides income from interest on a company's debt) If you're looking for a Growth and Income fund, Vanguard, Fidelity and T.Rowe Price sure have them - just be mindful of expenses - how much they are charging you to manage your money - anything over 1% per year is usually too high. Check their websites. Good Luck!

Answer 3

I tend to use money market funds for money I will need in the next year or two. For a time frame greater than two years but less than 5 years, I use bond funds. For extra cash I won't need for 5 plus years, I have several mutual funds to give me a balanced and diversified portfolio of small and large cap stocks which are both growth and value stocks.

There are costs associated with withdrawing money from mutual funds(taxes), which is why I only use them for longer term investments. Also, money markets are less volatile so you are guaranteed you will have more money in the short run. However, in the long run, you may lose purchasing power if you can't get real returns greater than inflation rates.

My advice to anyone is to never to pay credit card interest. If you don't have credit card debt, then you should start putting money into a money market account(or a checking account like ING or Presidential, which are paying over 4.2%).

Answer 4

Typically, money market funds generate the lowest return. But they are also the least risky. There is very low risk of principal loss with money market funds because they invest in a diversified portfolio of high-quality short-term instruments.

Answer 5

Instead of money market funds, I suggest you invest in CDs instead. They give just about the same return, and CDs are virtually no-risk investments. The only risk is if you need the money before the alotted time has expired. In that case, the bank charges you with about 3 months of interest penalty. I have a couple of CD accounts with ingdirect.com. You should check them out.

You can also check the rates of other banks and low risk investments at bankrate.com.

Answer 6

It depends - The money market fund is easy to get when you are in a pinch......Which was too easy for me......I touched it too often and I didn't watch my money grow........The mutual fund was not so easy to touch and I love playing with those.

Answer 7

look into closed end ETFs. this one has a 14% dividend :
http://www.etfconnect.com/select/fundPages/us.asp?MFID=8123