California Tax Exempt Money Market
  • California tax exempt money market no load funds may be the ideal investment for residents of this state
  • A no load money market fund does not charge any load fees, and is extremely safe and liquid compared to many investment options
  • California tax exempt money market funds offer unique tax advantages to residents of California

California tax exempt money market no load funds are mutual funds which invest in money markets, and these funds are usually considered one of the safest ways to invest to preserve investment capital while still earning a small return. Money market funds are very liquid, so that when you sell your shares it does not involve any waiting periods or time to find a buyer. Tax exempt money market funds are those which have holdings that are tax exempt for almost all the investors, and this is normally in the form of municipal debt securities. A no load money market fund that holds short term municipal debt securities is exempt from federal taxes, and is also exempt from state and local taxes for residents of these areas who invest. This can lead to an investment being exempt from three different taxes, and this can lead to substantial savings. No load California tax exempt money market funds offer specific tax advantages to residents in the state of California, and investors who do not live in this state will not see the maximum tax advantages these funds can offer. These funds also do not charge load fees, which can really add up and eat away at any returns.

One California tax exempt no load money market fund that is popular is the Franklin California Tax-Exempt Money Fund, which trades under the symbol FCLXX on NASDAQ. This fund invests one hundred percent of the investment pool into California municipal bonds that are rated AAA and are of the highest quality. There are no load fees or 12b-1 marketing fees, and the fund operating expenses are point five four percent. The minimum investment for this no load money market fund is very low at only one thousand dollars, and the fund has an established history because it was started in the year 1985 and has been operating for more than twenty years. The goal of this specific fund is to hold investments in municipal securities from California that are exempt from federal, state, and the federal alternative minimum taxes. These securities are of the highest quality and are only held for a short time, usually less than one year. Portfolio turnover for California tax exempt money market funds may be higher than for other fund types, because of a higher liquidity and market stability. The tax advantages these funds offer, as well as the principal preservation and higher safety benefits, make them a great investment opportunity.

A California tax exempt money market no load fund is intended as a safe alternative for capital and cash reserves that are not needed immediately but will be needed in a short time period. Money market accounts normally have a share price of one dollar, and they are similar to savings accounts because the investment value does not rise and fall normally. No load money market funds are not insured like a savings account or certificate of deposit is though, and even though these funds aim to preserve principal, in exchange for lower risks and returns than some other investment options, this does not mean that it is impossible to see losses with these funds. Although rare, it is possible for the fund share to drop lower than the intended one dollar price. When this happens it is termed breaking the buck, and it is possible to have a loss of capital if this happens. Make sure to do all of the required comparisons and research, to make sure that the fund is right for you before risking your investment capital. Choosing no load money market funds means making your own investment decisions, but it also means making sure that the funds chosen are best for you and your investment goals and not just the funds that pay the broker a higher commission.