Investing In US Treasury Money Market Funds

Investing in US Treasury money market funds can be a great choice for many investors, but before you invest in these or any other investment choices it is important that you understand how these funds work, and the advantages and drawbacks that they may have. These choices pick United States Treasury investments for the fund, but that does not mean they are safe or foolproof investment options. Although they hold securities issued by the US Government, these money market funds are not guaranteed or considered a safe choice that has no risks. All investments carry some risk, and it is important that you evaluate each of the Treasury money market funds individually to find the ones that fit within your acceptable risk levels and investment guidelines.

Treasury money market funds usually have holdings that are considered short term, and this plus the fact that they are traded on the markets means that these funds have a very high level of liquidity. They are also considered one of the lower risk investment options by a majority of investors, and this makes them popular. One of the biggest draws that these investment choices have is the tax benefits that you can see from them. Most Treasury money market funds invest in securities that do not have any tax on the interest from the investment at a local and state level. This tax incentive plays a big part in why these mutual funds are frequently chosen as investments. Most of them normally have around twenty percent of fund assets in cash, and the remaining balance invested in United States Treasury securities.

If you are looking at Treasury money market funds make sure to look at each fund prospectus carefully. This will give you most of the information you will need to make thorough comparisons, and the rest you can find online. All money markets are designed to be very liquid, and investors often use them for capital that will be needed in the future but can be used for a time to earn a return. Some of these choices may only hold ten percent in cash reserves and the other ninety percent in Treasury securities, while others may have a thirty seventy divide. It is crucial that you determine the exact makeup of the fund portfolio before you decide on the ideal Treasury money market funds, because this factor can vary from one choice to the next.

Investing in U.S. Treasury money market funds can be a great way to use money that would otherwise be sitting in a bank account drawing a very low amount of interest until it is needed, because you will see a better return usually. These investments do involve some risks though, and they are not guaranteed by the United States government or insured if a loss does occur. Compared to many other investment types, money markets can be a relatively low risk option, and their high liquidity means there is no long wait when you need to withdraw your capital.