Money Market Funds
-Short Term Parking Place for your cash-
Money markets funds have been a literal explosion among small businesses and big corporation in recent years. However, it is not common among retail investor as agent / consultant does not get any commission for promoting this liquid investment tool.
The concept of a money market fund is to pool small amounts of money from hundreds of separate investors to enable them buy jumbo Fixed Deposits (FDs) and government securities, which are available only in large denominations and earn significantly higher yields. In this way, a small investor can wield the same clout formerly available only to the very wealthy. (Imagine the yield you got with RM3000 deposit is the same with RM30 million deposits)
When comes to Short Term Parking Place for cash, the small investor has the best of all worlds with a money market fund.
- Enhanced yields. An investor can earn the highest available yield with the least amount of money. The yield is higher than average bank fixed deposit if you only want to deposit for a short period or lower amount. (Target return of 3.00%-3.5%)
- Liquidity. The funds can be withdrawn at any time without incurring a penalty or forfeit of interest. Your money earns higher interest until the time you withdraw.
- Flexibility. Fund deposit and withdrawal, from as low as RM300. And the money still enjoys interest 3.5% p.a. No minimal deposit period, no early withdrawal penalty
- Security. Money market funds invest in only short-maturity securities varying from a few weeks to no more than a few months.
- Tax-free income. Dividends are not taxable for investors.
- T+0 withdrawal with no exit fees. The money will be credited to your account within the same day (provided you execute the transaction before 9.45am on working days)
- Investor protection. Governed by trust deed and regulated by Securities Commission. The fund’s assets are protected through Trustee appointed for the fund.
- Can be done online using computer or mobile phone. That means you do not need to go out, spend your time on parking and queuing.
Rather than mention specific funds here, I recommend that you could shift a heavy portion of your liquid assets (the funds you will need to use within a year) into a high-interest-bearing liquid money market fund of your choice. If you have enquiry on money market or want to open a free account, contact me for more information.
You can open a free online money market or unit trust account here