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The Best Options for a Tax Free Money Market Fund

The Best Options for a Tax Free Money Market Fund

When economic times get tough, it is easy for the fears and worries to start creeping in. If any of your money is in the stock market, watching the numbers shift dramatically day after day can leave you with a sinking feeling in your stomach. When is it time to cut losses and bail? Should you stay and hold out hope that things will improve? What if things get worse instead?

It’s daunting trying to make the right decision for yourself and your family when it comes to finances. The uncertainty of trying times only makes matters worse. Simple decisions can result in drastic long-term consequences for many people. If you are in a position where you feel like your finances in the market are unstable, it may be time to invest in a tax free money market fund.

A tax free money market fund can help improve the stability of your portfolio, especially if your portfolio is equity heavy. Money market funds are mutual funds that invest in a broad range of short-term assets. The variety invested in creates a relatively stable growth over time. While these funds don’t see the dramatic rises in value that other stock options do, they also don’t see the same dramatic drops in value, creating a more stable option for the wise investor. If you find a money market that has been operating for many years, you will be able to see the average returns on investment and can acheive greater and far more stable gains than you will with other stocks.

Taxable money market funds will be taxed during maturity, as the name suggests, while tax free money market funds are not taxed. They are exempt from these taxes. While this is an attractive option, tax free money market funds tend to have lower yields than similar taxable funds. But that doesn’t necessarily mean that taxable funds will always bring in more money over time than tax free money market funds. You have to compare the rates on equitable terms by calculating what the gains are in the tax free fund if it were a taxable fund. By doing this simple conversion, made even easier with money calculators easily found on the internet, you can compare the different funds on an equal basis and determine which one will give you the better yields for your investment.

You can seek out a financial advisor for help finding a stable, secure tax free money market fund that is competitive with taxable funds. You can also spend a little time researching on the internet to locate the best fit for your investment needs. It is important to remember that money market funds are based on seven-day yields, which means that yields are calculated based on the fund’s performance over the last seven days. Keep this in mind as you compare different tax free money market funds.

If you need greater stability in your portfolio, a tax free money market fund can help provide exactly that. In these uncertain times, it’s hard to justify taking great risks with money. Investing in a tax free money market fund can help you keep your money more secure and stable.

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