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Is there such a thing as good debt? What do you suppose bad debt is? And
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One short step up from under the mattress, and an uninsured brother of a savings account, Money Market Funds provide conservatism by the bucket load. The interest earned won't make you wealthy, but there is always the liquid nature of the investment that keeps people coming back. The liquid nature is the ability for you to convert the money in the fund into real cash. Some funds act like checking accounts, although in a limited degree, keeping your money close at hand.
The money you make holding money markets comes from certificates of deposit, Treasury bills, short term notes issued by a variety of sources including banks, the government, and corporations. You will always know the value of your shares because most of these funds hold the value at $1. This value sometmes comes under pressure and banks have had to step in a readjust the value back to a dollar. This has happened recently in part to the 11 rate cuts that we experienced over the past year.
There is a tax break to some funds that is worth investigating. For instance, if your money market invests in income producing instruments from your home state, the interest made may be exempt for both state and federal taxes. Buy a fund that invests in the US Government and you will be free of state taxes. Buy one that invests in local and state instruments, you will be free of federal income taxes on earned interest.
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