a. intermediation, large
b. intermediation, small
c. disintermediation, large
d. disintermediation, small

b

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define.
how it works
3 PROS & 3 CONS
risks involved
better for a long term or a short term investment?

Working on a homework assignment???
Money Market funds invest in short term bonds – usually 90 day maturities. You invest by buying the money market fund (Vanguard, for example) and you get a monthly interest credit. Pretty much like a checking account.
Virtually no risk at all.

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In that same mutual fund. The economy just looks terrible, and I don’t have the stomach to ride out years of this….it may be a bad decision but oh well – want to sleep at night.

What are the pitfalls, tax-wise of doing this, and how easy or quick is it to just transfer it all into a money market account of the same mutual fund family?

Some of the costs of doing what you are suggesting are going to depend on the broker you are using and your account is set up. You may have to pay transaction fees for selling your mutual funds. At the end of the year, your transaction will be shown on your 1099-DIV. Keep in mind, that even if you sell at a loss, you may still have Capital Gains that you will pay taxes on. Such is the nature of mutual funds. Don’t expect a whole lot better on returns on a money market account. You are also responsible for taxes every year on the gains from a money market account.

There are some other options that may be available to you depending on the amount and purpose of your investment that may work better for you.

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When it comes to making investments, most people know that there is always room for a possible loss. Stock market investments in particular are rather notorious for taking a rather well funded portfolio and emptying it rather quickly. Of course, that does not happen all the time, otherwise no one would do it. If, on the other hand, you do not want to take what many consider to be an unnecessary risk, there are a number of other investments that are reasonably safer, can still bring a good return, and are definitely worthwhile. Here are a couple of them.

A common phrase that is often used these days to refer to the making of your investments safer is having a balanced portfolio. This means that you are not putting all of your eggs into one basket. You know that some markets are a much greater risk than others, such as trading on the stock market, and so you put some of your investment capital into some that are much safer and less likely to be lost. This “balance,” created by placing some of your investment into a variety of potential interest bearing accounts, should result in an overall gain.

Investments Depend On The Person

If you are a young person, then it should mean that you would be willing to take a higher risk (assuming you have some capital that may be lost). The possibility of the highest gains, unfortunately, also come from the markets with the potential for the highest change. This means that there is a much greater likelihood of a real loss – especially if you do not know what you are doing. By using the services of an experienced trader however, a stockbroker that has been doing it for years, you minimize the possibility of loss. But you should only invest a portion of your finances into the stock market.

If, on the other hand, you are much closer to retirement age, then you do not want to take such a risk with your funds. Instead, you would want to place your soon to be needed funds into a much more stable growth account, where the loss can be minimized and yet still bring a return in interest.

Stable Investing In Trust Funds

If you are looking to stabilize your investments in the stock market with something that is relatively sure, then you need to consider mutual funds. This form of investing places your investment into the hands of investors that basically do the investing for you. They watch the market, manage the funds, and make the changes necessary in order to keep your account growing. After you inform them of what level of risk you are willing to take, then the rest is done for you. They take your funds and spread them over a diverse sort of investments, and it gives you a much more stable package.

The Most Stable Investment – Bonds

Probably the most stable investment you can make is to buy bonds. The safest, of course, are the US Savings Bonds. These are purchased at a set price and guarantee a set interest amount in a specified time period. You cannot get much safer than that – and probably not much is safer than the US Government – investment wise. If you are looking for the highest stability available, then you need to take some of your investment portfolio and add some bonds to it. Bonds are also available from other corporations, cities, etc., but their strength is limited to the financial strength of the company. The longer the time period of your investment – the greater the risk that the company may not be around.

In addition to creating a balanced portfolio, you need either to become very knowledgeable about financial investing, or you need to seek professional counsel. Many people lose a lot of money every year simply because of unnecessary risks. These risks would never have been taken if they had sought counsel from someone who knows much more than they did about the market and investing methods. A truly balanced portfolio will also have an expert to help guide you through the many potential hazards of the investment world.

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It depends if the money market fund is leveraged or not; what is the money market fund holding such as CDO's (Collateralized debt obligations) – real estate loan debt.

http://en.wikipedia.org/wiki/Collateralized_debt_obligation

Most MM funds are pretty liquid (reasonably safe), but not guaranteed. Check with the company who has your MM fund and ask if it is insured or not. Some companies such as etrade have a FDIC Insured MM fund.

I would rather be in 30 day US T-Bills.

$1000 ea (US T-Bills)
US Fed Gov Guaranteed
No Fed income tax on US Treasury Bills or Treasury Bonds

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