Things You'll Need:
- Knowledge of money market funds
- Start-up capital
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Step 1
Learn to evaluate a money market fund's simple and/or compounded yield. A fund's yield is expressed as a percentage, indicating the average profit generated per $100 invested. For example, a money market fund with a yield of 1.9 percent earns $1.90 on average over the indicated period of time per $100 invested.
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Step 2
Check a money market fund's 7- and 30-day yield averages, in addition to its annual average. Keeping in mind that most money market funds have a maturity period of under 90 days, you can use yield averages to determine a particular fund's potential profitability. A fund's short-term versus long-term yields are a direct indicator of how well it is performing.
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Step 3
Bear in mind that some money market funds are tax-exempt. Mostly, these funds are ones that invest in sources of untaxable income, such as short-term government bonds.
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Step 1
Check out the various opportunities to invest in money market accounts offered by your regular financial institution. You may be able to get more favorable account terms from a bank you've been dealing with for a long time.
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Step 2
Have enough capital on hand to meet the minimum balance you may be required to keep in your money market account. It is common for financial institutions to bind investors to a minimum balance in the $15,000 range.
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Step 3
Use the Internet to find online and wholesale banks that offer investors the most favorable terms. However, be sure to check into any online brokerage you are considering investing with to ensure its legitimacy if it is not one of the financial world's well-known names.
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Step 4
Monitor the markets without plunging in for a while before you commit your capital to a particular money market fund. It's a good idea to follow a fund you're considering investing in closely for a period of several weeks to see if it performs as you expected it would.
