How the Money Market Works

The stock market is made up of many markets and it is the “bull” market that is well-known for many people, partly due to some films portraying dramatic situations inside the ticker tape office. The bull market entails very high risks, but very high returns, which make them instrumental for developing colourful investor or broker life stories, but if you’re like me and you’re looking for somewhere stable to deposit your money, you might want to know about the money market.

The money market addresses many companies, government entities and individual investors’ financial needs for a very short time. Cash investments, as money market investments are called, are debt securities that mature in one year as compared to usual securities such as bonds. Essentially, when the economy does well, your returns do well too.

Money markets are synonymous with mutual funds, treasury bills, certificate of deposit and other types of time deposits.

Yearly, the yields of money market financial instruments are very stable; it is very rare for a government reserve or a bank to go bankrupt at any time within the year.

The money market also works in conjunction with the help from the government. It helps governments raise money from the public and investors. Treasury bills are backed by government reserves, which virtually make them one of the safest investments in the world.

So if you’re like me and you don’t want to gamble too much with your investments, stick with the money market, or you could just give it a chance.