Delving into the money market: Putting your cash into money market accounts and unit trusts

Julie Brownlee, Fsp Invest, 05 Feb. 2015

Tags: money market, money market accounts, money market unit trusts, money market funds, money market investments,



If you’re looking for a low-risk home for your money that yields a reasonable rate of interest, it’s worth looking to the money market.

There are two easily accessible options you can look to: Money market accounts and money market unit trusts.

So how do these work? And why should you consider putting your money there?

Read on to find out…



Money market investments


Putting your cash into money market accounts or unit trusts is one way you can earn interest on your cash relatively risk-free.

You can also look to yield a half decent rate of interest, which should be on par with the current rate of inflation.

Let’s take a look at the two main options open to you…


Money market accounts


You’d open this through your bank. A money market account is an investment which acts like a savings account. Unlike a fixed deposit account, it doesn’t have a finite term.

To open a money market account, there’s usually a minimum deposit required of around R5,000. You can easily withdraw cash from the account (there may be a set minimum amount), but usually your balance can’t dip below the minimum deposit amount.

Currently, money market accounts are paying interest in the region of between 5% and 6%.


Money market unit trusts


If you don’t have a large lump sum available to put in a money market account, you may find a money market fund a more accessible vehicle.

You can invest in these types of funds with around R1,000, but you’ll have to pay that amount into the fund on a monthly basis.

These funds tend to pay out interest slightly higher than money market accounts, but you need to take into account the fees that come with unit trusts.

If you’re looking for a shorter-term, low-risk investment, then a money market fund is a good option.

So there you have it, putting your cash into money market accounts and unit trusts.

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