Money Market

You can just think of money market as cash that also earns a little interest.  For your purposes, if you have money market funds in your account, you can use them just like cash to buy stocks.

Most online brokers will look through your account every day or so and take any new cash that has been added to it, and turn it into money market funds for you automatically.  They do this so you are getting a small interest return on your cash.

This is a nice feature called a sweep, i.e. they are sweeping up your cash.  At first you may be confused when you see these money market balances and transactions in your account, but don’t let them throw you.  They are just automatically doing this service for you.

Also, unless you are a BIG investor, don’t get hung up on the interest rate it pays.  It won’t be much.  I’ve seen some investors focus way too much on this.  Remember, you are looking to make significantly more money by focusing on and investing in quality stocks.

Just think of money market like you think about cash and you’ll be fine.

Leave a Reply