What is the difference between a money market account and a mutual fund?

Same question asked 4 months ago.... Here is the best answer...

There are money market mutual funds, however, this is what I think you're talking about.

Money Market accounts: most banks and brokerages offer these. They are essentially savings accounts tied to the market rate, so you get some higher return than a normal fixed savings account rate. You can usually write 3 checks a month, without penalty and withdraw up to 6 times a month. Typically, you must invest anywhere from $5000-25000 to start and hold a minimum balance.

Mutual Funds: These are a collection of stocks held together and invested in with the pooled funds of investors in the fund. You generally spread the risk amongst many investors and many funds. The funds can be tied to indexes, S&P 500 Index, Overseas Index, socially conscious "Green Funds", types of companies, Small, Mid-Cap, Large-Cap funds, and even bonds.
You can get started with $50/mo., or flat entries of $250 typically.

Hope that helps!

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Investment Advisor

4 months ago - Report Abuse

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To add a bit to the first response: Money market accounts are restricted to investing in very short term, 90 days or less government or commercial paper (loans). I've seen many mutual funds bought through a broker or advisor have an initial minimum investment of $500, and no load mutual funds bought directly have a initial minimum investment of $2,500, but none with a $250 level. I would like to know some names.

Money market means buying bonds

Mutual funds are pooled investments, they are usually well managed, but you need to spot a bear market and withdraw your money, since they can't short stocks, otherwise you will lose money.

To answer Gosh. I have an IRA through TD Ameritrade and own two mutual funds with 250 minimum. (if you have an IRA not if you just want to buy the fund). The specific funds that I own are WTIBX and UMBIX, but there are others. Most of the ones that usually have a 500 dollar minimum can be bought with 250 through the IRA

Most of the banks offer these account. It is like buying bonds.Mutual funds are pool of securities. Risk diversification is the main advantage of mutual funds.