| Remember that the government only represents | | | | pooled and moves from lenders to borrowers |
| about 30% of our retirement income, the | | | | through money markets, financial institutions, |
| company retirement pension plan offers another | | | | corporations, governments, and central bank.f) |
| 30 % and many of us do not have one. It is up | | | | The lenders are usually corporations or institutions |
| to individuals to invest wisely short and long term | | | | with spare cash that can be invested for a short |
| in order to make up for the short fall if he or she | | | | period; the borrowers are those who temporarily |
| would like to live comfortably after retirement | | | | need extra funds.g) Commercial paper and |
| without giving up some retirement plans. In this | | | | Treasury Bills are 2 widely used instruments in the |
| article, we will discuss types of short term | | | | money market. |
| investment. | | | | 2. Government saving bonds |
| There are 3 types of short term investment and | | | | Government saving bonds are issued by the |
| their characteristics are as follows: | | | | government and sells directly to the citizen via |
| 1. Money market fund | | | | some financial institutions.a) They cannot be |
| Money market fund is a way of pooling | | | | traded (but only redeemed), their value does not |
| contributions from many small investors and | | | | fluctuate.b) They are bought at the face value in |
| managing them by a professional fund manager | | | | the denominations of $100, $300, $500, $1000, |
| working for mutual fund companies with very low | | | | $5000, and $10,000 from banks, trust companies, |
| fees.a) Money market fund can be liquid | | | | credit unions, and investment dealers.c) Interest |
| anytimeb) It is one of many saving vehicles | | | | are taxed annually with no commission or fee. |
| because the interest paid by this fund is low, it | | | | 3. Saving accounta) Putting your money into your |
| cannot increase your investment wealth.c) Since | | | | savings account is considered as the easiest and |
| the interest received is low, sometimes it may | | | | simplest way to invest by lending your capital to |
| even fall below the inflation rate.d) If the money | | | | financial institutions.b) Daily savings account is the |
| market fund is only an investment plan that is | | | | type of savings that interest is paid on the daily |
| used to accumulate wealth for your retirement, | | | | balance and is compounded monthly.c) With |
| you will eventually go broke because of today's | | | | regular savings accounts, interest is paid on the |
| low interest rate environment and heavy | | | | minimum monthly balance and is compounded |
| taxation.e) Money in the money market fund are | | | | every 6 months. |