The Money Market
What is a Money Market?
The Money Market is generally a market for short-term investments. The Money Market has a variety of players, such as the Reserve bank, commercial banks, large companies and certain financial institutions. Money Market rates are often linked to the Prime Overdraft Rate – the rate at which private banks lend out to the public. This rate takes its cue from the Repo rate - the rate at which the South African Reserve Bank lends money to local banks in the private sector. Unlike a current or savings account, in the Money Market there is no fixed yield (percentage return on investment). Instead, the rate fluctuates (sometimes daily) in accordance with the interest earned on investments in the Money Market, with investors seeing their yields fluctuate as a result. So while yields can fluctuate, initial capital will not be eroded.

Essentially, it's the ride without the risk.

Risk-free. Competitive returns. Tell me more... Maybe you are undecided on or delaying an investment. Maybe you are saving for a down payment on a house or your child's tertiary education. Maybe you will soon be taking that dream vacation.

Whatever the case, if you are someone who needs to have cash readily available, you will usually invest in short-term, highly-liquid assets. Historically, this has meant relying on channels such as cheque accounts or savings accounts. The problem with these, though, is their low yields. Through Legacy Money Market, investors can enjoy the types of interest rates previously only available to financial institutions and wealthy investors.

Money Markets are also known for offering investors a safe haven for cash during times of market uncertainty. Under such conditions, while the yield on stocks, etc, may outperform other types of investments over long periods of time, they are unlikely to do so over shorter periods. Therefore, investors often take refuge in Money Markets when the markets are volatile, parking their funds while deciding where to invest long term. In fact, the Money Market is where all the big investment banks keep their funds in between deals. The Forbes-owned site, Investopedia, calls the Money Market "one of the safest places for your capital..., a great place to park money while waiting for other investment opportunities to come to fruition."

Money Markets provide a low-risk investment option, and a safe and secure environment in which to invest your funds. <Back
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