Money, Money, Money – Offshore Money Market Accounts

Filed under: offshore

The securities market dealing in short-term debt and monetary instruments. Money market instruments are forms of debt that mature in less than one year and are very liquid.
Treasury bills make up the bulk of the money market instruments. Securities in the money market are relatively risk-free.

Whenever a bear market comes along, investors realize (yet again!) that the stock market is a risky place for their savings. It’s a fact we tend to forget while enjoying the returns of a bull market! Unfortunately, this is part of the risk/return tradeoff. To get higher returns, you have to take on a higher level of risk. For many investors, a volatile market is too much to stomach – an alternative is the money market.

The money market is better known as a place for large institutions and government to manage their short-term cash needs. However, individual investors have access to the market through a variety of different securities. We will learn about money market instruments in this tutorial.

One of the main differences between the money market and the stock market is that most money market securities trade in awfully high denominations. This limits the access of the individual investor. Furthermore, the money market is a dealer market, which means that firms buy and sell securities in their own accounts, at their own risk. Compare this to the stock market where a broker receives commission to acts as an agent, while the investor takes the risk of holding the stock. Another characteristic of a dealer market is the lack of a central trading floor or exchange. Deals are transacted over the phone or through electronic systems.

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