The 10 Best Money Market Funds of June 2023 Fidelity Money Market Fund SPRXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It The Fidelity Money Market Fund is one of three funds on our list that require a minimum initial investment of only one dollar. Still, it is not the cheapest option—seven of the other funds herein levy even lower expense ratios. The bulk of SPRXX’s holdings are various forms of repurchase agreements. Repos, as they’re also known, are overnight loans to the Federal Reserve, backed by Treasurys. The Fed buys them back the next day at a slightly higher price. That price premium is their implicit interest rate. “These are the safest things in the world,” Crane Data President and Publisher Peter Crane told Forbes Advisor. In addition, SPRXX’s holdings include other types of repos, commercial debt and certificates of deposit Schwab Value Advantage Money Fund Investor SWVXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It The Schwab Value Advantage Money Fund was the world’s fastest growing money market fund last year, thanks to Schwab and other brokerages shifting their so-called sweep money out of low-yield bank deposits, into higher-yield money funds, Crane says. SWVXX now holds more than $120 billion of shareholders’ assets. Treasury and other government agency repurchase agreements are SWVXX’s largest single type of holding. CDs and commercial paper are its second and third largest types of holdings. T. Rowe Price Treasury Money Fund Z PRTXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It Its expense ratio puts T. Rowe Price Treasury Money Fund in the middle of the pack in terms of annual cost on our list of best money market mutual funds for 2023. PRTXX is yet another money market fund in which Treasury repurchase agreements account for the vast majority of fund holdings. Treasury bills are the fund’s second biggest category of holdings. Currently, all securities held by the fund will mature in 397 days or less, and PRTXX’s weighted average maturity of holdings will not exceed 60 days. Invesco Premier Portfolio Institutional IPPXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It Invesco Premier Institutional has the highest yield of all funds on our list. That’s due to a portfolio that consists mainly of short-term, high-credit-quality money market instruments. The securities are obligations, and they include primarily commercial paper, certificates of deposits, master and promissory notes, municipal securities and repurchase agreements. JPMorgan Liquid Assets Money Market Fund MJLXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It One distinctive feature of JPMorgan Liquid Assets Money Market Fund is that it considers financially material environmental, social and governance ESG factors in investment decisions. MJLXX managers consider those factors with the goal of enhancing long-term, risk-adjusted financial returns. But fund literature makes clear that MJLXX’s consideration of ESG factors does not alter the fund’s strategic goal, which is to invest in high-quality, short-term money market instruments. These include corporate notes, commercial paper, funding agreements, repurchase agreements, CDs and bank obligations. Vanguard Federal Money Market Fund VMFXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It With roughly $245 billion of assets, Vanguard Federal Money Market Fund is the largest portfolio on our list of the best money market funds of 2023. It is the third largest such fund industrywide—one of the larger funds requires an initial investment of at least $10 million, while the other larger fund is Fidelity Government Money Market SPAXX, the next fund on our list. VMFXX invests largely in securities issued by the government or its agencies. It also invests in repurchase agreements with collateral backing of Treasuries or to a lesser extent mortgage-backed securities. VMFXX maintains an average maturity of 60 days or less. Fidelity Government Money Market Fund SPAXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It True to its name, the Fidelity Government Money Market Fund normally has nearly all of its shareholders’ money at work in cash, government securities and/or repurchase agreements that are collateralized by cash or government securities. Hypersafe as SPAXX holdings are, they are not entirely risk free. SPAXX literature points out that certain issuers of Government securities are sponsored or chartered by Congress but their securities are neither issued nor guaranteed by the Treasury. Offsetting that negligible chink in SPAXX’s armor is its massive size, now exceeding $260 billion. Vanguard Treasury Money Market Fund VUSXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It The Vanguard Treasury Money Market Fund is a stablemate of VFMXX. VUSXX follows a slightly different strategy in constructing its portfolio. VUSXX invests solely in Treasury obligations and repurchase agreements fully collateralized by Treasury securities. Like its larger sister fund, VUSXX maintains an average maturity of 60 days or less. Its expense ratio is the lowest on our list. T. Rowe Price Government Money Fund PRRXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It T. Rowe Price Government Money Fund invests only in dollar-denominated money market securities. All of PRRXX’s securities mature in 397 days or less. The fund’s weighted average maturity will not exceed 60 days. Roughly three-quarters of fund holdings consist of repurchase agreements. PRRXX’s second largest category of holdings is made up of debt issued by the government and its agencies. BlackRock Wealth Liquid Environmentally Aware Fund Investor PINXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It BlackRock Wealth Liquid Environmentally Aware Fund, also known as BlackRock Wealth LEAF, is another socially conscious fund in our list of the best money market funds for 2023. PINXX considers environmental, social and governance ESG factors in its investment decisions, but is not ruled by such factors, according to fund literature. The fund invests in a broad array of securities. Roughly 40% of its holdings are government agency repurchase agreements. About another 15% are CDs. An almost equal amount are commercial paper–that is, short-term unsecured promissory notes issued by companies. Nearly 10% are asset-backed commercial paper. The rest is a mix of fixed income securities. *Asset weights are sourced from fund filings, all other data is sourced from Crane Data, current as of June 1, 2023, unless noted otherwise. Methodology To compile our list of the best money market mutual funds, we searched for funds with a winning combinations of some key traits Wide availability. Many funds offer high yields and charge investors low fees, but the funds are available only through certain brokerages, advisors or workplace retirement plans. Instead, we generally only let funds through our screening process if Crane Data classifies them as retail funds. Likewise, we tried to steer clear of funds that charge liquidity fees or impose limits on redemptions. Low minimums and fees. We screened out all funds that demand initial investments of more than $3,000. And we screened for funds with the lowest expense ratios—all of our picks levy expense ratios of or less. Highest possible yields. We screened out funds with 7-day yields of less than Seven-day yield is the industry standard for making comparisons among funds. It considers fund distributions plus appreciation, minus average fees over seven days—and then projects this average forward over the next 12 months. Large portfolios. We screened out funds with low asset levels. Only one has as little as just over $1 billion in assets. Six have roughly $3 billion to $50 billion in assets. Three have roughly $110 billion to more than $250 billion. Finding funds with all of those attributes is a balancing act. A fund may excel in one or two or even three categories, but it may be a laggard in others or even be an outright failure in some categories. Why does asset level matter? Because money market funds are not bank deposits. They are not insured by the Federal Deposit Insurance Corporation FDIC. If a financial crisis arises, the funds that stand the best chance of preserving your principal are the biggest funds. First, they have the deepest pockets. “It takes ample resources to withstand tough times,” Crane said. Second, more assets means more shareholders. And in a financial emergency, you’ll want as many allies as possible to sway regulators and politicians trying to decide which funds and fund complexes to help. “Having 10-to-50 million shareholders on your side doesn’t hurt if you’ve got to call on Washington for emergency support,” Crane said. Size also matters during ordinary times as well. “The bigger the fund, generally the better its service,” Crane said. “In general, I don’t like funds at small financial firms. And I don’t want to think about limitations on access and extra fees charged by funds with weird share class letters at the end of the To learn more about our rating and review methodology and editorial process, check out our guide on how Forbes Advisor rates investing products. The author owned shares of the Fidelity Money Market Fund when this article was published. He held no positions in the other securities discussed in the post at the original time of What is a Money Market Mutual Fund? Money market funds are fixed income mutual funds that invest in debt securities with short maturities and very low credit risk. They offer ultra-low volatility and extremely good liquidity and may invest in taxable or tax-exempt government securities. Money market funds are open-ended funds, meaning they may sell unlimited shares to customers. The fund sells and redeems the shares at a price equivalent to the net asset value NAV, which is calculated daily. The managers of money market funds always aim to keep their NAV fixed at $1 per share using special pricing and valuation conventions. Some allow their NAV to float based on the current market value of the securities in their portfolios. Types of Money Market Funds Money market mutual funds are defined by their type of investments, typically labeled as government, prime or municipal funds. Prime and municipal funds are further classified as retail or institutional, depending upon the type of investors in the fund. Government funds must invest of their assets in government-issued securities and consequently are extremely safe. Municipal money market funds invest in municipal bonds issued by municipalities and municipal agencies, which pay interest exempt from federal income tax. Prime money market funds invest in corporate commercial paper, repurchase agreements, certificates of deposit, and other bank debt securities. Which Is Better Money Market Fund or Savings Account? A savings account with a financial institution is the safest, most liquid option for holding cash. That’s because the FDIC insures savings account deposits for up to $250,000, and funds are instantly available at the ATM or counter. That same insurance coverage applies to money market accounts MMAs, which are available at banks and credit unions, but are not the same thing as similarly named money market mutual funds. Money market mutual funds, often referred to simply as money market funds, are investment securities, not bank accounts. As such, they have no FDIC insurance. Still, money market funds are also very low risk given that they invest in cash and securities guaranteed by the US government, such as Treasury bills, Treasury notes and repurchase agreements based on government-backed obligations. Both accounts are extremely liquid, although some funds impose liquidity fees on redemption and certain limitations on redemption periods. Money Market Funds in the Current Environment Money market funds offered negligible yields in the low-rate environment that persisted over the past several years. Now that interest rates are rising, seven-day yields have climbed. Still, inflation remains high. Rising interest rates are enabling savers to trim the gap between the value of their savings in money market funds and the pace at which inflation is eroding that money’s purchasing power. Investors are responding, big time. Assets in money market funds have hit all-time record levels four weeks in a row, according to Investors poured a net $ billion into money market funds just in the latest week, which ended April 5, says the Investment Company Institute ICI, an industry trade group. That put money market fund assets at $ trillion. That’s a leap of over the past 52 weeks. It’s a surge this year alone. Keeping up with inflation and out-earning savings and checking accounts are not the only catalysts for inflows. “The failure of Silicon Valley Bank and the cryptocurrency collapse have spooked investors, who are leery about leaving money in bank deposit accounts in excess of the FDIC-insured amount of $250,000–and even amounts smaller than that,” Crane said. Next Up In Investing Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results. Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.

AmericanCapital Money Market Accumulation Fund, Inc. is a Maryland Domestic Corporation filed On October 21, 1983. The company's filing status is listed as Dissolved and its File Number is D01625482. The Registered Agent on file for this company is The Corporation Trust Incorporated and is located at 32 South Street, Baltimore, MD 21202.

With interest rates higher than they’ve been in some time, savers and investors are once again able to earn decent rates of return in relatively safe investments such as money market funds. Money market funds invest in short-term securities issued by governments and corporations and are available from several different brokers and fund managers. Investors in money market funds earn income, or a yield, from the securities that are held within the fund. Here are some of the top money market funds to consider for your portfolio. Top money market funds Vanguard Federal Money Market Fund VMFXX Schwab Value Advantage Money Fund SWVXX Fidelity Money Market Fund SPRXX Invesco Government Money Market Fund INAXX JPMorgan Prime Money Market Fund VMVXX Vanguard Municipal Money Market Fund VMSXX *Data listed below is as of May 9, 2023. Vanguard Federal Money Market Fund VMFXX The Vanguard Federal Money Market Fund invests in cash and short-term securities issued by the government. The fund aims to provide current income while maintaining a high level of liquidity. Yield percent Expense ratio percent Fund assets $ billion Schwab Value Advantage Money Fund SWVXX The Schwab Value Advantage Money Fund invests in short-term securities issued by and foreign entities. The securities may be issued by governments, corporations or financial institutions. The fund aims to earn the highest possible current income while maintaining stability and high levels of liquidity. Yield percent Expense ratio percent Fund assets $ billion Fidelity Money Market Fund SPRXX The Fidelity Money Market Fund invests in short-term securities to produce a high level of current income while maintaining stability and a high level of liquidity. The securities purchased may be issued by domestic or foreign issuers. The fund also invests in repurchase agreements and the commercial paper of financial institutions. Yield percent Expense ratio percent Fund assets $ billion Invesco Government Money Market Fund INAXX The Invesco Government Money Market Fund aims to provide a high level of current income while maintaining stability and high liquidity. It invests essentially all of its total assets in cash, government securities and repurchase agreements backed by government securities. Yield percent Expense ratio percent Fund assets $ billion JPMorgan Prime Money Market Fund VMVXX The JPMorgan Prime Money Market Fund seeks to generate current income while providing a high level of liquidity and a low volatility of principal. The fund invests in short-term securities that present minimal credit risk such as government securities, floating-rate debt issued by and foreign corporations and highly-rated commercial paper. Yield percent Expense ratio percent Fund assets $ billion Vanguard Municipal Money Market Fund VMSXX The Vanguard Municipal Money Market Fund aims to provide current income that is exempt from federal income taxes while maintaining stability and a high level of liquidity. Because the fund invests in municipal securities that are exempt from federal income tax, the yield is lower than other money market funds. Yield percent Expense ratio percent Fund assets $ billion What is a money market mutual fund? A money market fund is a mutual fund that invests in short-term securities with very little credit risk. These securities may be issued by governments, corporations or financial institutions that reside in the or abroad. Money market funds are considered to be low-risk investments that offer current income based on the prevailing level of interest rates. Money market funds aim to maintain a net asset value, or NAV, of $ while providing a high level of current income. Other mutual funds, such as stock funds, may aim to increase their NAV as their underlying investments perform well, but money market funds seek stability. Types of money market mutual funds Money market funds are typically divided into three categories government, prime and municipal. Here’s what you should know about each type. Government Government funds invest in cash, Treasury securities and repurchase agreements that are collateralized by Treasury securities. Prime Prime, or general purpose, funds invest in government securities as well as commercial paper, certificates of deposit, short-term securities issued by domestic and foreign corporations and repurchase and reverse repurchase agreements. Municipal Municipal or tax-exempt funds invest the majority of their assets in securities that are exempt from federal income tax. Money market funds vs. money market accounts You may have seen banks or credit unions reference money market accounts and wondered if these are the same thing as money market funds. The answer is no. A money market fund is a mutual fund that invests in short-term securities while a money market account is a product that banks or credit unions offer to customers that typically earns a higher rate of interest than a standard savings account. Perhaps the most important difference between money market funds and money market accounts is that money market funds are not insured by the Federal Deposit Insurance Corporations, or FDIC, whereas money market accounts are FDIC-insured. Money market funds come with very low risk, but there have been instances where funds “broke the buck,” meaning their NAV dropped below $ such as during the 2008 financial crisis. In these instances, the fund may be liquidated and investors could receive less than $ per share. How to choose a money market mutual fund Money market funds are offered by a number of different financial institutions such as banks, brokerage firms and mutual fund companies. Here are some of the key factors to consider when choosing a money market fund Yield You’ll want to compare a fund’s yield to other funds in the industry to make sure you’re getting the best return on your investment. Expense ratio Funds charge an expense ratio, which comes directly out of the return you ultimately earn as an investor. All else being equal, the lower the expense ratio, the better it is for investors. Type of fund Consider whether you’d like to invest in a government, prime or municipal money market fund. Municipal money market funds may be particularly appealing for those in high tax brackets. Other fees Be sure to pay attention to any additional fees you may be charged when buying and selling money market funds. Some brokers may charge mutual fund commissions, while others may charge fees for funds from certain fund families. Bottom line Money market funds aim to invest in high quality short-term securities that provide a high level of current income while maintaining liquidity and stability. The funds may invest in government securities as well as securities issued by and foreign entities. Municipal money market funds invest primarily in tax-exempt securities. Money market funds can be a good fit for investors looking to benefit from the current interest rate environment or saving for a short-term goal. Keep in mind that while the funds are considered low risk, they are not FDIC-insured. Editorial Disclaimer All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

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Editorial Note We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations. A money market fund is a type of mutual fund that invests in cash and low-risk, short-term debt securities. Money market funds are considered one of the least risky investment vehicles available, generating income—usually on par with short-term interest rates—that may be either taxable or tax-exempt, depending on the investments held by the fund. How Do Money Market Mutual Funds Work? Like other kinds of mutual funds, money market funds assemble a portfolio of securities and sell shares to investors, who earn returns from the portfolio in the form of income and capital gains. Money market funds build portfolios of cash and cash equivalents like bankers’ acceptances, certificates of deposit CDs, commercial paper, repurchase agreements, and Treasuries. Generally speaking, there are three main types of money market funds, each of which invests in different kinds of securities. The majority of their investments are in securities, but they also hold cash and cash equivalents. Government money market funds buy short-term government Treasuries. These are mostly notes and bills but may also include bonds and repurchase agreements backed by Treasury notes and bills. Prime money market funds invest in corporate paper, bankers’ acceptances, short-term corporate notes and bank debt securities. Municipal money market funds buy municipal bonds and other debt securities. Earnings are usually exempt from federal income taxes and sometimes also state income taxes. Some money market funds are designed for retail investors while others are only for institutional investors and require high minimum investments. Because money market funds invest in debt instruments, they produce regular income that’s either taxable or tax exempt, depending on the type of security creating the income. Traditionally, money funds have aimed for a net asset value NAV of $1 per share, and any difference between the NAV share price and the earnings on the portfolio’s investments is distributed to fund investors. With all investments, you run the risk of losing money. Money market funds, however, are widely considered one of the safest, lowest-risk and least volatile investment options. Money Market Fund Fees Money market funds charge an annual management fee called an expense ratio. The higher the expense ratio, the lower your returns—and when interest rates are low, expense ratios can really eat into your money market fund earnings. The low interest rates that prevailed for the decade and a half leading up to 2022 drove some fund managers to waive or reposition fees to maintain a zero or positive yield for their funds. Vanguard, for instance, temporarily reallocated the expenses of the Vanguard Pennsylvania Municipal Money Market Fund to other funds within the company. Today, money market fund fees have risen as interest rates have normalized. Money Market Fund vs. Money Market Account What’s the Difference? Though they share similar names, money market accounts are different from money market funds. Money market accounts are a type of savings account offered by banks and credit unions that may provide better APYs and easier access to your money than conventional savings accounts. Unlike money market funds, money market accounts are insured by the Federal Deposit Insurance Corporation FDIC. That means you are guaranteed never to lose money as long as the amount is under your bank’s FDIC coverage maximum, generally $250,000. Contrast this with money market funds, which are investment products that may lose money over time. That said, you might still opt for money market funds over money market accounts if they offer a substantially higher yield. Because they invest in cash and cash-like securities, money market fund risk is minimal. Origin of Money Market Accounts Money market accounts were introduced in the early 1980s to compete with money market funds. Money market funds were established about a decade before to provide more competitive interest rates than bank accounts, whose rates were limited by the Federal Reserve. Because they were investment products, not banking products, money market funds were able to avoid Fed regulation and pay much higher rates of return. By the late 1970s and early 80s, runaway inflation and high interest rates meant that you could earn much better returns in money market funds than in bank savings accounts. As money began flowing out of the banking system and into money market funds, Congress allowed banks to begin offering money market accounts that offered more attractive interest rates to help banks and credit unions compete with money market funds. Given the rates offered by high-yield savings accounts today, be sure to compare rates across money market funds, money market accounts, and high-yield savings products to make sure you’re getting the best rate for your money. Advantages of Money Market Funds Money market funds are generally considered one of the most stable investments—they experience low volatility and are less prone to market fluctuations. Money funds are also more liquid than other investments with similar returns, such as CDs, because they allow you to withdraw cash or buy other investments quickly. Money market funds are well diversified, and because some funds invest in securities whose interest payments aren’t subject to federal taxes and sometimes state taxes, they can provide a tax-efficient income source. Disadvantages of Money Market Funds Because money market funds are investments and not savings accounts, there’s no guarantee on earnings and there’s even the possibility you might lose money. When interest rates are low, money market rates are also low, earning investors very little. Money market funds are not for long-term investing, and even when interest rates are higher, the money in a money market fund typically won’t outpace inflation. “I’ve never had a time in my career when a money market fund had an interest rate higher than inflation,” Bishop says. “It’s a very good short-term place to keep money you need to keep liquid, but you will lose money in terms of the cost of the things you Money Market Fund FAQs What’s the best use of a money market fund? Money market funds are a good place to park cash you’ll need for a short-term goal or an emergency fund since you can access the money quickly. If you’re paying for a wedding in six months, for instance, you wouldn’t want to put the cash in the stock market and risk losing money in a market dip. For longer term goals, you’re better off investing in other vehicles to achieve a return that’s higher than inflation. Are money market funds safe? Money market funds invest in highly stable, short-term debt securities that are very low risk. As investments go, money market funds are generally considered quite safe, although they are not entirely risk free. While money market accounts are FDIC insured up to $250,000 per account, per depositor, there’s no FDIC coverage on a money market mutual fund. Money market fund share prices do fluctuate, so you may have to sell shares for slightly less than you paid for That said, money market fund risk is historically very small. What is the minimum investment for a money market fund? Minimum account requirements vary by fund and may depend on how you invest. For instance, some money market fund minimums range from $500 to $5,000, but there may be no minimum if you’re investing through an individual retirement account IRA or if you set up recurring deposits. How do you buy money market mutual funds? You can buy money market funds in your online brokerage account or directly from a mutual fund firm. When shopping for the right money market fund, make sure you look beyond the rate. “Especially in a low-rate environment, an account with a higher rate might not be the best if it is hard to access,” says Sean Pearson, a certified financial planner with Ameriprise Financial in Conshohocken, Penn. “Keep convenience in

Bondfunds are based on fixed interest securities. Money market funds invest capital in securities with extremely short terms and are seen as an alternative to fixed term deposits. Property funds

A money market fund—also known as a money market mutual fund—offers a relatively safe parking spot for your money. They are popular with investors because they are highly liquid, so the money can fund a new investment what is a money market fund? And how does it work? Let’s take a is a money marketMoney market funds are mutual funds that invest in short-term debt securities such as Treasury bills, cash, and cash-equivalent securities. They offer a low level of risk and high confuse a money market fund with a money market account. Money market funds are regulated by the Securities and Exchange Commission SEC and invest your money in the stock market accounts are a savings account offered by financial institutions such as banks and insured by the Federal Deposit Insurance Corporation FDIC.Just like any other investment, money market funds carry the risk of losing value. However, they are considered a safe way to earn a higher interest than savings accounts or money market to dive into the market? Wealthsimple Trade makes it easy to buy and sell thousands of stocks and ETFs—all commission-free. No jargon, no paperwork. Get started money market fund can be a popular tool for investors to park their cash before buying stocks or after selling them. They are much less volatile than the stock or bond markets, but their low returns make them a bad long-term money market funds workMoney market funds work just like any other mutual fund where investors buy shares. The fund takes the money and buys short-term government or corporate debt such as Treasury bonds, commercial paper, certificates of deposit CDs, and so of mutual fund investmentsCertificates of deposit CDs A federally insured savings vehicle with a fixed interest rate and a short-term date of withdrawalBankers’ Acceptance A short-term commercial bank draft representing a promise of future paymentCommercial paper A short-term corporate promissory note representing a pledge of future Treasury securities Short-term government debt obligationsRepurchase agreements A type of short-term borrowing using government securitiesIncome from money market funds can be taxable or tax-free depending on the type of portfolio. Tax-free portfolios can be exempt from federal and/or state and local market funds have tried to maintain a net asset value NAV of $1 per share. Investors receive the difference between the NAV share price and portfolio earnings in the form of NAV rule ensures that investors get regular payments although they are not guaranteed to be the same each time. There is also no guarantee that the mutual fund can maintain the share the fund fails to maintain the $1 share price called “breaking the buck”, it can be liquidated by regulators. This has only happened twice so far once in 1994 with the Community Bankers Government Money Market fund and once in 2008 with the Reserve Primary Money failures resulted in new rules issued by the SEC to provide more stability and prevent similar issues in the of money market fundsThere are three main types of money market funds prime also known as general purpose, government including Treasury, and tax-exempt also known as municipal. Prime and tax-exempt mutual funds are further divided into retail or of their classification, all money market funds must comply with regulatory requirements concerning the diversification of the fund’s investment, the type of investments it holds and their liquidity and of money market fundsPrime general purpose This type of fund invests in corporate notes, commercial paper, CDs, debt issued by government agencies, and so type of money market fund invests at least percent of total assets in cash, government securities, and repurchase agreements. This can include Treasury securities and repurchase agreements for municipal This type of fund comprises municipal securities exempt from federal and sometimes state income tax. As a result, earnings from tax-exempt funds are also money market funds are targeted toward individual investors, while others aim to attract institutional money. Those targeted toward individuals are known as retail money market funds, while those targeted toward institutions are known as institutional money market funds seek to maintain a stable $1 share value or NAV but may charge certain fees or suspend your ability to sell shares depending on market funds don’t have to maintain a stable $1 share value but can use a floating NAV, which allows for fluctuations. These funds may also charge certain fees and suspend the ability to sell individual and institutional investors can buy government money market funds. They don’t charge fees, suspend your ability to sell shares, and are not subject to a floating and disadvantages of money market fundsThere are both advantages and disadvantages to investing in money market funds. Sometimes, they can be the right choice and offer a way to protect and grow your they have downsides that can increase your risk and your opportunity of money market fundsMoney market funds are one of several options for investors looking to park their cash in the short term. Other options include money market accounts, high-interest savings accounts, and so main reason for putting your money in a money market fund is to find a low-risk but low-return investment. Sometimes, they also offer tax-exempt have several advantages over other investment optionsLow risk Money market funds offer low volatility and therefore low risk. They are a relatively safe investment where you can park your cash fees Money market funds don’t charge entry or exit fees or loads.High liquidity Investments within money market funds are highly liquid so you can get them out within a few business days. Many also allow investors to write returns than bank accounts Most money market funds earn more than high-interest savings accounts. Sometimes, such as with municipal funds, the earnings are also of money market fundsWhile there are advantages to money market funds, investors should also consider the downsides. They can be a good option in certain situations but may not work well in of money market fundsVariable rates Unlike traditional savings accounts, there is no guarantee on the rate of return for money market funds. This means you don’t know how much you will earn from capital appreciation Because of the conservative nature of money market funds, investors don’t get capital appreciation. This is a low-risk but also low-return FDIC-insured Since money market funds are a type of mutual fund, they are not insured by the FDIC. They are a security and thus regulated by the SEC. There is still a risk that you can lose your money without the backing of a government costMoney market funds generally offer low returns over the long term unlike riskier investments such as stocks. Over the long haul, inflation will eat away at your returns. This is why you may be better off with a diversified mix of stocks and bonds offered by ratios Just like other mutual funds, money market funds charge a fee that helps pay the cost of running the fund. It’s called the expense ratio and can reduce your earnings from the fund. Therefore it’s important to check the expense ratio information on the fund’s prospectus before putting your money in to money market fundsThere are several alternatives to money market funds, which may fit your needs better and offer similar yields. There are multiple factors that determine which type of account is the best fit for your current are several alternatives to consider for investing your cash in the short termShort duration bond funds and exchange-traded funds ETFsBond funds and ETFs can be a good alternative to money market funds with a higher potential yield. However, they can be higher risk and come with management fees and ETFs offer lower fees than bond funds and full transparency on what bonds they include in the fund. They can be purchased through a broker and traded on the open market like market accountWhile money market accounts often get confused with money market funds, they are not the same thing. Money market accounts are FDIC-insured up to $250,000 and are offered by traditional financial institutions such as regular savings accounts, they often require a higher minimum balance but offer higher yields. Most times, these types of accounts offer check-writing privileges and other features similar to regular bank savings accountHigh-yield savings accounts offer another alternative to money market funds. Just like money market accounts, they are FDIC insured and can be opened at traditional financial money market accounts, they have a lower minimum balance requirement and offer check writing and debit card privileges in many of deposit CDCertificates of deposit are a type of savings account with a fixed-term length of time such as three months, six months, one year, two years, and so on. In exchange for locking up your money for a fixed term, you will receive a fixed money market and high-yield savings accounts, CDs are also FDIC insured up to $250, longer the term, the higher the interest rate. Sometimes, CDs may pay higher interest rates than money market accounts but may require that you lock your money for a long you need to withdraw your money before the maturity date, you will be charged a to talk to someone about investing? Call us to talk with a real-life human being about your financial situation. Get a free analysis of your investments, debt and savings rate. Work on goal setting and make a plan to improve your finances. Book a free investment consultation Updated August 28, 2019 .

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