Money Read Time: 2 min

Understanding Money Market Funds

A money market fund, not to be confused with a money market account, is a type of mutual fund that invests in instruments like cash equivalents and short-term debt-based securities, which can also include U.S. Treasury Bonds.1

Safety First
These funds are designed to be easily accessible and are often considered cash equivalents. Their primary role in a portfolio is to preserve capital while maintaining liquidity. Financial professionals use them as a place to hold cash for an investor or as a place to "park cash" temporarily while they evaluate new investments. In fact, the core value of money market funds lies in their stability and liquidity, making them one place where investors can build an emergency fund.2

Asset Value
Money held in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Money market funds seek to preserve the value of your investment at $1.00 a share. However, it is possible to lose money by investing in a money market fund.

Money market mutual funds are sold by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

Preserving Capital
Money market funds can play a role in an investor's portfolio by providing a high-liquidity, low-risk investment choice that is designed to preserve capital. They can play a central role in managing an investment portfolio.2

1. Medicare.gov, 2023
2. Medicare.gov, 2023

 

Related Content

Impact Investing or Philanthropy

Impact Investing or Philanthropy

This fun piece can help your clients explore the benefits of impact investing versus founding a philanthropy.

Good Health is Good Business

Good Health is Good Business

Good employee health can be great for the company’s bottom line.

What Is the Dividend Yield?

What Is the Dividend Yield?

Calculate the dividend yield of a holding and see what that means for income over time.

 

Have A Question About This Topic?







Thank you! Oops!

Estate Strategies of the Rich and Famous

The examples of famous celebrities underline the need for a clear estate strategy.

How Financial Professionals Are Compensated

Read this overview to learn how financial advisors are compensated.

Practical Moves to Safeguard Your Financial Progress

Explore these strategies to help protect your purchasing power in a world of rising costs.

View all articles

Historical Inflation

See how the purchasing power of a dollar has changed over time due to inflation.

What Rate Would I Need to Earn on My Savings?

Work backwards from your savings goal to find the rate of return you'd need to get there.

Social Security Tax Estimator

Estimate how much of your Social Security benefit may be subject to federal income tax.

View all calculators

Are Alternative Investments Right for You?

With alternative investments, it’s critical to sort through the complexity.

From Boats to Brokers

From the Dutch East India Company to Wall St., the stock market has a long and storied history.

Dreaming Up an Active Retirement

When you retire, how will you treat your next chapter?

View all videos