Money Market Funds

Before we delved into money market funds, let’s have a clear picture of what a money market is. The money market refers to a part of the financial market wherein the financial instruments traded are with high liquidity and extremely short maturities. Usually, participants of the money market see the market as a good way to borrow or lend money in a short term. The products in the money market are federal funds, municipal notes, negotiable certificates of deposit or CDs, banker acceptances, commercial paper, US treasury bills, and repurchase agreements or repos.

Now that you have an idea of what a money market is, let’s talk about money market funds. A money market fund is a mutual fund where investments are exclusive to money or money-equivalent securities. Since it is a mutual fund, it follows the regulations set by the Securities and Exchange Commission. For example, the average maturity of the products in the money market is ninety days.

Money market funds are regarded as valuable tools for investors. We have listed down three reasons which will convince you that money market funds pay and pay well.

1.Money market funds are safe bets.

2.Money market funds equal to low initial investment.

3.Money market funds are accessible.