Types of Investment : Money Market Funds

Money Market Funds Basics:

Money market funds are mutual funds. 

Hmm?

Difference is,

They don't invest in stocks but treasury bills (e.g. notes and bonds with less than 13 months until maturity), popular profitable paper, bank notes, and other high-quality, short-term debt instruments which  shouldn't be confused with money market accounts, or money market deposit accounts, which are FDIC-insured but pay much lesser rates on average).

*Federal Deposit Insurance Corporation, FDIC

Money market capitals attempt to maintain a constant $1.00 per share NAV, so their risk contact is non-existent when compared with stock and bond funds.

Money market funds are not assured or guaranteed by the government (or anyone else), but the Securities and Exchange Commission heavily regulates them; they have a number of restraints on the quality, maturity and diversity of the securities they may invest in.

Though it certainly is a prospect, no retail investor has ever lost money in a money market fund.

While nothing is risk-free, money market funds have had a far better track record than banks in their 25 year history. 


Remember, even with money market funds, return equals risk (a repercussion of "there's no free lunch").