Money market funds

There you go - we now have a good understanding of what a Money Market Fund is, their different types and things to keep in mind when picking the right MMF. 💸

Here’s a quick summary of the main points!

In this learning guide, you’ve learned:

🔹 Money Market Funds (MMFs) are mutual funds investing in short-term debt like treasury bills and commercial papers, designed to preserve capital and provide liquidity with modest returns, usually better than the interest rate bank deposits offer.

🔹 Originating in the 1970s during a high inflation period, they offered a refuge for investors seeking better interest rates than traditional banks.

🔹 Types of MMFs include:

• Prime MMFs for those seeking a balance of safety and better yield.
• Government MMFs for conservative investors prioritizing capital safety.
• Tax-exempt MMFs for individuals sensitive to tax implications.
• Retail and Institutional MMFs cater to individual and large-scale investors, respectively.

🔹 Choosing an MMF involves understanding personal investment objectives, evaluating fund managers’ performance, and being cautious of associated fees.

🔹 While MMFs offer a sense of stability and liquidity, they lack the insurance cover traditional bank deposits usually provide.

Until next time, keep your investment spirits high, and never stop learning! 🎓

-

Keep in mind that when you invest, your capital is at risk, and this learning guide is for information purposes only and is not intended as investment advice.