Money market funds are low-risk investments for parking your cash, earning interest while providing very good liquidity. These funds are designed to offer stability and security, making them an attractive option for investors who prioritize preserving capital. Money market funds primarily invest in short-term debt securities such as Treasury bills, certificates of deposit, and commercial paper.
Many investors focus on total returns when comparing one fund against another. While it's good to know how much your money can grow, the primary objective of money market funds is capital preservation and liquidity. These funds aim to maintain a stable net asset value (NAV) of $1 per share, meaning they strive to keep their share price constant.
High-yield savings accounts and money market funds are both good options for short-term savings, but which one is right for you? Money market funds typically offer higher yields compared to traditional savings accounts, making them more attractive for investors seeking better returns on their cash. However, money market funds are not FDIC-insured, unlike savings accounts, which can be a crucial factor for some individuals.
Fidelity, one of the leading investment management companies, will no longer allow advisors to use their high-yielding money-market funds as the sweep account for new nonretirement accounts. This decision aims to provide greater flexibility and choice to investors, allowing them to select alternative sweep options that align with their individual needs and preferences.
In this article, Nick Sudbury discusses three popular money market funds with Fidelity Personal Investing customers. These funds include the Fidelity Government Money Market Fund (ticker: SPAXX), Fidelity Treasury Money Market Fund (ticker: FZFXX), and Fidelity Money Market Fund (ticker: SPRXX). Each fund has its own unique characteristics and investment objectives, catering to different investor preferences.
Money market funds are a good option for investors wanting stability and liquidity. These funds provide daily liquidity, allowing investors to access their funds quickly and easily when needed. Additionally, money market funds are considered to be low-risk investments due to their focus on high-quality, short-term debt securities.
A breakdown of the different types of money market funds and how they differ from money market accounts can help investors make informed decisions. Money market accounts are offered by banks and credit unions, while money market funds are managed by investment management companies. Money market funds typically offer higher yields compared to money market accounts, but they are not insured by the FDIC.
Investing in mutual funds has been a popular choice among investors for decades, and Fidelity Investments is one of the largest mutual fund providers. Fidelity offers a wide range of mutual funds, including money market funds, providing investors with various options to meet their investment goals and risk tolerance.
Ticker: SPAXX, FZFXX, SPRXX
