money market mutual fund

Definition

An open-end mutual fund which invests only in money markets. These funds invest in short term (one day to one year) debt obligations such as Treasury bills, certificates of deposit, and commercial paper. The main goal is the preservation of principal, accompanied by modest dividends. The fund's Net Asset Value remains a constant $1 per share to simplify accounting, but the interest rate does fluctuate. Money market funds are very liquid investments, and therefore are often used by financial institutions to store money that is not currently invested. Unlike bank accounts and money market accounts, most deposits are not FDIC insured, but the risk is extremely low (only those funds administered by banks are FDIC-insured, but some others are privately insured). Although money market mutual funds are among the safest types of mutual funds, it still is possible for money market funds to fail, but it is unlikely. In fact, the biggest risk involved in investing in money market funds is the risk that inflation will outpace the funds' returns, thereby eroding the purchasing power of the investor's money. also called money fund or money market fund.

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We had decided to dabble with a money market mutual fund, as it seemed like there was potential benefit for doing so.

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Once he was established in his career, John decided to invest some of his savings in a Money Market Mutual Fund for growth potential.

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For a money market mutual fund, income can be either taxable or tax exempt, depending on the types of securities in which the fund invests.

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