What is a Money Market Fund?

In my recent article about how to start an IRA with $1 in 15 minutes, I said that you would be putting your money into a money market fund. I thought I should explain in more detail what this is for those of you who decided to go this route, so that you are informed about and comfortable with where your money is. And for those of you who may have shied away from opening your IRA because you didn’t know what a money market fund was, let this be your last excuse!

A money market fund is a type of mutual fund that is legally required to invest in low-risk securities including government securities, certificates of deposit, commercial paper of companies, and other highly liquid and low-risk

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3 Responses to What is a Money Market Fund?

  1. disneysteve says:

    Thanks for this post. I have used a money market mutual fund for years and I often have to explain why I chose something non-FDIC insured. They are really just as safe and sometimes more convenient because you can have check-writing privileges with some of them.

  2. Amy F. says:

    Sometimes you can only write checks over a certain amount. With Fidelity, the check has to be for at least $500. I find this can be good for paying those occasional large bills (like insurance) if you have more money in your money market account than in your checking account. Of course, if you’re using the money market account as a savings account, you’ll want to replenish that money later.

  3. N Lewis says:

    Re: Money Market fund
    I bank in Canada at President’s Choice bank, a subsidiary of CIBC. While CIBC pays next to nothing on savings, without $5000 min. PC pays 4% from $1.00 up ! That’s only 4 cents but still as you go up that is higher than nearly every other bank here for those amounts. Also can access the bank machine either at Loblaws group of food stores or thru a regular CIBC machine at no charge.
    Good rate and available when needed. 90% of cash money stays in savings till needed and NO MER, even if small on a mutual fund!
    Thanks for letting me put in my 2 cents.

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