Money Market Fund Invests in short term money market instruments such as T-Bills, and commercial paper, which is the corporate version of a T-Bill. Money market gives you a short-term parking lot for your money, and are generally very stable. If you’re putting money away for a down payment on a home in the next few months, this would tend to be the most sensible place to put your money. Or maybe if you came into an inheritance, and you wanted somewhere to park the cash until you figure out how to invest it, this can also work. The unit value on Money Market funds is usually constant – the NAV is calculated each day and credited to owners of the fund units. Then, each month or quarter, whatever interest has accumulated is paid out. Since this is interest income, you can expect that it will be taxed the same as employment income if you hold money market in a regular savings account. Benefits – short term stability Drawbacks – Some money market funds have a fixed, guaranteed NAV, but oth...
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