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Investments: Characteristics Of

Money Market Funds

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A Money Market Fund is a type of mutual fund. Rather than invest in stocks and bonds, a money market fund invests in the money markets. The funds invest in short term debt obligations (from one day to one year). The main goal is to preserve the principal (the amount invested) and to obtain a reasonable return. To simplify accounting, the net asset value of interests generally remains fixed at $1.00. The interest rate fluctuates. Money market funds are considered as liquid as cash in a bank account. However, they are not insured by the Federal Deposit Insurance Corporation.

Money market accounts usually offer check-writing privileges.

Money market accounts are available at local brick-and-mortar and at online banks. If you want to check the rating of a money market fund, go to www.standardandpoors.com offsite link. Click on "Fund" then click "Money Market Funds"

NOTE: While generally considered safe, there is no guarantee that the value of a money market fund will not decline. The value of the obligations in which the funds invests may decline. Read the prospectus for a fund in which you're interested to understand the risk involved.


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