How money market funds work?
The use of money market funds has become an essential part of a good portfolio and it’s important to understand how they work. A money market fund is basically a mutual fund, one created with the purpose of investing exclusively in cash and money market instruments. These instruments being investments such as commercial paper, US treasuries, certificates of deposit and repurchase agreements.
This works in similar ways to other mutual funds in the sense that you can issue redeemable units. It’s important to note that SEC guidelines need to be followed. One thing that is very important is to avoid confusing money market funds with money market accounts. The funds are sponsored by funding companies without guarantee of principal, while the accounts are provided by financial institutions.
Money market funds are definitely worth looking into. They are a risk like most investments, but they can produce substantial earnings, so the reward outweighs the risk in most cases.
I hope you enjoud the explaining of money market funds work
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