Exploring various aspects of Fidelity Money Market should help you understand how to choose the best Mutual Funds by matching your different investment goals. People have other investment goals for achieving various milestones in life, such as children’s education, buying a car, building or buying a house, children’s marriage, and retirement savings. Moreover, it is essential to set aside some money to create an emergency fund to take care of unprecedented events that require quick money to tide over some crises. Emergency funds provide a buffer so that you get the necessary financial support without borrowing or using your credit cards, which entail high interest. The fund is beneficial if you have debt, as you can avoid increasing your liability. In addition, Fidelity money market funds are an easy way to access your money in a savings account.
What is the Fidelity money market?
Fidelity, a US company, is a well-known name in the financial services sector that provides numerous investment options and support to investors with safe access to the money market. Investors accessing the money market with the help and guidance of the company gain free access as the company does not charge any trading commissions, and there are no transaction fees for more than 3,300 mutual funds. In addition, investors can access a mobile platform and various research tools to learn more about smart investing options that align with their investment goals. Among various trading and brokerage services, Fidelity is renowned for its large selection of Mutual Funds, including Money Market Funds.
What are Money Market Funds?
One of the safest investment options with minimal credit risk is to choose Fidelity money market funds. These are similar to any short-term savings plan but with the option of easy access to cash. These funds are most suitable for investors wishing to park their money for a year with minimal risk. If you have idle money in your savings account, you can earn better returns by investing in Money Market Funds. This type of Mutual Fund invests in debt securities with short maturities and the least risk. Either the government entities are the issuers of such securities or companies that borrow money in the short term and repay the principal along with interest.
One of investors’ goals in choosing Money Market Funds is to save for emergencies or meet their short-term goals. They might even choose these funds to diversify their investment portfolio by including funds with low volatility and lending more balance to the portfolio. Choosing a government money market fund is an excellent strategy to hold money quickly before moving it to another investment. It also helps to make or receive recurring payments to a brokerage account.
Based on the type of securities, the income from money market funds might or might not be exempt from income tax.
Types of Money Market Funds
There are three types of money market funds.
Government Money Market Fund – 99.5% of the fund’s assets include US government securities, repurchase agreements, and cash. When considered a core position in a brokerage account, the fund acts like a savings account that helps earn money on the savings.
Prime Money Market Fund – The fund’s assets go mostly towards investing in money market securities of foreign and domestic issuers dominated by the US dollar, repurchase agreements, and US government securities. Prime Money Market Funds provide higher returns than government money market funds.
Municipal Money Market Fund – The funds seek higher interest income accompanied by federal income tax exemption while maintaining the stability and liquidity of the principal. 80% of the funds’ assets go toward municipal securities exempt from federal income tax.
Fidelity money market rates follow the interest rate policy of the Federal Reserve, and the yields of money market funds are usually low. The short-term investment in money market funds is 397 days at maximum.
The Fidelity money market has much more to offer investors by providing professional guidance from a large group of research providers and a highly rated mobile app.
