Banks often offer customers money market accounts, where the money that they put in will earn a bit more interest than it would in a conventional savings account. Banks’ money market accounts are typically insured by the Federal Deposit Insurance Corporation. By contrast, money market funds through brokers or mutual fund companies are not FDIC-insured and are thus considered slightly riskier than bank-offered money market accounts. Losing money in any money market fund or account, however, is virtually unheard of.
Money market funds are considered among the safest and most conservative of investments, by virtue of the fact that they hold their money in U. S. government securities, as well as higher-rated corporate “paper” and certificates of deposit. While no investment is completely risk-free, money market funds and accounts come as close as you can get.
Some mutual fund companies are waiving the expense ratio in view of the low rate of return in the current market.
Government securities - These consist of U. S. Treasury securities and securities issued by U. S. government agencies such as Freddie Mac, Fannie Mae and the Federal Home Loan Banks. Tax exempt securities - These are securities issued by national, state and local governments and non-profit organizations. They are usually exempt from federal income taxes and may also be exempt from state income taxes depending on the state. General purpose (prime) securities - These include commercial paper, corporate notes, certificates of deposit, and other private instruments.
The IBC report is compiled and distributed by iMoneyNet.
Think of money market funds and accounts as savings (or even checking) accounts. Some funds do offer check-writing privileges.
