Money Market Funds

Money market funds or principal stability fund is a safe investment that seeks to limit the risk to exposure to loss by investing in short term debt.

Money markets seek to keep a stable $1.00 net asset value (NAV), this $1.00 remains constant only the yield goes up and down. If the fund goes below $1.00 it means you have lost money and is called breaking the buck.

In the 37 years of money market funds only 2 funds have ever broke the buck, which makes these funds a relatively safe investment.

There are two types of funds

1 Taxable these funds invest in us treasuries, government securities, CDs, commercial papers, repurchase agreements, and banker acceptance.

2Non- Taxable These funds are limited to investing in short term debt obligations issued by federal tax exempt entities which normally have lower yields.

Principal stability funds can be good for you if you want a safe investment, but are not looking to make extraordinary returns.