Know about money market funds safety

Money market accounts are offered by banks. These are deposited accounts and these are launched to earn higher interest rates than saving accounts. FDIC insure the money market deposit accounts. Any way money market funds and money market mutual funds are not same.

Money market funds are mutual funds created for moderate investor to gain through purchasing low risk treasuries, short-term, commercial paper and bonds. They are not covered by Federal Deposit Insurance Corporation, even they are safe and they are invested in capital preservation.

Safety of money market mutual funds: At all times money market funds try to maintain a $1 per share value, they are not restricted to do so. Few money market funds went below $ 1 per share, otherwise called as “breaking the buck”.

Money market funds yield: Usually money market funds make money more than money market accounts. Anyway any government insurance program protect these funds. Banks sell the money-market mutual funds and also FDIC does not insure the these funds.