When you need your money to be safe, liquid, and earning more than a regular savings account, money market funds, a type of mutual fund that invests in short-term, high-quality debt like U.S. Treasuries, commercial paper, and certificates of deposit. Also known as cash funds, they’re the go-to for investors who want to avoid market swings but still earn interest. Unlike savings accounts, money market funds aren’t FDIC-insured—but many are backed by top-tier government and corporate debt, making them one of the safest places to hold cash outside of a bank.
They’re not just for retirees or cautious investors. Even active traders keep a portion of their portfolio in money market funds between trades. Why? Because they offer daily liquidity, low volatility, and yields that often beat traditional savings accounts—sometimes over 4% APY when rates are high. You won’t get the growth of stocks, but you also won’t lose value when markets dip. That’s why they’re a core part of cash management strategies, especially when paired with broker cash accounts or used as a buffer before buying stocks or bonds. They’re also used in short-term investments, low-risk holdings designed to preserve capital over weeks or months, like emergency funds or money set aside for taxes or upcoming expenses.
Some people confuse them with high-yield savings, bank accounts that pay higher interest rates than standard savings, but there’s a key difference: money market funds are mutual funds, not bank deposits. That means they’re not protected by the FDIC, but they’re still regulated by the SEC and must hold only the most liquid, credit-worthy assets. Most money market funds aim to maintain a stable $1 net asset value, so your principal doesn’t fluctuate. You’re not gambling—you’re just earning more than you would at your local bank.
And here’s the real win: when you’re not sure what to do with cash, money market funds let you sit tight without losing ground to inflation. They’re the quiet workhorse behind many portfolios—used by robo-advisors to hold uninvested cash, by retirees to cover 12 months of expenses, and by businesses to manage payroll float. You don’t need to time the market to use them. Just park your cash there and let it earn.
Below, you’ll find real strategies from investors who use money market funds to reduce stress, avoid bad timing, and keep their portfolios balanced. Whether you’re comparing them to cash management accounts, wondering if they’re right for your emergency fund, or just trying to understand why they’re in your brokerage’s default setting—this collection has the answers you need, no fluff included.
Money market funds offer a safe, liquid, and high-yield alternative to savings accounts for emergency cash. Learn why government funds are the best choice and how to set one up in minutes.
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