Money market funds may be appropriate for investors who:
• Need access to their money in the near future
• Are looking for a current short-term rate of interest
• Are very conservative in their investment approach
Main Types of Money Market Funds
National tax-exempt money market funds: Seek income not taxed by the federal government by investing in municipal securities with relatively short maturities.
State tax-exempt money market funds: Invest predominantly in short-term municipal obligations of a single state, which are exempt from federal and state income taxes for residents of that state.
Taxable government money market funds: Concentrate on short-term financial instruments issued or guaranteed by the U.S. government, its agencies or instrumentalities.
Taxable non-government money market funds: Focus on a variety of money market instruments, including certificates of deposit of large banks, commercial paper and banker's acceptances.