BanxQuote Money Markets Index

finance a la shmoop. what is a money market fund? isn't it a strange concept

to think about going to a market to buy money? [man walks through grocery store]

well yeah it's strange but the practice exists and it's a huge multi trillion

dollar market today. the key word here is money and not investment. why such a big

diff? well because the notion of investing implies duration. that is when

you invest in a nice fixer-upper home or a tractor distribution company or shares

in a fat dividend-paying bank you're investing for presumably a long time [people stand in line]

like years maybe decades maybe centuries if you can find the right miracle pill.

but here we're talking about money like the stuff you can buy candy with. so it's

short term not long and a money market fund basically comprises many series of

pretty safe bonds that are all coming due in the next 30 to 90 days. sometimes [pie chart]

longer than that sometimes shorter but generally in the very near future. so why

would you care about a money market fund? well because it pays you slightly more

interest on your money than say a bank checking account. and lots of people in

corporations need cash just sitting around to pay their bills, so there are

tons of money market funds out there available and that's the gist of a money

market fund. we're sure you'll have plenty of experience with them by the

time you hit your sixth hundredth birthday day [people cheer and hold birthday cake]