What is a money market fund?

A money market fund is a type of mutual fund that invests in short-term, high-quality, and low-risk debt securities such as Treasury bills, certificates of deposit, and commercial paper. Money market funds are designed to offer investors a safe place to park cash while earning a small return, often slightly higher than that of a traditional savings account. They are considered low-risk investments, making them popular for individuals looking for liquidity and safety. While money market funds offer lower returns compared to more volatile investments like stocks, they provide stability and are often used for short-term savings or emergency funds.