Having some extra cash stored away in a bank is of no use to anyone except maybe the bank. This is because each year inflation increases by at least 2% which in turn reduces the worth of the liquid cash. Therefore, if a person is looking to save some money for the longer term, it is best to opt for some kind of investment such as highest yielding money market funds. When considering an investment option, money market accounts and high-yielding accounts come into mind. But there is a term called money market funds which is not as common as the other two.

Money Market Funds

Money market funds are also known as money market mutual funds. It is a low risk investment. The aim in money market funds is to make maximum interest while still providing liquidity. This kind of fund is invested in high-quality debt products which last for a short term. This makes the investment a lot safer and the chances for a loss becomes minimum. Money market funds can be divided into three different categories:

1)      Prime

These kinds of money market funds are invested in bank debt securities or corporate debt securities. They are all short term investments.

2)      Government

These are invested in and backed by government debt securities. This makes them the safest form of investment.

3)      Tax-free  

These are mostly invested in municipalities issued debt obligations. But in some cases it is invested in some other entities which are also tax-free.

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Highest-Yielding Money Market Funds

Even though it may seem like the money market funds with highest yields are the best ones, that is not the case. In fact, the best money market fund is the one which is a mixture of low risk, low expenses and at the same time offers high yields. When making an investment in any money market funds, it is important to know that past performance of a fund does not mean that a fund will perform the same way in the future.

For your own peace of mind, it is important to make sure that you know every detail there is to know about a money market fund in which you are investing your money. Thorough research must be done before making a final decision about investment. Apart from knowing about its details, it is important to be comfortable with the investment amount. Minimum investment size needs to be set when picking out a market fund to invest in.

As per the research done on Forbes, some of the highest yielding money market funds are mentioned below along with their 7-day yields percentage:

Invesco Premier Portfolio- 2.42%

Vanguard Prime Money Market- 2.38%

Federated Prime Cash Obl.- 2.39%

Schwab Value Adv. Money- 2.37%

Fidelity Money Market Portfolio- 2.41%

When to Choose Money Market Funds?

A money market fund has low tolerance for loss can be liquidated very easily. If a person is to invest in a property, there is little to no chance that it can be sold immediately when the cash is required on an urgent basis. But on the other hand, if a person invests in money market funds, they can easily utilize the amount whenever they need the amount. This implies that anyone who is interested in investing some amount and may require cash on a short notice, should opt for money market funds.

There is no doubt that a money market fund is quite similar to a banks’ high yielding account. The only difference is that when the interest rate rises then the money market mutual funds rise proportionately as well. Any person who is looking to invest their cash in a safe place but may require it soon should definitely look into investing in money market funds.

As compared to Certificate of Deposit (CD) and treasury bills, money market funds are still better off in terms of investment. This is because they are lower risk but the return benefit attached with it is very high. Moreover, there is no maturity date attached with a money market fund. Hence, there is no withdrawal penalty attached with the money market funds. They can be liquidated at any point.

Anyone interested in saving for a vacation or purchasing a house in the near future should apply for money market funds. Anyone who needs an account to write a check whenever they want to take out the savings amount, money market funds are the best option as they always provide a check that a person can use for that purpose. Other than that, a person who wants to save some amount for emergency situations. Moreover, a savings account does not provide a high return as compared to the money market funds. This is why anyone interested in increasing their sales can also opt for money market funds.

One of the most commonly asked questions is whether a person can deposit some amount in the bank account or not. There are no limitations to depositing an amount in the money market funds account. Due to some federation limits, a person may withdraw a limited amount from such an account but they have no limits in depositing as much as possible.


Money market funds are a safe option to go for when a person is looking for a safe investment space. Most money market funds are high yielding. Low risk of loss is attached with these funds. Market funds should not be decided without thorough research. The market must be researched carefully. Different interest rates are offered by different platforms. The one proposing the maximum amount needs to be selected.

It must always be remembered that the yields of money market funds are never constant and keep on fluctuating. If one fund was highly yielding at one point, it is not necessary that it will be equally fruitful next time. Hence predictions cannot be made and nothing can be done precisely. But by performing a proper research of the market, the most suitable and generating option can be opted for. 

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