How to Choose the Best Fidelity Money Market Fund (2024)

FAQs

How do I choose a good money market fund? ›

Look for the best yield.

The yield is similar to an interest rate: the higher the yield, the higher the money market fund payout to you. Yields may fluctuate on a daily basis, so consider a fund's current yield and yield history.

Fidelity U. S. Treasury money market fund is the safest of the lot while Fidelity U. S. Government Reserves and Fidelity Government Money Market Fund are a close second. Money market funds investing in commercial paper or debt issued by municipalities tend to carry a bit more risk.

FDRXX – Fidelity Government Cash Reserves

Like SPAXX, FDRXX is another U.S. government money market fund. For all intents and purposes, it is basically an older version of SPAXX. Their holdings are nearly identical and they have the same yield and the same historical returns.

Just the Right Balance

Six to 12 months of living expenses are typically recommended for the amount of money that should be kept in cash in these types of accounts for unforeseen emergencies and life events.

If money does end up in the core position, since this is an investment account you want to optimize growth. Interest rates are currently extremely low, but if they rise in the future, SPAXX will provide higher returns, so choose it. TL;DR: It doesn't matter, but pick SPAXX.

The bottom line

Yes, SPAXX and FZFXX have slightly higher interest than the FCASH account, so that's what I would choose.

You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

What is the alternative to SPAXX Fidelity? ›

FDRXX: This is extraordinarily similar to SPAXX. In fact, the composition, description, overview, yield, and historical yield are virtually identical.

Although you can have only one core position, you can still invest in other money market funds. If you would like to change your core position after your account has been established, you can do so online or by calling a Fidelity representative at 800-544-6666.

Keep in Mind your Needs and Goals

The first and foremost thing you should consider while choosing an investment plan is to check whether it is capable of meeting your goals and needs. Once you have a clear idea of what you expect from the plan, it becomes easy to look for the investment plan.

How do I buy a Fidelity mutual fund? Select Accounts & Trade > Trade. If you have more than one eligible brokerage or mutual fund account, select the account in which you want to buy the fund. Click Trade Mutual Funds.

Best money market accounts & MMA rates. 4.55% APY: UFB Preferred Money Market Account (Member FDIC.) 3.40% (balances under $100k), 3.45% (balances $100k+) APY: Discover Money Market (Member FDIC.) 1.55% APY: CIT Bank Money Market (Member FDIC.)

Money market investing can be very advantageous, especially if you need a short-term, relatively safe place to park cash. Some disadvantages are low returns, a loss of purchasing power, and that some money market investments are not FDIC insured.

CD rates are typically higher than money market account rates. Banks have an incentive to give you better rates for CDs because you promise to give up access to your money until the end of the CD term.

The 50-30-20 rule is a common way to allocate the spending categories in your personal or household budget. The rule targets 50% of your after-tax income toward necessities, 30% toward things you don't need—but make life a little nicer—and the final 20% toward paying down debt and/or adding to your savings.

Can a money market account lose money? ›

However, the money is liquid, unlike money that's held in a CD. But you can still lose money in some cases, like if your money market account has high fees. Funds in a money market account can also lose purchasing power due to inflation. One of the best money market accounts can help you avoid these risks.

Fidelity Government Money Market Fund (SPAXX)

The fund is typically 99.5% or more invested in cash or cash equivalents in the form of short-term U.S. government securities or repurchase agreements that are fully collateralized by cash or such securities.

SPAXX normally consists of US Government securities, while SPRXX will invest in a wider range of securities including foreign and domestic securities. I have provided a direct link for both these funds below so you may more easily compare the two. Let us know if we can further assist!

The withdrawal will automatically come from the cash core in your account. We can walk you through it step by step in an online chat: http://go.fidelity.com/kaq5 or take care of the transfer for you over the phone at 800-544-6666. I hope this helps. I'm glad you were able to get it taken care of, Greg.

What is Fidelity's safest fund? The safest Fidelity funds are those in the lowest-risk categories. While it's not possible to determine which specific fund has the absolute lowest risk, the categories with the lowest Morningstar risk ratings are cash reserve and money market funds.

Over the most recent year-to-date, one-, three-, five- and 10-year periods, FLCEX has outperformed the S&P 500, despite a sustained turnover ratio above 80%.

Stability & safety

While not insured by the FDIC, the funds are required by federal regulations to invest in short-maturity, low-risk investments, making them less prone to market fluctuations than many other types of investments.

Why the stock market can be safer. Although the stock market produces volatile returns, it has a long history of outpacing inflation in the long run. So, if the money you have invested in the stock market isn't going to be used in the next few years, it's likely safer to keep your money invested than to take it out.

Fitch defines Money Market Funds with an 'AAAmmf' rating as having extremely strong capacity to achieve fund's investment objective of preserving principal and providing shareholder liquidity through limiting credit, market and liquidity risk.

Are money market accounts worth it right now? ›

If you want to earn a higher APY and you can meet a higher account minimum, a money market account is a good choice. It's also a smart option for people who need easy access to their money. If you know that you won't need the money for a while, and you want to earn an even higher APY, a CD works well.

If you're saving for something you'll need the money for in less than three to five years, saving in a money market fund may make sense for you. Money market funds are ideal for short-term saving because they invest in highly liquid securities with the objective of capital preservation and income.

Money market funds invest in highly stable, short-term debt securities that are very low risk. As investments go, money market funds are generally considered quite safe, although they are not entirely risk free.

The Fidelity Government Money Market Fund and Fidelity Treasury Money Market Fund (FZFXX) are money market mutual funds. You invest in the Fund/s through your core position, and you hold shares of the Fund in your account. Fidelity may, but is not required to, pay interest on FCASH balances.

For example, if your money market account has high fees or is not insured by either the FDIC or NCUA, you could be at risk of losing money. The best money market accounts generally avoid these risks. Plus, you can open them online.

Key Takeaways. Alternatives to money market mutual funds include high-yield savings accounts, money market deposit accounts, CDs, bonds, and bond funds. CDs and bonds are essentially a loan to an entity in exchange for payments in the form of yield.

Ramsey recommends a money market account not because the account will pay you a higher rate of interest, even though that is often the case. "Don't worry about how much interest the account earns -- your emergency fund isn't an investment," he explains. "That money isn't there to make you money.

Because they invest in fixed income securities, money market funds and ultra-short duration funds are subject to three main risks: interest rate risk, liquidity risk and credit risk. Interest rate risk measures the impact of changes in rates on the securities held by money market funds.

A high-yield savings account pays a much higher interest rate, but you have transfer limits and few, if any, accounts let you directly spend money. Money market accounts also tend to tie up more of your money, requiring higher minimum account balances than a high-yield savings account.

Can you lose money in a money market mutual fund? ›

You can lose money in a money market account in a few indirect ways. For example, if the interest rates on the account fall, the value of your balance will also decline. This is because you will get less than what you initially deposited when you withdraw your money.

The average money market account earns 0.23% Annual Percentage Yield (APY), according to the FDIC. The actual interest rate on a money market account may depend on the account balance and bank. Money market interest rates can change over time.

How do Money Market Funds Fail? There are many ways these funds fail: “breaking the buck,” forced liquidation, parent company bailout, frozen investments (illiquid), segregating bad assets, and failure to comply with investment policies are some of the main issues this paper will explore.