Sam Subramanian PhD, MBA. M oney market mutual funds like those offered by Fidelity Investments are indispensable instruments, providing liquidity and relative safety. Although not federally insured, Fidelity money market funds usually generate higher income than bank accounts.

They also enable investors to temporarily park cash before exchanging into long-term funds. Although money market funds may appear simple investments, you need to look beyond just current yield and expense ratio to figure out the best Fidelity money market fund for your hard-earned dollars.

And, this article helps you do just this. Before getting into the nitty-gritty, here is a quick word on the definition of a money market fund. Money market funds are financial instruments that invest in stable short-term securities like Treasury bills, bank CDs, commercial paper, repurchase agreements, or variable rate demand notes.

Their yields change based on the earnings they derive from investments. Fidelity offers 36 taxable and tax-exempt money market funds.

Savings and Money Market Accounts

To help you figure out which Fidelity money market fund is best for you, here are key differences among Fidelity money market funds for retail investors. Treasury Money Market Fund FDLXX invests nearly all of its assets in U. Treasury bills that are guaranteed by the federal government.

This fund is open to current account holders. Government Reserves FGRXX and Fidelity Government Money Market Fund SPAXX invest most of their assets in U. Treasury bills and debt instruments of Federal Agencies. Fidelity Cash Reserves FDRXXFidelity Select Money Market Portfolio FSLXX and Fidelity Money Market Fund SPRXX invest their assets in deposits issued by foreign banks and commercial paper issued by domestic and foreign companies.

These Fidelity money market funds often offer higher returns than those offered by U. Treasury and other government money market funds. Reap Rich Rewards with Fidelity FundsNetwork AlphaProfit applies time-tested, proven successful processes to select winners from several thousands of domestic, foreign, specialty and sector funds in Fidelity FundsNetwork.

You receive timely fund recommendations as well as market-beating model portfolios. Why spend hours researching for the best mutual funds, when you can make big money more easily the AlphaProfit way?

Subscribe to the AlphaProfit investment newsletter now! Fidelity Municipal Money Market Fund FTEXX and Fidelity Tax-Free Money Market FMOXX invest a major part of their assets in debt securities like variable rate demand notes issued by municipalities.

Fidelity offers state-specific municipal money market funds for Arizona, California, Connecticut, Massachusetts, Michigan, New Jersey, New York, Ohio, and Pennsylvania. These funds invest a major part of their assets in debt securities issued by municipalities in their namesake state.

Fidelity offers state-specific AMT tax-free money market funds for California, Massachusetts, New Jersey, and New York.

These funds invest a major part of their assets in debt securities issued by municipalities in their namesake state while normally avoiding private-activity municipal securities since interest from the latter is subject to the alternative minimum tax.

It is useful to evaluate Fidelity money market funds on four dimensions to determine the best fit. Income from different types of money market funds is treated differently for tax purposes. Dividends from government money market funds are totally or partially exempt from state income taxes hedging a forex position those from national municipal money market funds are exempt from federal income taxes.

Income from state-specific municipal money market funds is exempt from both federal and state income taxes. AMT tax money market account rates fidelity money market funds seek to provide income that is sheltered from the alternative minimum tax. You can maximize your after-tax income from a Fidelity money market fund by considering factors such as your marginal tax bracket and state of residence.

Qualified accounts such as Individual Retirement Accounts provide tax-deferred growth. Taxable money market funds are often a better choice than tax-exempt money market funds for investing monies in qualified accounts. Treasury money market fund is the safest of the lot while Fidelity U. Government Reserves and Fidelity Government Money Market Fund are a close second. Money market funds investing in commercial paper or debt issued by online typing work at home without investment tend to carry a bit more risk.

From applicability and usage perspectives, minimum amounts for opening an account, maintaining the account, and writing checks need to be considered.

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When analyzing Fidelity money market funds, you need to look beyond current yield and expense ratios. Fidelity Money Market Funds. Fidelity Select Money Market Portfolio.

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