Avenues to use your money market funds
Money market funds are one of the closest substitutes to your bank savings account. They offer almost the same level of safety; however, they give you better return than your savings account. They invest in short-term debt instruments, cash, and cash equivalents that are rated high quality. It is for this reason that money market mutual funds are considered safe as they carry very low risk. Nevertheless, it is not only for the returns that you invest in money market funds. So what are the other avenues where you can use money market funds?
It can be used for your unexpected expenses. If you want to reskill yourself and want a sabbatical from your current job, money market funds will help you to sustain in such rainy days. It can also be used for taking that minor renovation of your house.
If you are planning to upgrade your car or want to make down payment of your house that you intent to buy in the next one to two years, a money market fund is a sensible place to save the money.
Use it for Systematic Transfer Plan (STP). If you want to invest in equity market and are not sure if lump sum investment will be safe or not, you can park your fund in the money market fund and then systematically, transfer the amount to equity funds. A money market fund can be a friendly home to the money awaiting investment as you gradually move it into your chosen investment.
If you are a business man, you can use this fund to hold your excess funds that you receive in your business.