Money market mutual funds (MMF) are excellent places to save money for an emergency fund or for other short-term goals. These are extremely popular investments due to their flexibility and liquidity. Money market mutual funds are short term investments. These funds are offered by banks, brokerages and mutual fund companies.

Money market mutual funds act as building block for a new investor on his way to creating an investment portfolio. Investors use money market funds to hold cash between investments. It is easy for investors to place more money into this fund or remove money when it is needed. There are two types of money market funds: taxable and tax-free. The taxable funds will usually pay a higher yield, but they aren't for everyone.

Making investment in MMF is same as committing funds in saving account. But money market mutual funds carry higher rate of interest than a normal saving account. Investors get number of benefits by investing in money market mutual funds. These funds provide safety to investors as they invest in high-quality, short-term instruments issued by the federal government, corporations, municipalities, and banks.

These are good investment options for small and casual investors. In addition, money market mutual fund is a great way to save money without having to pay federal, state, and local taxes on it. Municipal money market funds can provide state and federal tax-free income, which can be beneficial for those in higher tax brackets. However it should be remember that each investment carries some risk. Invest large sum of money into a money market funds to get good rate of return with small risk.