Money market funds hold $8.4 trillion in assets as of June 2026 — one of the largest pools of short-term savings in US financial history, growing 13% year-over-year. They sit inside brokerage accounts at Fidelity, Vanguard, and Schwab and pay competitive yields on cash that would otherwise earn 0.40% in a standard bank account. Yet many investors who hold them don’t fully understand what they are, how they work, what the risks are, and how they compare to a high-yield savings account. Here is the complete explanation.

Table of Contents

• The $8.4 Trillion Cash Instrument Most People Know Nothing About
• What Is a Money Market Fund? The Plain-English Definition
• What Money Market Funds Actually Hold
• The Three Types of Money Market Fund
• How the $1.00 NAV Works — and What ‘Breaking the Buck’ Means
• How Money Market Fund Yields Work: The 7-Day SEC Yield
• How Expense Ratios Affect Your Net Return
• The Major Money Market Funds in 2026: VMFXX, SPAXX, FDLXX, SWVXX
• Safety: FDIC vs SIPC vs No Insurance — How Investors Are Actually Protected
• State Tax Advantages: When a Money Market Fund Beats a HYSA on After-Tax Return
• Money Market Fund vs High-Yield Savings Account: The Complete Comparison
• Money Market Fund vs Money Market Account: The Critical Distinction
• Who Should Use a Money Market Fund?
• Conclusion: The Right Parking Spot for Your Cash in 2026
• Frequently Asked Questions

Yield Comparison: MMF vs Bank Savings

MMF Industry Growth: Total Net Assets 2020-2026

MMF vs HYSA vs MMA: Side by Side Decision Guide

The $8.4 Trillion Cash Instrument Most People Know Nothing About

As of June 2026, 293 registered money market funds in the United States hold a combined $8.4 trillion in net assets — up 13% from June 2025 (SEC Division of Investment Management, Form N-MFP data, updated August 19, 2026). That $8.4 trillion represents one of the largest concentrations of short-term savings in the history of US finance. The money sits in brokerage accounts at Fidelity, Vanguard, and Charles Schwab, in corporate treasury accounts, in institutional portfolios, and increasingly in the accounts of retail investors who discovered that their idle brokerage cash could earn a competitive yield rather than collecting 0% as an unsettled settlement balance.

Most investors who hold money market funds — either by choosing them deliberately or because their brokerage set them as the default cash sweep — understand them at the level of ‘it’s where my cash earns interest.’ That understanding is sufficient to collect the yield. It is not sufficient to make a well-informed decision about which type of fund to use, how the risk profile compares to a high-yield savings account, what the tax implications are for investors in high-tax states, or what ‘breaking the buck’ means and whether it should concern them.

This guide covers all of it: the plain-English explanation of what a money market fund is and how it works, the three types of fund, the $1.00 NAV mechanism and the history of the two times it failed, the 7-day SEC yield as the correct metric for comparison, the expense ratio’s effect on net returns, the specific major funds at each platform in 2026, the FDIC vs SIPC vs no-insurance question, the state tax advantage for Treasury fund investors, and the complete comparison with high-yield savings accounts.

$8.4 trillion in US money market fund net assets as of June 2026 (+13.0% YoY; SEC). 293 registered funds (+5.8% YoY; SEC August 19, 2026). Top government MMF gross yields September 2026: approximately 4.0–4.5% 7-day SEC yield. National average savings account: ~0.40–0.60% APY (FDIC; Bankrate). Best HYSA rates: ~4% APY. Breaking the buck: only 2 documented cases in history. SEC Rule 2a-7 WAM cap: 60 days. SIPC coverage at broker: up to $500,000/customer.

What Is a Money Market Fund? The Plain-English Definition

A money market fund is a type of mutual fund that invests in short-term, high-quality debt instruments. It is designed to achieve three specific goals simultaneously: preserve the investor’s principal (by maintaining a stable $1.00 net asset value per share), provide easy daily liquidity (shares can be redeemed on any business day), and generate a modest yield from the interest payments on the debt instruments it holds.

Wealthvieu’s 2026 money market fund guide defines it concisely: ‘Money market funds are mutual funds that hold short-term, high-quality debt — primarily US Treasuries, government agency securities, and corporate commercial paper. They’re designed to maintain a stable $1.00 per share price and pay out interest as dividends.’

The key structural features that make a money market fund distinct from other mutual funds:

• Short maturity: the fund can only hold securities with a remaining maturity of 397 days or less (approximately 13 months), and the portfolio’s weighted average maturity cannot exceed 60 days (SEC Rule 2a-7). This short maturity profile limits interest rate risk and means the portfolio turns over frequently, keeping the yield closely aligned with current short-term interest rates.
• High credit quality: SEC rules require money market funds to hold only ‘eligible securities’ that are short-term, high-quality, and issued by creditworthy entities. Government funds can only hold US government securities. Prime funds can hold corporate commercial paper, but only from highly rated issuers.
• Stable $1.00 NAV: most money market funds are designed to maintain a net asset value of exactly $1.00 per share. When you invest $1,000, you own 1,000 shares worth $1.00 each. You earn yield through dividends, not through share price appreciation.
• Daily liquidity: shares in a money market fund can be purchased and redeemed on any business day. There is no lock-up period, no early withdrawal penalty, and in most cases settlement is same-day or next-day.

What Money Market Funds Actually Hold

The specific securities inside a money market fund depend on the fund type, but all operate within the constraints of SEC Rule 2a-7. The most common holdings:

• US Treasury bills (T-bills): short-term US government debt with maturities from a few days to 52 weeks. The highest credit quality available. Interest is exempt from state and local income taxes, making T-bill holdings particularly valuable for investors in high-tax states.
• US government agency securities: debt issued by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, and direct obligations of agencies like the Federal Home Loan Banks. Not technically backed by the full faith and credit of the US government (with some exceptions), but considered near-sovereign in credit quality.
• Repurchase agreements (repos): short-term borrowing arrangements where one party sells securities (typically Treasuries) to the fund with an agreement to buy them back at a higher price on a specified date. The spread between the sale price and the repurchase price represents the fund’s return. Government MMFs use repos collateralised by government securities. Repos are typically overnight or very short-term, providing extreme liquidity.
• Commercial paper (prime funds only): short-term unsecured corporate debt, typically with maturities of less than 270 days. Issued by corporations and financial institutions. Commercial paper carries slightly more credit risk than government securities, which is why prime funds typically yield slightly more than government funds.
• Bank certificates of deposit (prime funds only): short-term time deposits from highly rated banks. Subject to credit risk of the issuing bank, but strictly limited to investment-grade issuers under Rule 2a-7.
• Municipal notes (tax-exempt funds only): short-term debt issued by state and local governments. Interest is exempt from federal income tax, and often from state tax in the issuing state.

The result of investing only in these instruments is a portfolio with extremely short maturities (average under 60 days), very high credit quality, and very high liquidity. The fund earns interest daily, and that interest is passed to investors as daily dividend accruals that are typically credited monthly.

The Three Types of Money Market Fund

Not all money market funds are the same. The three main categories have different investment objectives, different risk profiles, different yield levels, and different tax treatment:




The comparison between government and prime money market funds in 2026 often favours government funds on a risk-adjusted and tax-adjusted basis, especially for investors in high-tax states. The yield premium of prime funds (typically 0.05–0.25% above government funds) does not compensate for the additional credit risk and loss of the state tax exemption in most scenarios. Wealthvieu (April 2026): 'Government money market funds (holding only Treasuries and agency securities) are the safest type.' For most retail investors, a low-cost government MMF is the appropriate default.

How the $1.00 NAV Works — and What ‘Breaking the Buck’ Means

The stable $1.00 net asset value (NAV) is the defining feature of money market funds and the reason they are used as cash equivalents. When you invest in a money market fund, you buy shares at $1.00 each. When you redeem, you receive $1.00 per share back. The fund pays you the interest it earns on its portfolio in the form of daily dividend accruals that are credited to your account (typically monthly in aggregate, or reinvested as additional shares).

Unlike a stock fund or bond fund, where the NAV fluctuates daily as the underlying securities’ market prices change, a money market fund uses accounting methods (primarily amortised cost accounting, in which securities are carried at purchase price plus accrued interest rather than market price) to maintain the $1.00 NAV. The SEC’s Rule 2a-7 framework sets the conditions under which this stable NAV treatment is permitted — the short maturity, high quality, and daily liquidity requirements all exist to keep the portfolio value close enough to par that the $1.00 NAV is accurate.

‘Breaking the buck’ is the term used when a money market fund’s NAV falls below $1.00 per share. This is the primary risk that money market fund investors face. The history of this event is extremely brief:

• 1994 — Community Bankers US Government Money Market Fund: the only retail money market fund in history to break the buck before the Reserve Primary Fund incident. The fund’s NAV fell to $0.96 due to losses on adjustable-rate mortgage securities. Institutional investors lost money; retail investors were made whole by the fund’s adviser.
• September 2008 — Reserve Primary Fund: the defining event in money market fund history. The Reserve Primary Fund held approximately $785 million in commercial paper issued by Lehman Brothers. When Lehman filed for bankruptcy on September 15, 2008, the paper became worthless, dropping the Reserve Primary Fund’s NAV to $0.97. This was the first time a major retail money market fund broke the buck, triggering the first mass run on money market funds in history and requiring a US Treasury guarantee programme to halt the cascade. The event led directly to the SEC’s 2010 and 2014 rule reforms that significantly tightened money market fund regulation.

Since 2008, no retail money market fund has broken the buck. The post-2008 regulatory reforms under Rule 2a-7 require higher liquidity buffers, shorter maximum maturities, higher minimum credit quality, and better disclosure. The 2024 amendments to Rule 2a-7 added further liquidity requirements (daily liquid assets at least 10% of total assets; weekly liquid assets at least 30%) to reduce the risk of runs.

Breaking the buck is extremely rare — only two documented cases in the history of US money market funds — but it is not impossible. The risk is not zero, and money market funds are not FDIC-insured. For most government money market funds holding US Treasuries and agency repos, the practical risk of principal loss is extremely low — the underlying assets are the obligations of the US government. For prime funds holding commercial paper, there is a non-trivial (though still very low) credit risk component. Investors who cannot accept any principal risk should use FDIC-insured bank products.

How Money Market Fund Yields Work: The 7-Day SEC Yield

The yield on a money market fund is expressed as the 7-day SEC yield — the standardised method mandated by the SEC for comparing money market fund returns. The 7-day SEC yield represents the annualised net income earned by the fund over the most recent 7-day period, calculated as:

7-Day SEC Yield = (Net income earned per share over 7 days ÷ Beginning NAV per share) × (365 ÷ 7) × 100
This standardisation is specifically designed for comparison — so that when you look at two different money market funds, you are comparing the same quantity on the same time basis. The 7-day SEC yield reflects current market conditions for short-term interest rates, which is why it can and does change daily.

The key relationship between money market fund yields and the Federal Reserve is direct and rapid: when the Fed raises the federal funds rate, money market funds begin receiving higher interest payments on their short-term holdings almost immediately (since average maturity is under 60 days, the portfolio rolls over quickly into higher-yielding securities). When the Fed cuts rates, money market fund yields fall within weeks. This is why money market fund yields tracked the Fed’s 2022–2023 rate hikes very closely — rising from near-zero to above 5% as the Fed funds rate climbed to 5.25%–5.50% — and have moderated as the Fed has cut and held rates in 2024–2026.

Example: Yield comparison in practice: two government money market funds, same asset class. Fund A: 5.00% gross yield, 0.40% expense ratio → 4.60% net 7-day SEC yield. Fund B: 4.90% gross yield, 0.10% expense ratio → 4.80% net 7-day SEC yield. Fund B wins, despite the lower gross yield, because the expense ratio differential is larger than the gross yield differential. On a $50,000 balance over one year: Fund A at 4.60% net earns $2,300. Fund B at 4.80% net earns $2,400. $100 more from the lower-fee fund, compounding. Source methodology: Wealthvieu (April 2026). Illustrative — not financial advice; actual yields change daily.

How Expense Ratios Affect Your Net Return

The expense ratio is the annual fee charged by the fund manager, deducted from the fund’s gross yield before it is distributed to investors. For money market funds, where yields are typically in a 4–5% range rather than the double digits of equity funds, the expense ratio has a proportionally significant effect on net return.

The relationship is simple: net 7-day SEC yield = gross yield − expense ratio. A fund with a high expense ratio is effectively charging you for the privilege of holding the exact same Treasury bills you could access at much lower cost from a competitor. In the money market fund space in 2026, expense ratios range from approximately 0.01% (Fidelity’s government funds) to above 0.50% for some institutional or smaller fund families. The difference between a 0.10% and a 0.40% expense ratio is 0.30% per year — which on a $100,000 balance is $300 per year that flows to the fund manager rather than your account.




All fund details are approximate and as of 2026 where available; expense ratios may change. Verify current yields directly on the fund provider’s website before investing. Past yields do not guarantee future returns.

Safety: FDIC vs SIPC vs No Insurance — How Investors Are Actually Protected

One of the most important distinctions between money market funds and bank savings accounts is the nature of the protection covering each. Understanding this precisely is the key to making an informed choice:

• FDIC insurance (Federal Deposit Insurance Corporation): covers bank deposits — including high-yield savings accounts, traditional savings accounts, money market deposit accounts (MDAs), and CDs at FDIC-insured banks. Coverage: up to $250,000 per depositor, per institution, per ownership category. FDIC insurance protects against the bank failing. It also protects against losses: if a bank fails with your FDIC-insured deposits, you receive your full principal and accrued interest up to the limit, guaranteed by the US government.
• SIPC insurance (Securities Investor Protection Corporation): covers investment accounts at registered broker-dealers — including accounts holding money market funds. Coverage: up to $500,000 per customer per brokerage firm (including up to $250,000 in cash). SIPC insurance does NOT protect against investment losses or a money market fund breaking the buck. It protects against the brokerage firm failing and misappropriating customer assets (fraud). If your money market fund breaks the buck while held at a solvent Fidelity or Vanguard, SIPC provides no protection.
• No insurance (for losses from fund performance): a money market fund’s principal loss — the risk of breaking the buck — is not covered by any government insurance. The risk is very low for government funds, somewhat higher for prime funds, and has only materialised twice in the entire history of US money market funds.

YieldFinder.app (September 2026) summarises the SIPC position precisely: ‘SIPC covers protection against brokerage firm failure, not investment losses. Fund assets are held separately from the fund company’s assets, providing additional protection.’ This separation of assets is important: even if the fund company (say, Vanguard) were to fail, the assets of VMFXX (the US Treasury bills and repos) are held in custody separately and cannot be used to satisfy the fund company’s creditors. Investors own those assets, not the fund company.

For government money market funds holding primarily US Treasury bills, the practical safety profile is very close to FDIC insurance — because the underlying assets are direct obligations of the US government, which are the most creditworthy securities on the planet. The difference is that the protection mechanism is different (asset segregation rather than government guarantee) and that the fund theoretically could break the buck under extreme stress even with Treasury holdings. For balances over $250,000 where FDIC insurance is limited, a government MMF holding T-bills may be comparably or more effectively protected than a single-institution bank account above the FDIC limit.

State Tax Advantages: When a Money Market Fund Beats a HYSA on After-Tax Return

One of the most significant but least discussed advantages of government money market funds is their state and local income tax treatment. Interest earned on direct obligations of the US government (Treasury bills, Treasury notes) is exempt from state and local income taxes under federal law. Many government money market funds — particularly Treasury-focused ones like FDLXX (Fidelity Treasury Only) and the Treasury component of VMFXX — distribute dividends that carry this state tax exemption.

Wealthvieu (April 2026) explains the mechanism: ‘If a government money market fund invests at least 50% of its assets in direct US government obligations (like T-bills), the dividends attributable to those obligations are exempt from state income taxes in most states. This can provide meaningful additional after-tax returns for investors in high-tax states.’

Example: State tax advantage calculation (hansgoldstein.com, June 27, 2026; illustrative methodology): Investor in California, 32% federal bracket + 9.3% CA state bracket. $100,000 in VMFXX (government MMF, 50% of dividends from direct Treasury obligations). Gross yield: 4.50%. Tax on Treasury portion (50%): $4,500 × 50% × 32% federal rate = $720 (FICA not applicable). State tax savings: $4,500 × 50% × 9.3% CA rate = $209 per year in saved state tax. VMFXX after-tax yield vs equivalent fully-taxable HYSA after-tax yield: VMFXX wins by approximately $200-$770 per year on $100,000 depending on exact Treasury % and tax situation. For 100% Treasury fund (FDLXX): the saving is proportionally larger. Illustrative only; not tax advice. The precise after-tax advantage depends on your marginal state rate, the fund's annual Treasury percentage (published annually by fund providers), and your total tax situation. Consult a tax professional.

Money Market Fund vs High-Yield Savings Account: The Complete Comparison

Money Market Fund vs Money Market Account: The Critical Distinction

The naming confusion between ‘money market fund’ and ‘money market account’ (MMA) is among the most common in personal finance, and it matters because the two products are fundamentally different:

• Money market account (MMA): a bank deposit product — not a fund, not a security. Offered by banks and credit unions. FDIC or NCUA insured up to $250,000. Typically offers a higher interest rate than a standard savings account. Usually comes with limited check-writing and debit card access. Rate set by the bank and can be changed at any time. Examples: Discover Money Market, Capital One 360 Money Market. Not a mutual fund; not regulated by the SEC.
• Money market fund (MMF): a mutual fund regulated by the SEC under the Investment Company Act of 1940. Not a bank product. Not FDIC-insured. Holds a portfolio of short-term debt securities. Accessed through a brokerage account. Examples: VMFXX, SPAXX, SWVXX.

SmartCashFlow.org (May 2026) makes the distinction explicitly: ‘“Money market accounts” at banks (Discover Money Market, Capital One 360 Money Market) are NOT money market funds — they are bank deposit accounts with FDIC insurance but typically lower yields than HYSAs.’ For investors evaluating their cash management options, the first question is always which product type they are looking at: bank deposit (MMA or HYSA) or mutual fund (MMF). The label ‘money market’ appears on both but describes two entirely different instruments.

Many people looking for 'money market accounts' on their bank's website are actually finding bank deposit products (MMAs) rather than money market mutual funds. The two have almost nothing in common except the name. If you want a money market mutual fund, you need a brokerage account at Fidelity, Vanguard, Schwab, or similar. If you want FDIC-insured bank interest, you need a money market account or high-yield savings account at a bank. Read the product description carefully before opening.

Who Should Use a Money Market Fund?

Money market funds are specifically suited to certain investor profiles and not to others. The following situations represent the strongest case for using a money market fund:

• Investors with existing brokerage accounts: if you already hold investments at Fidelity, Vanguard, or Schwab, a money market fund is typically already available as the default settlement fund or cash sweep. Using it requires no new account, no transfer, and no minimum. It is the path of least resistance for keeping idle brokerage cash productive. InvestLane (February 2026): ‘For money market funds, you need a brokerage account. Major platforms like Fidelity, Schwab, and Vanguard all offer proprietary money market mutual funds, many of which automatically serve as the default core position for uninvested cash.’
• Investors with large cash balances above $250,000: FDIC insurance at a single bank covers only $250,000. A government money market fund holding US Treasury bills provides per-asset protection (the Treasuries are owned by the fund investors, not the fund company) rather than a $250K government guarantee cap. For individuals or families with $500,000+ in cash, a government MMF may offer more effective protection than concentrating in a single FDIC institution.
• Investors in high state income tax states: as discussed in Section 10, the state tax exemption on Treasury dividends can meaningfully improve the after-tax yield of government MMFs for investors in California (9.3% state rate), New York (up to 10.9%), Oregon (9.9%), Minnesota (9.85%), and similar high-rate states. HYSAs do not provide this exemption.
• Short-term cash parking while awaiting investment: for cash awaiting deployment into the market — between selling one position and buying another, for example — a money market fund in a brokerage account is the natural vehicle. It earns a competitive yield with same-day liquidity and no friction.

Conversely, money market funds are probably not the right tool for: pure emergency fund storage (where FDIC insurance’s absolute guarantee has clear value), investors without brokerage accounts who would need to open one purely for MMF access, or anyone for whom any theoretical principal loss risk (however infinitesimal) is unacceptable.

Conclusion

Money market funds have grown to $8.4 trillion in assets for a straightforward reason: they offer competitive yields on cash that would otherwise earn nothing, with daily liquidity, very low principal risk, and for government funds — an additional state tax advantage that can provide meaningful after-tax returns for investors in high-tax states.

Understanding them fully means knowing three things: what they hold (short-term, high-quality debt — primarily Treasuries, agency securities, and repos), how they work (stable $1.00 NAV maintained through short-maturity portfolios; daily dividends; 7-day SEC yield as the comparison metric), and what risks they carry (not FDIC-insured; breaking the buck is possible but has only occurred twice in history; SIPC covers brokerage failure, not fund losses). With that understanding, the choice between a government money market fund, a prime fund, a HYSA, or a money market account reduces to a straightforward set of questions about tax situation, account access, balance size, and risk tolerance.

For most investors who already have a brokerage account, a government money market fund — VMFXX at Vanguard, FDLXX at Fidelity for high-tax states, SWVXX or a Treasury fund at Schwab — is the most efficient use of idle cash in 2026. It earns competitive yields, qualifies for state tax exemption, settles the same day, and has a security profile that for practical purposes is as safe as any instrument available in the market.

Frequently Asked Questions

What is a money market fund in simple terms?

A money market fund is a type of mutual fund that invests in short-term, high-quality debt instruments — primarily US Treasury bills, government agency securities, and repurchase agreements (for government funds), or additionally commercial paper and bank CDs (for prime funds). It is designed to maintain a stable $1.00 share price, pay interest daily as a dividend, and allow investors to buy and sell shares on any business day with no lock-up period. In 2026, government money market funds at major brokerages like Fidelity, Vanguard, and Charles Schwab pay approximately 4.0–4.5% gross 7-day SEC yields on cash that would earn 0.40–0.60% in a standard bank savings account. Money market funds are regulated by the SEC, not FDIC-insured, and hold $8.4 trillion in assets as of June 2026 (SEC data, updated August 19, 2026).

Are money market funds safe?

Money market funds are very low risk but not risk-free and not FDIC-insured. The primary risk is 'breaking the buck' — the fund's NAV falling below $1.00 per share. This has only occurred twice in the entire history of US money market funds: in 1994 (Community Bankers US Government Money Market Fund) and in 2008 (Reserve Primary Fund, which held Lehman Brothers commercial paper). For government money market funds holding US Treasury bills and repos backed by Treasuries, the practical risk of principal loss is extremely low because the underlying assets are US government obligations. For prime funds holding commercial paper, the credit risk is slightly higher. Accounts at registered broker-dealers are protected by SIPC (up to $500,000 per customer) against brokerage failure — not against fund losses. Vanguard (July 2026): 'While money market funds are designed to be low risk and maintain a stable net asset value, it's possible to lose money.'

What is the 7-day SEC yield and why does it matter?

The 7-day SEC yield is the standardised method for comparing money market fund returns, mandated by the SEC. It represents the annualised net income earned by the fund over the most recent 7 days. It is 'net' because it is calculated after the fund's expense ratio is deducted. The 7-day SEC yield is the only meaningful number to use when comparing money market funds, because it accounts for both the fund's gross income and its fees. A fund with a 5.00% gross yield and a 0.40% expense ratio has a 4.60% net 7-day SEC yield. A fund with a 4.90% gross yield and a 0.10% expense ratio has a 4.80% net yield — meaningfully better, despite the lower gross yield. Always compare money market funds by 7-day SEC yield, not by gross yield or by any other advertised return metric. Yields change daily with short-term interest rates, so check the current yield on the fund provider's website before investing.

What is the difference between a money market fund and a money market account?

These are fundamentally different products that share a confusing name. A money market account (MMA) is a bank deposit product — FDIC-insured up to $250,000 per depositor per institution, offered by banks and credit unions, typically with check-writing and debit card access. It is not a mutual fund and is not regulated by the SEC. A money market fund (MMF) is a mutual fund regulated by the SEC under the Investment Company Act of 1940. It holds a portfolio of short-term debt securities, is not FDIC-insured, and is accessed through a brokerage account. Despite the similar name, these are different product categories with different insurance frameworks, different regulatory environments, and different risk profiles. If you see 'money market' on a bank's website (e.g., Discover Money Market Account, Capital One 360 Money Market), it is a bank deposit. If you see VMFXX, SPAXX, or SWVXX in a brokerage account, it is a mutual fund.

Should I use a money market fund or a high-yield savings account?

The right choice depends on your tax situation, account access, and balance size. Use a HYSA if: you prioritise FDIC insurance above all else; you do not have a brokerage account; your balance is under $250,000 and FDIC's absolute guarantee matters to you; or you need immediate debit card access. Use a government money market fund if: you already have a brokerage account (MMF is one click away); your balance exceeds $250,000 where single-bank FDIC coverage is limited; you live in a high-tax state (CA, NY, OR, MN) where the state tax exemption on Treasury dividends provides a meaningful after-tax yield advantage; or the cash is being held alongside investments and will be deployed soon. In practice, for many brokerage investors, the government money market fund in their existing account beats a HYSA on after-tax return (especially in high-tax states) and is just as liquid and nearly as safe. The HYSA's advantage is the FDIC guarantee's absolute nature — a government guarantee rather than asset segregation.

How do I buy a money market fund?

You buy a money market fund through a brokerage account. Most major brokerages (Fidelity, Vanguard, Charles Schwab, Merrill Edge, and others) offer proprietary money market funds that are often set as the default sweep for uninvested cash — meaning your idle cash automatically earns the MMF yield without any action. To purchase manually: log into your brokerage account; search for the fund by ticker (e.g., VMFXX for Vanguard Federal Money Market, SPAXX or FDLXX for Fidelity government options, SWVXX for Schwab); enter the dollar amount you want to invest; submit the purchase. Most government money market funds have no minimum investment or a low minimum ($1–$3,000). Settlement is typically same-day (for money already in the account) or next business day for transfers from an external bank. Always verify the current 7-day SEC yield directly on the fund's page before investing.