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JudasHero asked in Business & FinanceInvesting · 1 decade ago

What do you know about the following money markets?

I've been saving up money to invest in a money market, and I've narrowed my possibilities down to the following:

Fidelity Municipal Money Market Fund

Fidelity Prime Money Market

T. Rowe Price Prime Reserve Fund

T. Rowe Price U.S. Treasury Money Fund

Vanguard Tax Exempt Money Market Fund

Do you know anything about the above funds? If so, what do you recommend and why?

Also, most of those funds offer an "automatic payment" option where, instead of investing a set lump sum at one time, I can start with a lower amount and invest it monthly over time. Which would you recommend?

1 Answer

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  • Luigi
    Lv 4
    1 decade ago
    Favorite Answer

    Usually, tax exempt MM funds pay considerably less than taxable funds, but currently there are some tax exempts that pay as much! Today's Barron's magazine lists Dreyfus AMT-free Muni Reserve paying 1.09% and USAA MM paying 1.11%. Those are the highest listed in each category. I would have to know what the current 7-day yield is on each fund, and none of your list are high enough to make Barron's top 10.

    Treasury funds, too, generally pay less even though they are taxable. So, I would go with either Fidelity Prime or T Rowe Price Prime Reserve. There is also a Vanguard Prime MM fund. Vanguard generally has the lowest expenses, so it may offer a slightly higher return than either the Fidelity or T Rowe Price funds.

    If you have the lump sum saved up then start that way. You can still use the auto investment feature to continue to add to it.

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