Money market mutual funds are hard to classify because they are used both for making transactions and savings.

True or False

This statement is neither true nor false. As Obi Won said, it depends on your point of view.

Money market funds are usually classified by the securities that they hold. They come in two basic "flavors": taxable and tax-exempt, depending on the bonds that they hold. In addition, within the taxable money market funds you have ones that deal only with Treasury or government bonds, or ones that also incorporate bank CDs and corporate paper (ultra-short bonds from companies with high credit quality).

Yes, money market accounts can be an account to hold your savings, as well as one that has check-writing privileges. But this could also be said about a checking account from a bank.

Money market accounts are very liquid and safe, so they are appropriate to place money for emergencies or a known purchase within the next 2 years. For example, people saving up money for down payment of a house should strongly consider a money market account. Everyone should really have a money market account for their emergency fund, IMO.

False

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