Investing in a money market mutual fund with Fidelity can be a smart way to manage your short-term cash. However, it’s crucial to understand how these funds work, their potential risks, and the importance of reading the prospectus before investing. Fidelity offers a range of money market funds designed to meet different investment needs.
What are Fidelity Money Market Mutual Funds?
Fidelity Money Market Mutual Funds are investment vehicles that aim to preserve capital and provide liquidity by investing in short-term, high-quality debt securities. These funds strive to maintain a stable net asset value (NAV) of $1.00 per share. While they offer a relatively safe investment option, it’s important to remember that they are not without risk.
Risks of Investing in Fidelity Money Market Funds
Despite their focus on stability, Fidelity money market mutual funds are not risk-free. While seeking to preserve a $1.00 NAV, there’s no guarantee they will always succeed. Fluctuations in market conditions can impact the fund’s value, potentially leading to losses.
Importantly, these funds are not FDIC insured. Unlike bank deposits, your investment is not backed by the federal government. Fidelity Investments and its affiliates are not obligated to cover any losses the fund may incur. Understanding this distinction is crucial before investing. Certain Fidelity money market funds, specifically government and U.S. Treasury funds, do not charge a fee when you sell your shares. However, other funds may impose a redemption fee.
Why Consider a Fidelity Money Market Fund?
Despite the inherent risks, Fidelity money market funds offer several benefits. They provide a convenient way to earn a modest return on your cash while maintaining easy access to your funds. They can be a useful tool for managing short-term savings goals or holding funds for upcoming expenses.
Fidelity also offers the Cash Management Account, a brokerage account specifically designed for investing, spending, and cash management. For those seeking a more traditional brokerage experience, the Fidelity Account might be a more suitable option.
Before Investing: Read the Prospectus
Before investing in any Fidelity money market mutual fund, carefully review the prospectus. This document contains vital information about the fund’s investment objectives, strategies, risks, fees, and expenses. Contact Fidelity directly to obtain a prospectus, offering circular, or summary prospectus. Past performance is not indicative of future results. Your investment’s value will fluctuate, and you could experience gains or losses when selling shares.
