Saidanother way, capital involves risk and creates jobs. Accumulating money on the balance sheets of large corporations does not. One of the main reasons the U.S. has been able to engineer Thefund invests in a range of money market instruments which include negotiable certificates of deposit , bankers’ acceptances, debentures, treasury bills and call accounts. The fund may only invest in money market instruments with a maturity of less than 13 months. While capital losses are unlikely, they can occur if, for example OldMutual’s money market fund had an average daily investor withdrawal of Sh2.5 million last year, down from Sh2.6 million in 2020. The asset manager’s equity fund — its second-largest TheMoney Market Instruments help to provide short-term funds to the private and public institutions who need finance for their working capital requirements. These funds are provided by discounting the trade bills through commercial banks, Moneymarket securities provide a fixed return with short maturities. By purchasing debt securities issued by banks, large corporations, and the government, money market funds carry a low default tabel angsuran gadai bpkb motor di pegadaian. April 13, 2022 5 min readGet to know the definition and how money market accounts workApril 13, 2022 5 min readWhen it comes to your savings, you want to know everything about where you’re putting your money and if you’re getting the most from it. If you’ve heard of a money market account but don’t really know what it is, you’re not alone. Here are the answers to the most frequently asked questions about money market accounts, sometimes referred to as MMAs. So what exactly is a money market account? Despite its name, a money market account has nothing to do with the stock market. A money market account is a unique savings account that generally earns you a higher savings rate than traditional savings It may offer some check-writing and debit card Also, with the higher savings return benefits of a money market account, there may be certain restrictions. Often, money market account savings can require a higher minimum balance than traditional savings What’s the difference between money market accounts, savings accounts and CDs? While a money market savings account is a type of savings account, it's different from typical savings accounts. Overall, the greatest difference between a money market account and a savings account is the annual percentage yield APY. The APY reflects how much your account will earn each It’s based on your interest rate and how often it’s compounded. While searching for what a money market savings account is, you may have come across another type of savings account called a certificate of deposit, or a CD. This is a type of savings account that requires you to deposit money for a specific amount of time, called a Typically, the longer the term, the higher the A big difference between a CD and a money market account is that with a CD, you have to keep your money within the account for the term. If you take it out early, you might have to pay a penalty. Once the term is over, most CDs allow you to access your money, plus any interest earned. With a money market account, you can usually access your money without having to face penalties. How does a money market account compare to a high-yield savings account? When you’re considering a money market account vs. a high-yield savings account, you’ll find them to be very similar at first glance. Both might require a higher minimum deposit, both might offer comparable interest rates and both might have similar restrictions on the number of withdrawals or transfers you’re allowed to make each month. One difference between the accounts is access. They can both be used to support savings goals. But remember, money market accounts may give you the ability to write checks and use a debit card. How does a money market account work? If you're looking into opening a money market account, how it works might be of interest to you. For customers, a money market account works similar to a savings account You deposit your savings into the account, you start earning interest and your money is available when you want it. How often do money market accounts pay interest? While it depends on your bank and your specific account, interest on money market accounts is usually credited So why the higher savings rate than traditional savings accounts? What’s the catch? Generally, the bank is giving you extra interest for keeping extra money in your account. The bank rewards you with the higher APY incentive if you meet certain How safe are money market accounts? When it comes to your savings, you want to know your money is safe. At insured banks and institutions, it is. If your bank fails, your money is secure because the Federal Deposit Insurance Corporation FDIC promises to insure your money up to the allowable Benefits and disadvantages of a money market account If you’re thinking of opening a money market account, hold onto this list so you can have the pros and cons handy. It’s important to know the benefits and advantages of a money market account, as well as any disadvantages. Pros They usually have higher savings interest rates than a typical savings account. They are typically FDIC-insured. They may allow you to have access to your money via debit card or checks. Cons They might require a minimum balance to receive the highest savings interest rate. They may limit how many times you can access your money a month. How do I choose the best money market account? Many banks and many credit unions offer money market accounts, but they’re not all the same. The first thing to consider is the savings rate. As you’ve seen, a higher savings rate can earn you more money. However, you should also consider any promotions a bank may offer. Some banks may offer bonuses when you open a new account. Next, you’ll want to find out if there are fees—and how these fees might affect your savings. Some accounts are free as long as you maintain the minimum balance, but it’s always a good idea to check the fine print. Finally, you should understand how much you can afford to save. You want to ensure you have enough money available for your day-to-day spending. When you research the minimum balance requirements and transaction restrictions, you want to know you can comfortably afford to meet the conditions on a regular basis. Should I open a money market account? As you consider whether or not a money market account is right for you, it helps to keep in mind these things If you usually just keep your savings for a rainy-day fund, a money market account is a great way to earn interest on the money you already have. If you're inclined to make frequent withdrawals, a checking account might be a better option. If you can't afford the minimum balance, a traditional savings account may suit you better. If you would like to have some accessible savings, rather than locking your money away in a CD, a money market account could be a good way to achieve that while still earning interest. If you already have the minimum balance sitting in another savings or checking account, it might make sense to open a money market account to take advantage of higher interest. Either way, there are advantages of money market accounts as well as savings accounts, so the right one for you completely depends on your situation. And as you consider your circumstances and available options, keep in mind that your money management skills are growing as well as your site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Glossary of Banking Terms and Phrases — Money Market Deposit Account undated. Retrieved February 2, 2022, from What is a money market account? July 23, 2021. Retrieved February 2, 2022, from Glossary of Banking Terms and Phrases — Annual Percentage Yield APY. Retrieved February 2, 2022, from Certificates of Deposit CDs undated. Retrieved February 2, 2022, from Certificate of deposit What is a CD? July 25, 2021. Retrieved February 2, 2022, from Best money market accounts February 3, 2022. Retrieved February 3, 2022, from The best places to save your money Money market accounts, savings accounts and CDs January 20, 2022. Retrieved February 2, 2022, from Deposit Insurance FAQs December 8, 2021. Retrieved February 3, 2022, from April 13, 2022 5 min readRelated Content article September 28, 2022 5 min read article April 6, 2022 5 min read article April 6, 2022 5 min read The 10 Best Money Market Funds of June 2023 Fidelity Money Market Fund SPRXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It The Fidelity Money Market Fund is one of three funds on our list that require a minimum initial investment of only one dollar. Still, it is not the cheapest option—seven of the other funds herein levy even lower expense ratios. The bulk of SPRXX’s holdings are various forms of repurchase agreements. Repos, as they’re also known, are overnight loans to the Federal Reserve, backed by Treasurys. The Fed buys them back the next day at a slightly higher price. That price premium is their implicit interest rate. “These are the safest things in the world,” Crane Data President and Publisher Peter Crane told Forbes Advisor. In addition, SPRXX’s holdings include other types of repos, commercial debt and certificates of deposit Schwab Value Advantage Money Fund Investor SWVXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It The Schwab Value Advantage Money Fund was the world’s fastest growing money market fund last year, thanks to Schwab and other brokerages shifting their so-called sweep money out of low-yield bank deposits, into higher-yield money funds, Crane says. SWVXX now holds more than $120 billion of shareholders’ assets. Treasury and other government agency repurchase agreements are SWVXX’s largest single type of holding. CDs and commercial paper are its second and third largest types of holdings. T. Rowe Price Treasury Money Fund Z PRTXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It Its expense ratio puts T. Rowe Price Treasury Money Fund in the middle of the pack in terms of annual cost on our list of best money market mutual funds for 2023. PRTXX is yet another money market fund in which Treasury repurchase agreements account for the vast majority of fund holdings. Treasury bills are the fund’s second biggest category of holdings. Currently, all securities held by the fund will mature in 397 days or less, and PRTXX’s weighted average maturity of holdings will not exceed 60 days. Invesco Premier Portfolio Institutional IPPXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It Invesco Premier Institutional has the highest yield of all funds on our list. That’s due to a portfolio that consists mainly of short-term, high-credit-quality money market instruments. The securities are obligations, and they include primarily commercial paper, certificates of deposits, master and promissory notes, municipal securities and repurchase agreements. JPMorgan Liquid Assets Money Market Fund MJLXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It One distinctive feature of JPMorgan Liquid Assets Money Market Fund is that it considers financially material environmental, social and governance ESG factors in investment decisions. MJLXX managers consider those factors with the goal of enhancing long-term, risk-adjusted financial returns. But fund literature makes clear that MJLXX’s consideration of ESG factors does not alter the fund’s strategic goal, which is to invest in high-quality, short-term money market instruments. These include corporate notes, commercial paper, funding agreements, repurchase agreements, CDs and bank obligations. Vanguard Federal Money Market Fund VMFXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It With roughly $245 billion of assets, Vanguard Federal Money Market Fund is the largest portfolio on our list of the best money market funds of 2023. It is the third largest such fund industrywide—one of the larger funds requires an initial investment of at least $10 million, while the other larger fund is Fidelity Government Money Market SPAXX, the next fund on our list. VMFXX invests largely in securities issued by the government or its agencies. It also invests in repurchase agreements with collateral backing of Treasuries or to a lesser extent mortgage-backed securities. VMFXX maintains an average maturity of 60 days or less. Fidelity Government Money Market Fund SPAXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It True to its name, the Fidelity Government Money Market Fund normally has nearly all of its shareholders’ money at work in cash, government securities and/or repurchase agreements that are collateralized by cash or government securities. Hypersafe as SPAXX holdings are, they are not entirely risk free. SPAXX literature points out that certain issuers of Government securities are sponsored or chartered by Congress but their securities are neither issued nor guaranteed by the Treasury. Offsetting that negligible chink in SPAXX’s armor is its massive size, now exceeding $260 billion. Vanguard Treasury Money Market Fund VUSXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It The Vanguard Treasury Money Market Fund is a stablemate of VFMXX. VUSXX follows a slightly different strategy in constructing its portfolio. VUSXX invests solely in Treasury obligations and repurchase agreements fully collateralized by Treasury securities. Like its larger sister fund, VUSXX maintains an average maturity of 60 days or less. Its expense ratio is the lowest on our list. T. Rowe Price Government Money Fund PRRXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It T. Rowe Price Government Money Fund invests only in dollar-denominated money market securities. All of PRRXX’s securities mature in 397 days or less. The fund’s weighted average maturity will not exceed 60 days. Roughly three-quarters of fund holdings consist of repurchase agreements. PRRXX’s second largest category of holdings is made up of debt issued by the government and its agencies. BlackRock Wealth Liquid Environmentally Aware Fund Investor PINXX Minimum Investment Expense Ratio 7-Day Yield Minimum Investment Expense Ratio 7-Day Yield Why We Picked It BlackRock Wealth Liquid Environmentally Aware Fund, also known as BlackRock Wealth LEAF, is another socially conscious fund in our list of the best money market funds for 2023. PINXX considers environmental, social and governance ESG factors in its investment decisions, but is not ruled by such factors, according to fund literature. The fund invests in a broad array of securities. Roughly 40% of its holdings are government agency repurchase agreements. About another 15% are CDs. An almost equal amount are commercial paper–that is, short-term unsecured promissory notes issued by companies. Nearly 10% are asset-backed commercial paper. The rest is a mix of fixed income securities. *Asset weights are sourced from fund filings, all other data is sourced from Crane Data, current as of June 1, 2023, unless noted otherwise. Methodology To compile our list of the best money market mutual funds, we searched for funds with a winning combinations of some key traits Wide availability. Many funds offer high yields and charge investors low fees, but the funds are available only through certain brokerages, advisors or workplace retirement plans. Instead, we generally only let funds through our screening process if Crane Data classifies them as retail funds. Likewise, we tried to steer clear of funds that charge liquidity fees or impose limits on redemptions. Low minimums and fees. We screened out all funds that demand initial investments of more than $3,000. And we screened for funds with the lowest expense ratios—all of our picks levy expense ratios of or less. Highest possible yields. We screened out funds with 7-day yields of less than Seven-day yield is the industry standard for making comparisons among funds. It considers fund distributions plus appreciation, minus average fees over seven days—and then projects this average forward over the next 12 months. Large portfolios. We screened out funds with low asset levels. Only one has as little as just over $1 billion in assets. Six have roughly $3 billion to $50 billion in assets. Three have roughly $110 billion to more than $250 billion. Finding funds with all of those attributes is a balancing act. A fund may excel in one or two or even three categories, but it may be a laggard in others or even be an outright failure in some categories. Why does asset level matter? Because money market funds are not bank deposits. They are not insured by the Federal Deposit Insurance Corporation FDIC. If a financial crisis arises, the funds that stand the best chance of preserving your principal are the biggest funds. First, they have the deepest pockets. “It takes ample resources to withstand tough times,” Crane said. Second, more assets means more shareholders. And in a financial emergency, you’ll want as many allies as possible to sway regulators and politicians trying to decide which funds and fund complexes to help. “Having 10-to-50 million shareholders on your side doesn’t hurt if you’ve got to call on Washington for emergency support,” Crane said. Size also matters during ordinary times as well. “The bigger the fund, generally the better its service,” Crane said. “In general, I don’t like funds at small financial firms. And I don’t want to think about limitations on access and extra fees charged by funds with weird share class letters at the end of the To learn more about our rating and review methodology and editorial process, check out our guide on how Forbes Advisor rates investing products. The author owned shares of the Fidelity Money Market Fund when this article was published. He held no positions in the other securities discussed in the post at the original time of What is a Money Market Mutual Fund? Money market funds are fixed income mutual funds that invest in debt securities with short maturities and very low credit risk. They offer ultra-low volatility and extremely good liquidity and may invest in taxable or tax-exempt government securities. Money market funds are open-ended funds, meaning they may sell unlimited shares to customers. The fund sells and redeems the shares at a price equivalent to the net asset value NAV, which is calculated daily. The managers of money market funds always aim to keep their NAV fixed at $1 per share using special pricing and valuation conventions. Some allow their NAV to float based on the current market value of the securities in their portfolios. Types of Money Market Funds Money market mutual funds are defined by their type of investments, typically labeled as government, prime or municipal funds. Prime and municipal funds are further classified as retail or institutional, depending upon the type of investors in the fund. Government funds must invest of their assets in government-issued securities and consequently are extremely safe. Municipal money market funds invest in municipal bonds issued by municipalities and municipal agencies, which pay interest exempt from federal income tax. Prime money market funds invest in corporate commercial paper, repurchase agreements, certificates of deposit, and other bank debt securities. Which Is Better Money Market Fund or Savings Account? A savings account with a financial institution is the safest, most liquid option for holding cash. That’s because the FDIC insures savings account deposits for up to $250,000, and funds are instantly available at the ATM or counter. That same insurance coverage applies to money market accounts MMAs, which are available at banks and credit unions, but are not the same thing as similarly named money market mutual funds. Money market mutual funds, often referred to simply as money market funds, are investment securities, not bank accounts. As such, they have no FDIC insurance. Still, money market funds are also very low risk given that they invest in cash and securities guaranteed by the US government, such as Treasury bills, Treasury notes and repurchase agreements based on government-backed obligations. Both accounts are extremely liquid, although some funds impose liquidity fees on redemption and certain limitations on redemption periods. Money Market Funds in the Current Environment Money market funds offered negligible yields in the low-rate environment that persisted over the past several years. Now that interest rates are rising, seven-day yields have climbed. Still, inflation remains high. Rising interest rates are enabling savers to trim the gap between the value of their savings in money market funds and the pace at which inflation is eroding that money’s purchasing power. Investors are responding, big time. Assets in money market funds have hit all-time record levels four weeks in a row, according to Investors poured a net $ billion into money market funds just in the latest week, which ended April 5, says the Investment Company Institute ICI, an industry trade group. That put money market fund assets at $ trillion. That’s a leap of over the past 52 weeks. It’s a surge this year alone. Keeping up with inflation and out-earning savings and checking accounts are not the only catalysts for inflows. “The failure of Silicon Valley Bank and the cryptocurrency collapse have spooked investors, who are leery about leaving money in bank deposit accounts in excess of the FDIC-insured amount of $250,000–and even amounts smaller than that,” Crane said. Next Up In Investing Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results. Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners. Money Market Vs. Capital Market An Overview The money market and the capital market are not single institutions but two broad components of the global financial system. The money market is the trade in short-term debt. It is a constant flow of cash between governments, corporations, banks, and financial institutions, borrowing and lending for a term as short as overnight and no longer than a capital market encompasses the trade in both stocks and bonds. These are long-term assets bought by financial institutions, professional brokers, and individual investors. Together, the money market and the capital market comprise a large portion of what is known as the financial market. Financial Markets Capital vs. Money Markets The Money Market The money market is a good place for individuals, banks, other companies, and governments to park cash for a short period of time, usually one year or less. It exists so that businesses and governments that need cash to operate can get it quickly at a reasonable cost, and so that businesses that have more cash than they need can put it to use. Key Takeaways The money market is a short-term lending system. Borrowers tap it for the cash they need to operate from day to day. Lenders use it to put spare cash to capital market is geared toward long-term investing. Companies issue stocks and bonds to raise money to grow their businesses. Investors buy them to share in that money market is less risky than the capital market while the capital market is potentially more rewarding. The returns are modest but the risks are low. The instruments used in the money markets include deposits, collateral loans, acceptances, and bills of exchange. Institutions operating in the money markets include the Federal Reserve, commercial banks, and acceptance houses. When a company or government issues short-term debt, it's usually to cover routine operating expenses or supply working capital, not for capital improvements or large-scale projects. About Liquidity The money market plays a key role in ensuring that banks, other companies, and governments maintain the appropriate level of liquidity on a daily basis, without falling short and needing a more expensive loan and without hoarding excess cash that isn't earning interest. Individual investors may use the money markets to invest their savings in a safe and accessible place. Many choices are available, including mutual funds that focus on state money market funds, municipal funds, and Treasury funds. Many of the government funds are tax-free. A money-market fund also can be opened at most banks. The Capital Market The capital market is where stocks and bonds are traded. Its movements from hour to hour are constantly monitored and analyzed for clues as to the health of the economy at large, the status of every industry in it, and the consensus for the short-term future. The overriding goal of the companies institutions that enter into the capital markets is to raise money for their long-term purposes, which usually come down to expanding their businesses and increasing their revenues. They do this by issuing stock shares and by selling corporate bonds. Primary and Secondary The capital market is roughly divided into a primary market and a secondary market. A company that issues a round of stock or a new bond places it in the primary market for sale directly to investors or institutions. If and when those buyers decide to sell their shares or bonds, they do so on the secondary market. The original issuer of those stocks or bonds does not immediately benefit from their resale, although companies certainly have an interest in the price of their stock shares rising over time. The capital market is by nature riskier than the money market and has greater potential gains and losses. What are four examples of money market instruments? Examples of money market instruments include certificates of deposit CDs, commercial paper, Treasury bills T-bills, and banker's acceptances. What are the types of capital markets? Capital markets can be broken down into primary and secondary markets. The primary market is where stocks and bonds are first issued to investors. The secondary market, on the other hand, is where securities that have already been issued are traded between investors. What are 3 types of capital market? Capital markets can include the stock market, the bond market, and the forex market. Each of these markets trade a different asset class. The Bottom Line The money market and capital market are often talked about. Together, they make up a large chunk of the global financial market. The money market is where short-term financial instruments with a holding period of a year or less are traded. It essentially works as a short-term lending and borrowing platform for its participants, with investors in this market either gaining access to funds or earning interest on them. The capital market is also a venue where people make money but has different characteristics. In this market, there are entities that issue shares, bonds, or other long-term securities to raise capital and grow their businesses, and those who invest in these instruments, hoping to turn a profit. The key distinguishing factors are time and rewards. Money markets are made up of short-term investments carrying less risk, whereas capital markets are more geared toward the longer term and offer greater potential gains and losses. Investors with a focus on the preservation of capital often seek out fixed-income solutions such as government or low-risk municipal bonds, preferred stocks, traditional bank savings products, or money market mutual funds. Each of these investment vehicles provides a degree of safety from otherwise volatile securities markets in addition to a potential stream of fixed income. Although each strategy has its own merits and drawbacks, a money market fund is a popular choice among risk-averse investors. Read on to find out more about this kind of investment and how you can benefit from these putting your money into this product. Key Takeaways Money market funds invest in highly liquid securities like cash, cash equivalents, and high-rated debt-based funds offer investors liquidity because they're invested in securities with short-term maturities—usually 13 months or they only invest in highly rated securities, money market funds offer a high degree of market funds also offer investors higher yields than traditional savings accounts. What Is a Money Market Fund? A money market fund is a type of mutual fund. It invests in highly liquid vehicles such as cash, cash equivalents, and high-rated debt-based securities. These securities tend to have short-term maturities—usually less than 13 months. Many money market funds hold securities like commercial paper and Treasury bills. Investors purchase units or shares of a money market fund from a mutual fund company or through a broker. Just like other mutual funds, there may be a minimum initial investment amount required to take part in a money market fund. They also come with an expense ratio. This fee is calculated as a total percentage of the fund's asset which covers its administrative and operating expenses. Don't confuse money market funds with money market accounts MMAs. Although they may sound alike, they are different. A money market account is a savings account offered by traditional financial institutions, allowing the account holder to earn interest on the average balance. Because they are intended to act as a savings vehicle, MMAs allow investors limited withdrawals. These accounts are insured by the Federal Deposit Insurance Corporation FDIC, while money market funds are not. Types of Money Market Funds Money market funds are divided into different categories depending on their attributes including their maturities and the classes of securities. For instance, government money market funds invest the majority of their assets in cash and government securities. Treasury funds invest in Treasury bills, bonds, and notes. Another type of money market fund is the tax-exempt fund. These types of funds invest primarily in vehicles that are exempt from federal taxes such as municipal bonds. Benefits of Money Market Funds A money market fund provides investors with an array of benefits that you may not find with other investments. The most common are noted below. Liquidity Money market mutual funds provide investors with liquidity. That's because these funds are invested in securities that mature in short periods of time and can be liquidated for cash. Fund managers invest pooled investor dollars into money market securities including bank certificates of deposit CDs, federal agency notes, high-grade commercial paper, or government treasury issues such as T-bills. Safety Investors who want to park their money in a relatively safe investment may want to consider money market funds. The Securities and Exchange Commission SEC mandates that only securities with the highest credit ratings are available to purchase in money market funds, creating a degree of safety for investors not found in other fixed-income investments. This also helps set them apart from other investments such as stocks which are characterized by a higher degree of volatility. Higher Yields In addition to safety and liquidity, money market funds offer the potential for higher yields than conventional cash equivalents such as savings or money market accounts from a bank or credit union. The objective of a money market fund it to keep its net asset value NAV steadily at $1, resulting in no growth of principal. Despite this, money market funds provide investors slightly higher yields than conventional cash equivalents over time because fund managers can diversify the underlying investments. Although they're considered relatively safe investments, money market funds also come with inherent risks including inflation, credit, and interest rate risks. A Word on Risks Even though they're considered a primarily safe place to put your cash, money market funds do come with their own inherent risks—just like any other investment. A few things investors may want to consider are Inflation Risk This risk occurs when the cash flows from a money market fund drop because of inflation. In other words, inflation cuts down how the money market fund performs. Credit Risk Because they aren't insured by the FDIC like savings accounts and CDs, there's no guarantee that you won't lose your money. Interest Rate Risk This is the risk associated with fluctuating interest rates. Yields share an inverse relationship with interest rates, so when interest rates rise, yields drop and vice versa. 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