Money market

The money market is a subsector of the fixed income market. The difference is that the money market specialises in debt securities maturing in less than a year that are essentially IOUs issued by financial institutions, corporations and governments. Thus they are often referred to as cash investments, since they are extremely liquid and are considered exceptionally safe. Money market instruments are the most conservative investment on the market, and because of the low risk they entail, they offer significantly lower returns than most other securities.

The easiest way to invest in the money market is through money market funds or a money market bank account, which pool together assets of various investors to buy money market securities on their behalf.

Money market instruments include Treasury bills (the most marketable money market security), time deposits, commercial papers, banker’s acceptance, eurodollars, and repos.