Money market funds confuse some investors. Many think these are money market accounts, which sound similar to savings accounts.

Money market fund managers buy short-term, low-risk, low-volatility debt. These funds seek a $1 per share net asset value and pay dividends to investors.

Retail Retail funds limit ownership to individual investors.

Institutional Institutional money market funds serve institutions, not individuals. The NAV can float here, unlike other money markets. Pension funds and companies buy this mutual fund.

Government money market funds invest at least 99.5% in government assets. Usually U.S. Treasuries, but also Fannie Mae and Freddie Mac.

Prime Prime funds, sometimes called “general purpose” funds, invest in short-term bank and corporate debt.

Municipal Municipal money markets invest their assets in tax-exempt bonds issued by municipalities. These funds receive exemptions from federal income tax and, in some cases, exemptions from state personal income tax.

Purchasing a money market fund is similar to buying a stock. You can simply log on to your brokerage account and buy the fund of your choice.