If you funneled cash into money market mutual funds in 2023 amid rising interest rates, you may have a surprise tax bill in April, experts say. Investors and institutions have piled $5.84 trillion into money market mutual funds, as of Nov. 29, according to the Investment Company Institute, and many funds are paying well over 5%. "With pennies earned in 2022 on cash assets, the tax bill was negligible," said certified financial planner Robert Schultz, senior partner at NWF Advisory Group in Encino, California. Here's whyWith yields closely tied to the federal funds rate, money market funds — different than money market deposit accounts — are mutual funds that typically invest in shorter-term, lower-credit-risk debt, such as Treasury bills. Many investors are stockpiling money into these funds due to "fear in the stock market" and many are nervous to spend cash, according to CFP Colin Day, an enrolled agent at Correct Capital in St Louis.

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Persons: Robert Schultz, Colin Day Organizations: Investment Company Institute, NWF, Finance, Stanford Locations: Encino , California, St Louis