Money Market Interest

Why choose Money Market Accounts

Why choose Money Market Accounts

Financial gurus will always advise that you invest in money market accounts as an integral part of a diversified portfolio. While they are relatively low yielding, they are also very low risk and virtually impervious to stock market fluctuations.

How They Work

Money market accounts are fairly straightforward, you put money in the bank, the bank pays you interest. They are similar to typical savings accounts but there are differences. First, and most importantly, money market accounts usually pay significantly better interest. In exchange for the higher returns though, you need to maintain a large minimum balance. There are also restrictions on the number of withdrawals you can make in a month.

An important Part of Any Portfolio

Because they are FDIC insured, just like savings accounts, money market accounts are very safe investments. While you can’t really count on money market accounts for great returns, you can be sure that you won’t lose money on them, and you will even gain a little. This is why it is important to have money market accounts in your investment portfolio; they act as something of an insurance policy. They can cushion the blow in the event that you lose money on potentially more profitable but far riskier options.

Better Interest Rates

Very often, the best options for money market accounts are not offered by banks but by credit unions. This is due largely to the fact that credit unions are typically non-profit.  When investing in money market accounts, it’s always best to research the best rates before committing to a particular option.

You should avoid withdrawals from money market accounts as much as possible, especially if you got a good deal on interest. There are stiff fines for going under the minimum balance, as well as for withdrawing too many times. Many seasoned investors “park” their money in money market accounts when the market is bearish. For whatever purpose you intend for them, money market accounts are always a winning investment.

Banking – Money Market Accounts They invest in government and corporate securities and pay the depositor interest based on current interest rates in the money markets. Money market accounts typically have a relatively high rate of interest and require a higher minimum balance to earn interest or avoid monthly fees. en.wikipedia.org
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What to Look For When Comparing High Interest Money Market Accounts

What to Look For When Comparing High Interest Money Market Accounts

Everyone wants to make the most out of their money, which is why high interest money market accounts are so attractive.  Whether you’re saving for a child’s education, a new car or a down payment on a home, money market accounts are the ideal place for short-term savings.  Money market accounts blend the best of savings, checking and certificates of deposit.  Here’s what to look for when comparing money market accounts.

Take Your Search Online

It used to be that opening a money market account meant that you had to take whatever rate your local bank gave you.  Today, thanks to the internet, nationwide branches and even online-only banks have made the rates for money market accounts even more competitive.  There are plenty of websites that provide you with daily rates, as well as ratings, terms and more information, letting you choose between dozens of high interest money market accounts to find the one that suits your needs and financial goals.

Security and Safety

Once you’ve started to compare high interest money market accounts, chances are you’ll find very different requirements.  Beyond the numbers, you’ll want to check for a high rating from well known rate comparison sites like Bankrate.com.  Sites that have earned this rating have been deemed safe, secure and reliable for online and offline banking.   Because money market accounts aren’t subject to the volatile changes of the stock market, they are a great short-term saving solution for anyone who’s looking for low-risk, but still want the flexibility of being able to access their funds.

Get Rewarded!

Banks provide high interest money market accounts as a way to reward loyal customers for their business.  Some banks provide high interest on this type of account with only a ,000 minimum balance, where the interest you earn is compounded daily and added to your account every month.

No matter which of the many high interest money market accounts you ultimately invest on, you can feel secure knowing that you’ll be able to manage your account online, just as you can with your savings and checking account.  This kind of flexibility lets you transfer money between your money market account and other bank accounts (even if they’re at other financial institutions), write a set number of checks each month and even link your money market account to other accounts for added overdraft protection.

By keeping these tips in mind, you’ll be able to go beyond the numbers of high interest money market accounts and leverage the many advantages that these types of accounts offer in helping you reach your short term financial savings goals.

Are Money Market Funds For You?

Are Money Market Funds For You?

Money market funds are one of the most popular cash management tools. These investments are also touted as the safest type of mutual fund. But before investing in them, you should first know what they are, their benefits, and if they are suitable investments for you.

What Money Market Funds Are

Money market funds are mutual funds that invest in money or financial markets, which, in simple terms, means that you borrow or loan money, respectively. A money market fund is similar to your deposit account at the bank in that it takes your money and uses it for investment purposes. Then, a portion of the earnings, which come in the form of dividends, are paid to you. In general, money market funds pay out monthly dividends.

Money market funds typically invest in short term investments that mature in less than 13 months at the maximum. Since money market funds are investment with shorter time frame, the risk is significantly reduced. The idea is that lending the money for the short term is safer as there is a high probability that the amount will be paid back. Normally, money market funds invest in US Treasury issues, short-term corporate paper, and certificates of deposit. There are different kinds of money market funds based on the type of securities they buy. However, the most significant distinction is whether the dividends earned are taxable or tax-free.

The Advantages of Money Market Funds

With this type of investment, you are allowed to write checks that draw from a money market fund. This allows you to enjoy the benefits of dividend earnings, plus you can easily access your cash. However, you need to verify with your institution first regarding restrictions and fees.

Money market funds are most practical for parking cash you need in the short term. These needs may include down payment for a house, a car or a vacation. Also, since money market funds are completely liquid, you can sell your shares in a money fund anytime you want to.

Who Invests in Money Market Funds

Money market funds are for investors who want to earn decent returns from safe investments. These investments are usually liquid. This means that you have the privilege of drawing out the money within a few business days if you need to. Money market funds also allow you to take advantage of increasing interest rates. This is made possible by stashing your money in an investment that adjusts with the movements of the market.

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