Over the years money market accounts have become known as one of the best places for investors to keep their money. In early 2007, more than 2.3 trillion dollars was stocked away in money market accounts. And of course, this number is only going to go up as more people learn about the power of these accounts. The funds on money markets are invested in securities of financial agencies in treasury bills, the government corporations, and banks.
Banks feel that money market accounts are a great option, and this is why they push them as opposed to CDs or basic checking or savings accounts. Here are just a few benefits that have made money market accounts so popular over the last 35 years.
Low Risk
When you invest in a money market the funds are not insured by the FDIC. But with that being said they are guaranteed because they are in safe investment funds such as t bills. The same thing holds true when investing in debt securities of the government because they have the ability to create funds if they are low.
High Liquidity
Generally speaking, money market accounts are easily converted to other funds. You can withdraw your funds anytime that you are interested in doing so. When you compare this to a certificate of deposit it is easy to see the main advantage. After all, once you are locked into a CD you cannot get the money early unless you are willing to pay a fee. You can also issue checks from money market accounts a certain amount of times each month.
Competitive Rates
When it comes to the most competitive rates, it does not get much better than a money market account. You will be hard pressed to find a checking or savings account that offers rates as high as a money market. In most cases, money market accounts will make you anywhere between 4 and 6 percent each year. While your interest is accumulated on a daily basis, you will get paid this money only once at the end of the statement period.
Add New Comment