Is a Money Market Account Good for You?
Saving money is probably one of the most abused phrases, but not a lot of people actually have extra funds stashed away for purposes other than spending and shopping. If not for mandatory contributions in the office, a lot of employees could retire without a penny saved up.
Among the many reasons that people don’t keep a savings account is due to low interest rate. They would rather invest their money in something else, but which they usually fail doing. If you feel the same way, you might want to look into a money market account. It is basically the same as a savings account with some differences.
It pays a slightly higher interest rate
Unlike a savings account, financial institutions have more flexibility with a money market account. They can invest it into government bonds, CDs (certificates of deposit) or other safe investment options. This is why you can expect higher interest rates, making the account quite attractive for a lot of savers. Although a 0.5% difference may not seem much, it can accumulate big time in the long run.
It is fairly low risk
The Federal Deposit Insurance Corporation protects and insures such an account up to $250,000. This makes it a low-risk and safe investment because it protects you against loss. Ask other investors about their choice of account, and they are likely to choose a money market account.
It is not without its share of disadvantages, however. What usually gives people pause is the fact that there are restrictions to the number of withdrawals that can be made. So anyone fund of withdrawing on a regular basis, should think long and hard before signing up for a money market account. Then again, if your purpose is to really save money for the future, the withdrawal restrictions would not deter you from it, and should even encourage you.