What is a money market account?
A money market account is a financial tool that allows an investor to earn interest on their money while not having to tie it up for any fixed amount of time. A money market account is an excellent investment tool for someone who does not need immediate access to their money, but wants the flexibility to access their money when the need arises.
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-- Investing Tip by FindLocalBanks.com
When shopping for a CD / Money Market account, make sure you compare the Annual Percentage Yields of each account.
The Annual Percentage Yield (APY) is calculated by using the dividend rate of the account and takes into consideration
how often interest is compounded on the account. While two insitutions may offer the same dividend rate on an account,
the account that compounds interest more frequently (i.e. monthly as opposed to quarterly) will earn the customer a higher
APY, and thus earn more money.
What is the rate of return on a money market account?
The interest rate on a money market account will vary by financial institution. The more you are willing to invest, the better rate of return you can expect to receive. In general, the interest rate on a money market account is typically better than the interest you would earn on a regular savings account. However, since you do not have to commit to any time frame of investing, the interest rate on a money market account in general is less than the rate you would get by investing into a certificate of deposit (CD).
Since every financial institution offers different rates of return on their money market accounts, it can take to time to do thorough research.
-- Investing Tip by FindLocalBanks.com
When considering how to invest your money, take into account how secure the investment is.
We all want to earn the most money possible, just know that some financial products can actually decline in value.
For example, a certificate of deposit typically has a lower rate of return that many mutual funds, but it
is guaranteed not to decline in value-while a mutual fund could decline in value.
When making a decision between two financial investment products,
remember to take into account how much risk you are willing to accept regarding potential loss of original investment.
Are there withdrawl penalties for money market accounts?
Most financial institutions do not charge withdrawl penalties on their money market accounts. However, some may limit the number of times that you can make a withdrawl from your money market account in any given month.
