One of the more popular investment options over the past few years, money market account. In fact, most people find that it is replaced with a savings account as part of a safe investment portfolios. That being said there are still a lot of people who are not clear on just what is a money market account.
A money market account is a savings account that you open with your bank. Funds that invest the money that is then invested by the bank in a variety of different investments, and almost always short-term loans such as Treasury bills and commercial paper. The exact details of how the money market is not all that important to the investor. What they really need to know is why you should invest in the capital market, and how they will go about doing it.
The reason is that you want to invest in the capital market is that it is a very safe investment that will provide a better return from your savings account with more than just a little bit of risk. Insurance is not on these accounts, such as a savings account so that there is a very small part of the risk, but very small. To open a money market account, you’re probably going to want to want to go to your bank, although you can open one with your brokerage firm as well. A lot of people are not clear about how the money market account differs from a certificate of deposit.
How Does The Money Market Work
A money market account is very similar in nature to a savings account with the most important difference is that you often have the ability to write checks from it. Most broker/dealers and mutual fund companies to provide money market accounts in some form.
For small balances, a savings account is often more useful for some money market accounts can be substantial fees unless they are maintaining the minimum balance. Some banks also impose restrictions on the number of withdrawals allowed.
Money market funds are stable funds, where if you deposit $1 you will get $1 back – this is known as the “Net Asset Value” (NAV) of the fund.
One thing about money market account that is different from other investments is that the goal is to preserve the value of the investment itself. This is different than say, a mutual fund where the goal is to see the value of the fund increases. With money market account objective is to maintain the same value and pay interest to account holders. In this regard, money market account is like a combination of mutual funds and savings account, and will be back fluctuate but should remain a constant value of the initial investment.
Over the past few years a lot of people may shift from savings accounts to money market accounts for a portion of their investment portfolios, which need to be kept safe. The main reason for this is that money market rates are much higher than those of savings account. The other reason is that the money market account is a savings account as a liquid just so you can get your money out as quickly and easily, in fact most of the money market accounts and will allow you to write checks on the account.