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Money Market Accounts as Profitable Investment Strategies


Money market accounts, or money market deposit accounts, provide investors with a new way to manage their money. These types of accounts fall somewhere between checking and savings accounts, as they provide much higher interest rates, while still allowing access to the cash. The higher interest rate stems from the fact that the money in the account is invested by the bank low risk, short-term investments, such as Treasury Bills. Due to the fact that your money has been invested, it is not as available as with a normal checking account. Bearing this in mind, money market accounts provide a safe alternative for many people who are looking for a place to invest their hard earned cash.

Why Open a Money Market Account?

Money market accounts offer the ability to save money while still being able to withdraw from your account. It is important to remember that most accounts will limit the number of transactions per month, and fees will often be incurred by surpassing this limit. Also, the number of transactions allowed is usually much lower than with checking accounts. Some money market accounts do have a minimum limit for opening an account, but this isn’t always the case. For new savers, money market accounts are particularly beneficial. Many who are just starting to save are reluctant about tying up their money. Until a cushion is built to allow for unforeseen expenses, many new savers want to keep their cash on hand. The limited transactions of a money market account offer the wanted accessibility, while providing a way to start accumulating more money.

That is not to say that money market accounts are for new savers only. By shopping around, investors can find interest rates that are as much as double those offered with regular savings accounts and significantly higher than with checking accounts. Even with a small amount of money, a higher interest rate will ensure the sum will grow that much quicker. Money market accounts are considered to be much less risky investments compared to many others.

This alone is one of the main reasons that people choose to use a money market account as an investment strategy. With more and more people recognizing the importance of saving for their future, the last thing wanted is instability in funds available. In addition, money market accounts are insured with the Federal Deposit Insurance Corporation, which means that your money is safe even if your banking institution fails or goes out of business.

How to Make a Money Market Account Work for You

Before opening a money market account, you should shop around for the best combination of interest rate, transaction level, fees and minimum deposit limit that suits your needs. It is worth noting that this may not always be the case. You should regularly monitor your account and also compare it to other offers. Managing your money can mean moving it around, and if you are not getting the best returns for your investments, moving to a new account or even banking institution is worth considering. Remember, it is important to monitor your account.

As with many other types of accounts, larger sums of money will often have larger interest rates. In other words, the more cash you can deposit and keep in your money market account, the greater the interest rate you will receive. By using a money market account with a checking account, more cash can be kept in the money market account, making it work harder and earn more. Increasing the amount you have in your account will ensure that you earn more on it. This doesn’t mean that you have to come up with more cash, but what it does mean is managing your money better. One way is to consolidate your bank accounts to allow there to be a larger lump sum in the account with the highest interest rate.

For some savers, it may be worth opening a tiered money market account. The difference with a tiered account is that as your money grows, your interest rate increases. Tiered money market accounts offer tiers, or ranges, of interest based on cash amounts. When the amount in your account reaches the next tier, your interest rate will automatically increase to the next level. By increasing the amount in your account or the interest level you receive, you could be earning hundreds of dollars more each year.

Whatever your financial situation, if you are in the position to begin saving money, opening a money market account can offer an ideal way to invest your money wisely.

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