When it comes to growing your savings, you may think of putting your money away in a savings account or certificate of deposit. However, many people find that keeping their money tied up for long periods of time or earning lower interest defeats the purpose of saving and having access to funds when needed. Money accounts were set up in the 1980s as an alternative. What is a money market account? You can think of a money account as a hybrid of some of the most popular banking products available to consumers today .. Money accounts can help you reach your savings goals in several ways:
The More You Save, The More You Earn
So just what is a money market? A money account allows banking customers with little to no investment knowledge to confidently invest funds in short term financial products, without requiring the experience required of stock market investors. Money accounts are managed to keep shares at an even $ 1 each, rather than contributing to the rollercoaster of stock market highs and lows. Oftentimes, consumers elect to save their money in a money account versus a savings account because they have the flexibility of writing a set number of checks per month while earning a competitive interest rate. Like savings accounts, the more you save, the more you earn. Plus, your interest is compounded daily and the resulting amount added to your account each month, enabling you to reach your savings goals even sooner than you may have expected.
Other Benefits of Money Market Accounts
The best money accounts can also be tied to your other banking accounts, such as checking and savings accounts, to prevent overdraft fees. Additionally, accounts are typically lower risk investments than other types of financial products such as mutual funds or the stock market. Of course, your return on investment may not be as high, but if you are a conservative saver, a market account may be an ideal short-term low risk savings vehicle.
So the next time you're wondering, just what is a money market account , you can think of it as a stable, low risk alternative to savings accounts that gives you the convenience of writing checks while earning a competitive interest rate on your savings. With all of these advantages, it's no wonder that money accounts are one of the most popular financial products available from banks today. Remember that interest rates can change on a daily basis, so if you find an attractive rate on a market account, it's best to take advantage of the higher rates when you find them, as they may not be there tomorrow.