Tips And Ideas For Money Market Accounts

Introduction

If have some spare cash to invest and would rather forego the turbulent dynamics of investing in stocks, or any other market driven investment, then opening a money market account may just be the way to go. A money market account will allow you to establish an emergency fund which would earn a better rate of return than a typical bank account and are very easy to access as compared to other investment vehicles in the market. Here are some benefits and important factors to take into consideration while searching for money market accounts.

Step 1

money market accounts are accessible either through a bank or a brokerage. They will often allow you to make a certain number of transactions a month, as compared to a regular checking account which will allow you an unlimited number of transactions a month.

Step 2

Investing in a money market account has a certain number of advantages, such as earning a return on your investment. These returns are usually higher than what you would normally get with a regular checking account. Another benefits investors can accrue from opening a money market account, is the security of their funds, once invested. Money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC), for up to $250,000 on an individual account. If you have savings that exceeds this secured amount, then you could open more than one money market account and spread the amounts equally among them.

Step 3

However, money market accounts do have their own set of restrictions as to the management of money in the account. For instance, once you open the account you will typically be required to maintain the balance above a certain minimum amount. If your savings falls below that minimum amount, you may be charged a penalty by the bank. You will also be charged a penalty if you process transactions above the allowed limit.

Step 4

You can either apply for a money market accounts physically at your local bank or brokerage, or perform a search and submit an application online through either type of institution. Make sure to find out the current average interest offered by the account and whether there is a minimum investment amount required to open the account. Also make sure to find if there are penalties for withdrawing your savings from the account and if there are limits on the number of withdrawals you can perform in a month.

Step 5

Some money market accounts will provide added features such as a debit card or the opportunity to access other investment opportunities. Some accounts will offer a rate of interest based on the amount of money you invest into the account. Make sure to perform a wide enough search for different interest rates offered by different accounts, to gain the most value for your money.

Tips

Money market accounts will typically request for certain documents while opening the account. These include, proof of identification and an initial deposit. You will also be required to fill out an application form, indicating your personal details.

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