| When it comes to money market accounts and | | | | return, when compared to its typical certificate of |
| certificates of deposit (CD) type investments, | | | | deposit, but does not offer the security that |
| there is not a whole lot of glamour. This may be | | | | comes from FDIC protection. It's important to |
| for good reason, as they are certainly not the | | | | note that money market accounts are often |
| sexiest investments available today. However, | | | | categorized as conservative investments, but |
| they do play a very valuable role. Money market | | | | they don't share any government protection. Also, |
| accounts and CD's are for the most conservative | | | | the big complaint associated with the bank |
| of investors. When it comes to CD's and money | | | | investments is that much of the low return is lost |
| market accounts, preservation of capital is | | | | to taxation and inflation. There are money market |
| paramount. We will take a closer look at the roles | | | | funds that offer tax-free returns. These tax-free |
| these unsexy investments have. | | | | advantages to money market funds are invested |
| Actually, money market accounts and CD | | | | in municipal type bonds, which offer federal and |
| accounts often play rather different roles. Most | | | | tax-free advantages. They do not, however, |
| commonly, money market accounts, or money | | | | typically pay is high as their taxable counterparts. |
| market funds fill the need for temporary | | | | Traditionally, if you wanted to start a CD, you |
| investment. This allows active investors, the ability | | | | would go down to your local bank branch and set |
| to utilize the money market accounts as | | | | up a certificate of deposit. Since your local branch |
| short-term investment tools. Investors and | | | | didn't have much competition, you wouldn't always |
| traders alike, that buy and sell securities, often | | | | get the best CD rates. The Internet has changed |
| need a location for assets, when they are not | | | | all of that. By doing a simple search online, you |
| utilized. This is very important, as traders are able | | | | can find the high certificate of deposit rates, as |
| to keep their money working for them, albeit at | | | | well as attractive money market account rates. |
| rather low interest rates. The CD type | | | | Sites like compare hundreds of the best CD rates |
| investment is more commonly connected with | | | | throughout the nation, allowing you to find a much |
| the conservative investor seeking safety. | | | | more attractive rate than you would have, even |
| Certificates of deposit are insured by the FDIC, | | | | 10 years ago. In fact, there are many websites, |
| up to a limit of $100,000 per account. The | | | | just like Bank Rate that offer similar services, |
| downside to bank investing is that CDs often | | | | with the goal of finding you the best CD rates. It |
| require that you lock up your money for a period | | | | pays to check out a few of these services |
| of time, most commonly one to two years. This | | | | before finding an account to go with, as it is not |
| makes them less likely than their money market | | | | at all uncommon to find better rates elsewhere. |
| counterparts. As a trade-off, CDs, usually pay a | | | | The important thing is to utilize the tools that are |
| higher yield, but that's not always the case. | | | | now available to us. In addition to finding the top |
| The money market fund, as the name implies has | | | | account rate, FDIC protection is also important. |
| the advantages of a mutual fund, in that it | | | | Also, it's always a good idea to go with a |
| typically invests in several different banks, such as | | | | respected institution, as they are less likely to play |
| CDs, debt or bond obligations, or U.S. Treasury | | | | games when it comes to withdrawing your funds. |
| securities. This can result in a little bit higher | | | | |