Money Market Accounts
If you have a large sum of money that you don’t wish to risk yet would also like to earn some interest, money market account is the answer. Most online banks offer money market accounts to their customers. They generally pay higher interest rates or annual percentage yields (APY) than your regular checking and savings accounts. These accounts are FDIC insured up to $250,000. While a lot of banks have account minimums, some don’t have any minimums. There is, however, a cap on the number of withdrawals you can make each month. Most banks do not permit you to write checks. But the higher interest rate compensates you for the above drawbacks.
I personally keep a minimum necessary balance in my checking account that I set aside for monthly expenses and bills. The rest of the money that doesn’t go into my brokerage account goes into a money market fund. A money market account is a safe place for your money that you don’t wish to risk. Examples include a down payment for your home, funds for next year’s college tuition, your emergency fund, medical expenses, etc.
Certificates of deposit, or CDs as you may know them; offer only slightly better interest rates than money market accounts but with more restrictions. CDs have a term in that you cannot redeem your funds without incurring a penalty. Goldman Marcus, along with several other banks, offer a no-penalty CD option.
Note that money market funds are different from money market accounts. Money market funds are mutual funds that invest in short term securities such as commercial paper and US Treasury bills. These are not FDIC insured.
Here are some of the money market and savings account options available. This information is correct as of May 14, 2019. The table is for informational purposes only and does not include all existing products. FoodLifeAndMoney does not endorse or recommend any particular product. Moreover, money market rates change everyday. So please do your own research before investing.
Our top 10 money market account options
|Account||Annual Interest Rate||Minimum Balance|
|UFB Direct||2.45% ($25,000+)||$5,000|
|Marcus by Goldman Sachs||2.25%||$0|
Having said that, I wouldn’t recommending being 100% invested in a money market account. Your portfolio must be diversified. Click here to learn more about diversification.