Money Market Account

Similar to a savings account at your local bank or credit union, money market accounts allow individual investors to earn higher interest rates on their cash. They typically invest in short-term bonds and debt instruments that offer higher rates of return in exchange for minimal risk. Unlike Certificates of Deposit (CDs), these accounts are fully liquid. They often include check writing privileges and allow investors to make withdrawals at any time without penalty. However, some have limits on the number of withdrawals per month. Minimum deposits required to open these accounts may start as low as $100, but those with higher minimums may offer higher rates of return. They usually require that investors maintain a minimum average account balance to avoid monthly fees. Investors should check with local and online banks and credit unions to see the different rates and fees associated with these accounts.