Build Your Savings With Money Market Investing

Money market investing was very popular in the late 1980s and was a safe method of saving money and earning a higher rate of interest. The popularity decreased as people began placing more of their earnings into 401k or 403b retirement plans. The offer of employer-matched contributions made these retirement plans an easy and effective method of earning and saving money. Most people thought these plans were virtually safe and they could accrue a substantial income to meet their retirement needs.

As many people have learned over the past several years, 401k and 403b plans carry a significant risk. This has caused a new interest in money market investing. Many people have learned that a slow and steady savings plan with lower risks is a better solution to meet their future retirement needs.

There is a difference between money market accounts and money market funds. Many financial institutions offer money market accounts as a means to earn a higher interest rate on savings. The average required deposit is $2500. However, many institutions will allow you to open a money market account for as little as $500. The interest rate varies between institutions and it would be prudent to shop around to obtain the best rate possible.

Brokerage firms generally do not offer money market investment accounts since they are not banks; however, they do offer money market mutual funds. Your deposit of funds allows you to purchase shares in the investment pool. Most of the investments are with low risk and short-term debt securities such as municipal bonds and certificates of deposits. While the FDIC does not insure these accounts, they do provide a relatively safe investment. You also have immediate access to the money you have in your account without penalty.

There are several brokerage firms that offer money market investments and all of them are competing for your business. To obtain the best money market rates, you will need to shop each of the firms or banking institutions that offer a money market funds account. Your rate will also depend on the amount of your deposit. Some brokerage firms offer accounts with a minimal deposit. You will have more negotiating power, if you have a significant amount to deposit.

Money market investing is a popular and relatively safe method for accruing savings. This method is slow and steady, so do not expect to become rich over night. However, you will establish a reliable and safe method for building a significant amount in your savings plan.