Thursday, December 28, 2017
When we think about investing, it is common to feel anxiety. People are curious about stocks and bonds but they are also concerned about the risk. Money markets can be a happy medium in putting money somewhere and seeing it grow without high risk and with a great deal of safety.
What is a money market?
A money market account is an interest-bearing account that typically pays a higher interest rate than a savings account and which provides the account holder with limited check-writing ability. Money market accounts offer the account holder benefits typical of both savings and checking accounts. This type of account is likely to require a higher balance than a savings account.
Money markets are able to offer higher annual percentage yields than savings accounts. Money market accounts can offer a higher interest rate by requiring a higher minimum balance. These types of investment tools offer higher yields than traditional savings accounts. They also place restrictions on the number of withdrawals the account holder may take over a given stretch of time.
What are money markets fees and minimums?
The minimums to establish an account generally vary among financial institutions. Some banks range anywhere from $100 while other banks require a deposit of $10,000 to open an account. Some accounts require a minimum balance of $500, avoiding a $10 monthly service fee. Other banks require a $50,000 glance to sidestep monthly fees of $50 a month. Shop around. Most institutions offer check writing privileges.
FDIC Insurance. The Federal Deposit Insurance Corporation (FDIC) insures deposits and the interest accrued up to the maximum amount allowed by law- currently $250,000. FDIC insurance protects the money in your money market account the same way it does in regular savings accounts.
Money markets are a great home for emergency savings, something you can access immediately. One way to think of a money market account is to think of it as less liquid than a checking account, but more liquid than bonds or Certificates of Deposits.
At McHenry Savings Bank, we are a full service financial institution with a complete line of deposit and loan products. We have been serving the banking needs of the residents of McHenry County since 1955. We are local people making local decisions. Call us (815) 385-3000.