Five Ways To Get The Money Market Rates You Really Want

Five Ways To Get The Money Market Rates You Really Want

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Investors in search of a low-risk, high-interest investment dont need to look any further. A money market account works similarly to a savings account, and offers consumers an easy way to invest money and save for the future. Your initial investment is FDIC-insured, though the interest rate you earn will fluctuate based on current market conditions. If you can find an account with favorable money market rates, youll have the opportunity to invest without the danger of losing all your funds in a stock market crash. Consider these five strategies to find great rates for your money market account.

1. Don't Confuse Money Market Accounts and Money Market Funds
First of all, its important to realize that money market accounts and money market funds are two very different types of investments. When you open a money market account, your interest rate will change regularly. However, the amount you deposited into the account will never be affected. With a money market fund, the entire balance of your deposit and the interest youve earned is invested into mutual funds. If the market performs poorly, the value of your account can diminish significantly. As you look for money market rates, make sure youre looking for the right type of account. It wont matter how much interest you earn if you end up losing it all later because of a poor investment.

2. Prepare a Substantial Deposit in Advance
Most banks have minimum required deposits for money market accounts. They also categorize accounts based on their total size and initial deposit amounts. Typically, accounts with higher balances and deposits earn better money market rates. If youre close to the cut-off point for a higher rate, save a little longer so that you can qualify for the next bracket. Of course, don't leave your money sitting around while you wait. In the meantime, put your cash in a savings account or another short-term investment vehicle.

3. Plan Your Contributions and Research Available Offers
Before choosing a money market account, you should look around at the offers available from multiple banks. The interest rates youll earn are generally related to current market conditions, so youll often find pretty similar rates at most banks. However, your rates are also calculated based on the amount youll be investing. As you shop for rates, be sure to have a budgeted amount prepared, as well as an idea of how much you plan to invest in the future.

4. Watch the Market for the Best Time to Invest
In the months prior to opening a new account, pay close attention to current money market rates and the way the market is performing. Watching the market wont necessarily tell you what to expect in the future, but it can give you a pretty good indication. This will help you determine the best time to invest so that you can choose a time when rates are high or stable. Youll also be prepared in case the market experiences a downturn, and you can keep your money working for you in another investment vehicle while you wait to invest in a money market account. Once you open a money market account, remember that your investments will always be protected even if your interest rate falls.

5. Keep Your Account in Good Standing
Once you've found an account with great rates, be sure to keep your investment in good standing so that you can become eligible for even better rates. Though you can withdraw money from your account, try not to let your balance get too low. When you regularly maintain a high, stable balance, you can become eligible more quickly for higher interest rates.

About the Author:
Victoria Lee is an experienced author with a special interest in finance. Based in New York, money market rates. Her favorite pastime is reading up on the latest finance news and she saves her best tips for her finance information pages: http://www.squidoo.com/lensmasters/FinancialTips4U at Squidoo.



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