There are many ways to obtain money market returns, from investing in funds or opening up an account at a bank and earn interest back from the bank’s investments. The plus side of purchasing a money market account at a bank is that it will be backed by the FDIC. MMAs share similar features to checking accounts and standard savings accounts. The main difference is that the MMAs usually pay out higher interest rates and require higher minimum balances and initial deposits. There are also fewer transfers / withdrawals allowed.
Money market funds, on the other hand, are funds that you can invest in if you want relatively low-risk holdings in your portfolio. They usually invest in securities and pay out earnings in the form of dividends. In the right circumstances, these funds can be a useful cash management tool. Before selecting one and putting your money into one, make sure you understand how they work and the amount of risk you might be taking on.
Also keep in mind that money market returns gained from these funds usually aren’t high – especially when compared to stock holdings. After all, they are pretty low risk for the most part. The types of purchases and sales typically involved in the money market include large volumes of short-term debt products, such as commercial paper or overnight reserves. These investments are considered to be liquid, as fund shares targeted to $1.
Money Market Returns With Bank Rates
If you’d rather just go the bank rate, choose an online financial institution that can guarantee the highest money market returns possible. However, this alone shouldn’t be your deciding factor – especially if you don’t have a lot to start out with. Check the initial deposit requirement to ensure that you have enough. As for the APY rate, 1.75% is a good place to start. That percentage should be guaranteed.
This is an excellent option for those who want to reach your savings goals. If you care mostly about keeping your money safe and secure, and earning back a bit of interest, then open up a money market account at an online bank. Only consider investing in the funds if you want to diversify your investment portfolio some more.
Choose a bank that does not charge a monthly maintenance fee. You should get online access to your account 24/7. Think about how you will be allowed to fund your account as well. Some online banks accept PayPal and Zelle and some do not.
The best online bank to start with when researching money market returns is CIT Bank. It only requires $100 to start an account, and the entire process is very simple. The money is FDIC-insured.