The Untold Secrets of Parking Emergency Cash in a Money Market

For this specific purpose, we are going to define emergency cash as financial assets that is set aside for emergency purposes only. Not all people have the luxury to set aside a part of their monthly income as emergency cash. But some very prudent people will feel compelled to do this. And just in case you are part of that frugal faction then you might as well make more out of this simple act of saving—like turning it into an investment.

If you are really serious about setting aside emergency cash, then why not turn it into an earning investment by applying for a money market account? Don’t mind the fact that it earns less than 2 percent interest per annum. At least it is still a higher rate compared to passbook accounts. And besides, the stability of the investment is a prime consideration—especially because the money is intended for emergency purposes. You do not want to risk that lump sum for some unstable blue-chip investment that fluctuates every now and then, do you?

And besides, the interest rate is only an added value to the fact that you have emergency cash ready for just in case the need arises. In the meantime, while no emergency unfolds yet, let the money sit on a money market account and earn interest.

Buy why choose money market over other investment types. For one thing, money market accounts have higher interest rates than most bank passbook accounts. Another is because money market accounts allow a person to withdraw his money at any point in time.

Unlike entering time locked agreements which deter people from withdrawing their investments prematurely, money market agreements follows a withdraw-anytime scheme which is appealing to people who are simply looking for places to park their emergency cash.

Think about this. Suppose that you have $50,000 emergency cash that will be parked on a money market scheme. With a bank interest rate of 1.48%, you can expect a return of $740 which will then be added to your initial deposit of $50,000. So now, you have $50,740 which will increase the amount you have invested and will give you higher returns and will push the return of investment to $751.

If you will continually pool your resources into the money market then you are assured that your emergency cash will soon reap enough from all the interest it gains to provide for you a disposable amount upon your discretion. At that point in time, your money will gain enough from interests in order to provide for your other needs. Isn’t that enticing enough? Getting a new set of golf clubs from an interest-gaining emergency cash is indeed delightful. And money market investments have never been this lucrative before.

So do not waste any more time and get your cash parked in a money market now. Earn while your cash is sitting idle, waiting for emergency situations to arise. Besides the security that the Federal Deposit Insurance Corporation provides, it is also one of the most lenient types of investment in terms of assets liquidity. You can even write checks using that account in case the emergency situation happened at a time wherein you cannot access the bank any longer. Most hospitals do accept check payments anyway.

So make no mistake about it, find out for yourself how money market can help you grow that emergency cash and turn it into an investment instead of just an emergency cash. Go ahead and ask around which money market gives better rates. Study how their plans work out and ask about specific concerns such as investment liquidity. Sooner or later you are off not just to financial stability but financial freedom as well.