Money market accounts vs CD account-your road towards saving money

A lot of people are trying to find the best way for saving money and this is the reason why they want to learn as much as possible about the money market accounts and about the CD accounts. A money market vs CD debate is absolutely necessary, as they both represent popular financial products and they both help people save money. However, the question that rises is: which of these two represents the best choice for saving money important amounts of money?

Let’s first learn what a certificate of deposit, also known as CD, is. The CD is a product put at the disposal of people by a bank or by a financial institution. The CD can be used as debt instrument by an investor. You, the person who uses the certificate of deposit, represent the investor. You offer the financial institution you work with the possibility to use the money you have deposited in order to give loans and you are paid an interest rate in exchange. You actually accept the bank or the financial institution to use your money, but when the term you have set at the beginning is over, you will have much more money in the account.

Directing our attention towards the money market deposit account, we find out the fact that it has some specific characteristics. The funds deposited in the money market deposit account are available for the depositor within certain guidelines that are set when the account is opened. The depositor can withdraw money without having to pay penalties only if the money is withdrawn according to the guidelines that have been established when the account has been opened. The money market fund is a type of fund that invests in government securities, as well as in highly liquid securities of other types. These securities represent a lower risk than the one available with the mutual funds.

These having been said about these two types of accounts, there is a huge question that rises: which of them represents a better form of investment? Since they are both conservative investments that come with a low risk for the investor, the difference is made by other features and aspects. The difference between the money market accounts and the CD accounts stands in the needs of the investor. If you are an active investor and know that another type of investment might attract your attention in the near future, then it is a good idea to choose the money market account, as it is more liquid. If you are sure that you don’t have to access the money before the set term is over, then the CD represents a better investment, as it offers a higher interest rate. The choice stands in the hands of the investor and depends on his interests and needs. Both accounts have advantages and they both have disadvantages, but they surely represent great tools for saving a lot of money. Take them into consideration for being the tools that help you save money and choose the account that better matches with your needs!