Money market fund vs. Savings account which offers better benefits

If you don’t have much but wanted to establish a good investment then maybe you will opt for opening a bank savings account. It sure is a good idea but if there is a better way to keep your investment so shy wouldn’t you go for it? While it is safe, the interest rate may not be too inviting or attractive. If you want another alternative then you may want to consider a money market fund.

The primary reason why more people see opening a savings account a better idea is because of the security they see from doing so. Besides, even of the bank declares bankruptcy; your money remains safe with the insurance granted by the FDIC.

The money market mutual funds are also safe but in a different perspective. The funds are not actually insured by the FDIC but the SEC has a say in it. Generally, the investment matures in less than a hundred and twenty days so there is lower to no risk. They are have lower interest rate then the average rate you get in the market but they are slightly higher than when you opt for a savings account.

When you opt for a bank savings account, you are faced with two types of fees; the transactions fees and a requirement to maintain a minimum balance. The rates and minimum requirement vary from one bank to another. With the money market funds, several fees need to be paid by the investor. Of the fees related to money market funds, the biggest of them is the expense ratio. This is the percentage fee which is charged in managing your funds. The rates are usually below 0.5%.

While you gain like 0.1-1.7% when you invest in a savings account, with the money market funds, you can enjoy 1-1.3% interest profit. But there isn’t no assurance that you always get a 3% profit all the time. What is sure is your probability of getting 3% return on profit. This had been the scene few months ago before the five SEC commissioners voted for the MMF changes.

Finding the best financial company to buy your funds could be a little challenging but if you invest more time in researching you surely will find a good company. You may go ahead and visit a company or the World Wide Web can also be a good place to start with. Check on the rates and policies to avoid confusion especially now that new rules and regulations have taken place.