Money market vs. Savings account confusion – The key is here
When investors hear about a money market account and a savings account, they consider both these options as similar to each other. Well, actually they are two similar kinds of accounts but they do have some important differenced that would help the investors in gaining a favorable return from any of these two options. Let us consider the advantages of the investment in the money market. The money market is associated with a high amount of liquidity. Thus, cash can be made readily available in the money market and an investor can utilize this cash in some alternative investment options that would provide him with a fair return. Be it lending or borrowing, these functions are carried out by the dealers in the money market. The investor has to follow the plans as designed by the financial advisors. The maturity period associated with the money market is also less and this also makes it a favorable option as compared to the savings account. However, a disadvantage associated with the money market is a high rate of interest.
Both, the money market account and the savings account are considered to be deposit accounts in which the investor is required to deposit a fraction of his cash and he gets back a specific interest at a pre determined rate. Money market investments are generally for a longer period as compared to the savings account,. When an investor would invest a considerable amount of money in the money market, he is bound to receive high returns for a long time. But, it does not mean that the principal s being locked and no withdrawal is possible. This is not the case. The number of transactions in a particular month may be fixed by the financial institutions, but this is not a grave issue and can be dealt with in a fair manner by the investors. The withdrawals can be even made by a cheque and this is a fair advantage associated with the money market investments. In savings account, the interest rate is not fixed and the rate may vary from bank to bank, depending on the policies of the bank.
Two major innovative schemes involved in savings account are the online saving account and the issuing of the debit cards with the opening of savings accounts. The debt cards make the withdrawal of money easy from any part of the world and at any point of time. Thus, the access to money in a savings account is much easier and favorable as compared to a traditional money market account. Thus, the money market vs. savings account issue is related to the factors like the amount of cash available with the investor, the reason for which the investment is sought for and the level of liquidity that the investor seeks to have in his investment. Thus, if you are looking for a fair level of accumulated cash for your future and you wish to live a happy retired life, then do some research and look out for the best option.