Sky Suprise Investing Advice

A Perfect Dance Between Risk and Reward

A money market account is sort of a middle ground between investing in a money market fund and simply putting your money in a savings account. It offers better rates than a savings account, but requires a minimum deposit. While the interest is not as good as with money market funds, there are fewer restrictions on withdrawals.

Savings accounts: minimum risk minimum rewards

Savings accounts have very few restrictions; you don’t need a maintaining balance, and you can withdraw as often as you want with no fines, they are also FDIC insured. The trade off is that the savings account rates are really quite low. Savings accounts are really just a safe place to store your money when you aren’t using it, they have little value as investments.

The Middle Ground: Money Market Accounts

With a money market account, you need to maintain a minimum balance in order to earn interest. You can withdraw from money market accounts, but there are restrictions. The good news is they are FDIC insured. They do earn significantly more interest than savings accounts, but are still considered very conservative investments.

Potentially high yields with money Market Funds

Money market funds are the riskiest of these three options. Money market fund interest rates are dictated by the Fed, you could end up earning a lot when the Fed hikes the rates, on the other hand, you could earn virtually nothing if the Fed drops the rates. Money market funds are quite liquid though, although they do require sizeable minimum balances. Of the three though, they offer the highest potential earnings.