The Top Four Benefits of a Money Market Account by Victoria Lee

When you need an investment strategy that offers the potential of high rewards with low risk, a money market account (MMA) could be the right option for you. Money market accounts are popular with investors who want to earn interest on their money while still retaining easy access to all funds. The accounts offer variable interest terms based on current market conditions, which means that you'll earn higher interest whenever the market performs well. To determine whether or not an MMA could complement your financial plans, consider the following benefits of money market accounts.
1. Withdrawing Money is Easy
Some investment vehicles offer the illusion of safety through fixed interest and terms. However, the same accounts typically place strict limitations on the number and types of withdrawals you can make in a given period of time. While a set interest might seem like security, you could end up in greater financial peril if you don't have access to your savings in the case of an emergency. Money market accounts make it easy for you to withdraw money when you need it without penalty. Though you'll probably encounter some restrictions on the number of withdrawals you can make, investors with MMAs typically have no trouble adhering to the limits.
2. Unlimited Returns on Your Investment
While savings accounts and certificates of deposit have fixed interest terms, interest for money market accounts fluctuate according to current market trends. The amount of money you'll earn from your MMA is ultimately determined by the size of your deposit and the duration of your investment. This type of investment strategy gives you greater control over your money and offers you the potential of higher rewards. To earn the most interest from your MMA, be sure to compare rates from multiple banks before opening a new account.

3. Potential for High Interest
Though you might not have much control over the interest you'll earn, you can prepare for higher rates by opening your account with a large deposit. Most banks group money market accounts into multiple investment tiers and offer higher interest rates to investors with larger account balances. If your deposit is almost large enough to reach the next tier of interest rates, it's often best to save more until you've reached the next minimum deposit amount. With a higher interest, you'll earn more on your deposit and all of your investments over the duration of your MMA. It's also important to pay attention to market trends before investing. Try to open your account during a time when interest are trending upward.
4. Enjoy Secure Savings
Many people also choose money market accounts because they offer security and stability from an unpredictable economy. Though your interest and the amount of money you've earned can fluctuate according to market performance, the money you've deposited into your account is always protected and insured by the Federal Deposit Insurance Corporation (FDIC). Even if your bank goes out of business or the economy hits an unexpected period of decline, you'll never lose any of the money you've invested in your account. If you're interested in an investment strategy that protects the money you've earned and offers the potential of high interest rates, a money market account could fit your needs.

About the Author

Victoria Lee is an experienced author with a special interest in finance. Based in New York, she gives advice on investing your money in a money market account. Her favorite pastime is reading up on the latest finance news and she saves her best tips for her finance information pages: http://www.squidoo.com/lensmasters/FinancialTips4U.