What are savings and money market accounts?
By Myles Johnstone
Savings and money market accounts can be found at banks. Money market funds are available through mutual fund companies. All are lending investments based on short-term loans and are about the safest in terms of risk to your investment among the various lending investments around.
Relative to the typical returns on growth-oriented investments, such as stocks, the interest rate (also known as the yield) paid on savings and money market accounts, is low but does not fluctuate as much over time.
Bank savings accounts are backed by the federal government through Federal Deposit Insurance Corporation (FDIC) insurance. If the bank goes broke, you still get your money back (up to $100,000). Money market funds are not insured. Should you prefer a bank account because your investment (your principal) is insured? No. Savings accounts and money market funds have almost equivalent safety, but money market funds tend to offer higher yields.
About the Author
Myles Johnstone writes exclusively for finance related sites such as Refinancing Finance Info.com, Vehicle Finance Info.com and finance Solutions info.com
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