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You should consider a money market investment if:
- You need a place to keep your emergency fund.
- You’re putting money aside that you’ll need soon.
- You’re building an account to invest at a later date.
Here is a checklist you can use before launching into a money market account:
- Compare the interest rates on the various types of money market investments.
- Analyze the potential fees you may be required to pay.
- Make sure the money market investment offers the features you need, such as the ability to write a certain number of checks each month.
- Find out what the minimum balance requirement is and the consequences of going below it.
- Ask questions and read the fine print in the literature that describes your investment.
As you compare interest rates, remember that money market mutual funds report the interest over the past seven days and that figure doesn’t include compounding. After you make your decision, you can enroll online, in-person, or by phone.
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