Comparing A Money Market And A Certificate Of Deposit

Comparing A Money Market And A Certificate Of Deposit



Comparing a​ Money Market And a​ Certificate Of Deposit
As investors,​ we​ all face common problems .​
Where can I​ find the​ best rate of​ return? What is​ a​ good stock to​ invest in? What do I​ do with my money in​ between investments? With the​ first two questions,​ limitless answers can apply .​
However,​ with the​ last question,​ there are two popular alternatives .​
a​ CD or​ money market account are both viable choices that should be investigated .​
But which one will give you the​ most bang for your buck?
CD’s or​ certificates of​ deposit are basically like you giving the​ bank a​ loan .​
You give the​ bank a​ certain amount of​ money and they give you a​ certain amount of​ interest .​
the​ interest rate that you get is​ proportionate to​ how long the​ investment is​ .​
Before you ever deposit your money into a​ CD,​ you decide on​ how long the​ money will be invested .​
the​ longer you invest,​ the​ higher your interest rate will be .​
This is​ why older people are notorious for having many CD’s because they simply want to​ keep the​ money they have at​ a​ reasonable interest rate .​

CD’s can range in​ time frames from a​ few weeks to​ years .​
It all depends on​ the​ investor .​
the​ bad thing about CD’s is​ that you don’t have access to​ your money .​
If you decide that you need to​ get your money out of​ a​ CD before it​ matures,​ you will probably have to​ pay a​ fine .​
So if​ you get a​ CD,​ your money is​ officially tied up.
The other popular choice is​ a​ money market account .​
This is​ basically like an​ investor’s checking account .​
Whichever investment firm you have will take the​ balance from your money market account and invest it​ into mutual funds and other securities .​
With this form of​ investment,​ the​ rate of​ return is​ directly proportionate to​ how much money you have in​ the​ account .​
It is​ not linked to​ a​ certain time period as​ with a​ CD .​
This means that if​ you don’t have very much money,​ you won’t make any interest .​
the​ main benefit with these accounts is​ that you have access to​ the​ money at​ any time .​
Most financial institutions will give you a​ checkbook that you can use like you normally would .​
the​ bad thing is,​ many people will treat it​ as​ an​ actual checkbook instead of​ their investment money .​

Whichever form of​ investment you choose,​ make sure it’s the​ right one for you .​
They both have positives and negatives that you should consider,​ before making a​ choice.




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