A money market
ACCOUNT is a fancy
name for a savings
account at your
local bank, usually
with a $500 minimum
balance. Like
standard passbook
savings accounts,
you can put more
money in or take
money out at
anytime. But the
shameful interest
that the bank pays
you won't even keep
up with inflation.
As this is being
written, big banks
such as Bank of
America are paying
less than 1%. We
have been such
suckers!
A money market
FUND, sometimes
called a cash
management account
or asset
management account,
is provided
automatically by
your stock broker
for your money on
the sidelines.
Pioneered by Merrill
Lynch in the 1980’s,
current yields are
less than 2 percent.
During the year
2000, many paid 6 to
7%.
Money market
funds are convenient
for both investing
and ready access to
your cash, many
offering both check
writing and debit
cards that you can
use at any store or
ATM machine. You may
even decide to
consolidate your
bank accounts into a
master money fund,
giving you a single
statement showing
your checking
account and credit
card activity.
Money market
funds with a major
brokerage or mutual
fund are extremely
safe. They invest
your money if
T-Bills, Fannie-Maes,
Ginnie-Maes, and
high-grade corporate
bonds. If you don't
know what all these
are, that's okay,
all are safe
investments. Money
funds offered by
respected companies
such as Fidelity or
Vanguard are
extremely safe.
Of 1,200 money
market funds
currently available,
360 invest only in
tax-exempt
securities, ideal
for a standard
taxable account.
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