Investing in a Money Market account…?

stephaniea: Investing in a Money Market account…?
I have a few questions…
1. Can you lose your money when investing in a money market account that is FDIC insured?
2. How often does the annual % change?
3. How long do you have to keep the account?
4. I have about $ 5000 that I won’t need for about three to five years, so is this the best option for me to invest in, or is there something else I should look into?

FYI: The place I am looking into is AmTrustDirect an e-money market account. The interest rate is 5.233% and the APY is 5.36%.

Answers and Views:

Answer by Geeeyaaa
1. Money market account is just like a liquid savings account but it makes money from charging fees. Some are limited to 6 withdrawals per month. They charge 5-10 bucks if you withdraw more than its limit.

3 important things to ask the bank are..

Fees and services charges on the account ?
Minimum balance requirements ?
Interest rate paid on your balance ?

No, you can’t lose money from a FDIC insured money market account. Fees will reduce earnings.

2. It depends when the bank wants to change it. (anytime)

3. It depends on the bank but they want to keep your money as long as they can make money from it. Some banks will charge you a lot of fees to keep your money in a money market account.

4. Open one up if you want access to your money.

If you don’t need access to your $ 5,000 you can benefit from other accounts. It depends on wether you want a risky investment or a conservative one.

CDs are FDIC insured, given at a fixed term and are currently averaging higher interest rates than bonds. You can easily find one averaging (5% – 6%).

Bonds are not FDIC insured and currently giving low rates. ( 3%-4%)

Stocks, ETFs, mutual funds are riskier and promise higher returns.

Answer by Rocky S
Well that 5.23 % is a good rate but they change daily. You have 3 to 5 yrs and if you have money in a savings avccounbt you can invest in Vanguard Equity Income fund. It is a good one. And it retuens about 12% per yr if the market hols up. Last yr it was up 21%. If you need help let me know and i will help you. Ok.

Answer by Carlton C
There is no such thing as “investing” in a money market account. That is a fancy way of saying “savings account”. If you are afraid to lose money, place it in ING Direct and let it sit for 5 years. Or, you can take a little bit, invest in your education of finances and then really invest in some assets. Mutual funds/money market accounts will charge you to “hold” your money. Why pay someone to hold your money when you can hold it yourself.

Invest in your education of finances and make your money grow yourself.

“If you work hard on your job, you will earn a living. If you work hard on yourself, you will earn a fortune!”