A brand new year is starting and if you learned anything from 2020, it’s that you need to be prepared for those “what-if” scenarios.
Having adequate emergency reserves is important and consider making it part of your 2021 saving goals. You should always strive to have at the very least six months’ worth of your monthly expenses set aside in your emergency reserves.
There are several options that you can choose from if you want to start saving money for emergencies. One of the best and easiest options is using a money market account.
A money market account is a type of interest-earning savings account, and is intended to offer investors high liquidity with a very low level of risk. They are also insured by the FDIC.
Are you trying to open a money market account? Let’s go through how and why to start using a money market account successfully.
Getting a Money Market Account
A money market account can be opened through any bank or financial institution. A money market account gives you the same peace of mind that you obtain when you save money in a savings account.
To open a money market account, you may need to deposit the minimum amount required by the financial institution. Sometimes the minimum is $10,000 or higher. A financial institution may require a greater deposit than the minimum in order for you to earn higher interest rates.
How Does a Money Market Account Work?
Money that is deposited into this account earns interest. The interest that is paid is outlined by the bank. You will be happy to know that the interest rates paid in this account are usually a little higher than the traditional savings account.
However, even though earning interest is a benefit of a money market account, the biggest benefit is its liquidity and safety. You cannot afford to have an emergency all of a sudden and have to depend on funds that have decreased in value, need a week to receive a check, or have a surrender charge or tax if you touch the money.
Is a Money Market Account Right for You?
Money market accounts are only for one thing…keeping money parked in a safe place. They should be a part of any family’s short-term financial needs.
If you have any questions about how to use a money market account for retirement purposes, contact us.