What are the benefits of having a MONEY MARKET account and what are the various types to choose from?
The primary benefit of a money market is massive liquidity. Nearly all instruments are VERY easily bought and sold, and they’re VERY safe – returns are guaranteed in almost all cases. That means a money market is a good place to park money if your primary concern is preservation of principal. That is, you have enough money that an FDIC-insured bank account is inappropriate (more than $100k), and you want to get a bit more interest than you otherwise might with a bank account. The down side is low reward – since they’re guaranteed, they don’t pay much. You can expect very low returns from these vehicles, and in many cases they fail to even beat inflation (rule of thumb, 3% growth per year). They’re still better than most bank accounts in terms of interest, but not going to give you much return. (This may be fine with you, if you really want the above benefits.) The varieties mainly come down to what they invest in – T-bills, CDs, bankers’ acceptances, etc. Even with “safe” investments,
