Can Opening A Money Market Account Affect My Financial Future?

For younger consumers looking to plan their financial futures, it becomes important to look at ways to invest their savings wisely without running a huge risk of losing their money altogether. While there are so many options available, like IRAs and 401Ks and mutual fund investments, among others, it’s equally important to diversify rather than putting all your eggs in one basket. Opening a money market account as part of an overall financial strategy makes great sense for any younger consumer looking for a safe option for at least part of their future savings. In a struggling economy, mutual funds and 401Ks can take a beating on it returns based on the type of investment accounts are included in the mutual funds or 401Ks. With a money market account, while the overall yield is much more conservative in nature, the monies are protected and even the slightest return can be a windfall in a struggling economy.

 With the global economic crisis that has gripped the financial world since the mid-2000s, many investment firms and banking institutions have lost significant amounts of money due to their investments in high-risk speculative bonds and securities packages. Many banks have also failed as a result. While money market interest rates have certainly dropped during that time, in some cases lower than one percent return for a $10,000 minimum balance, they still don’t lose money. A money market account is definitely considered to be a conservative option in terms of investments, but making one percent is definitely a lot better than losing millions. A consumer still has the ability to draw a limited number of transactions on their money market account, and as long as they retain a minimum required balance, will still gain a low interest yield. Ask one consumer who holds a low interest money market savings account, and another who held an account through Lehman Brothers, and ask them which account they currently like better. The guess is that considering Lehman Brothers, one of the largest investment firms in the United States, went bankrupt, the answer would come from the person holding the lower yield money market option.

Diversity in investments means more to a consumer today than ever before. Making smart choices in terms of how your savings will yield long term results can be tricky, especially in an ever-changing economy. However, the decision to open a money market account as a part of your investment portfolio should always be an option in order to guard against high-risk, high-yield accounts that can fluctuate with even a hint of bad economic news.