Money Market Funds and Money Market Deposit Accounts
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Money Market Funds and Money Market Deposit Accounts
There are two ways to invest in money markets. You can buy a money market fund or open a money market deposit account.
Money Market Fund
A money market fund is an investment vehicle like a mutual fund, and you may need a financial advisor to help you invest in one. A money market fund offers a fixed return, called a dividend. The dividends are taxable unless you buy a tax-free or tax-exempt fund.
Money Market Deposit Account
A money market deposit account is like a savings account. You deposit money and it grows according to a fixed rate of return. The return is taxable.
Money market funds and money market deposit rates are generally similar and each follows the same pattern of investment to spur growth within the fund. They simply invest in short-term, low-risk securities like treasuries and bonds. To find the best money market rates, be sure to compare both types of vehicles.
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