Money Market Accounts have many of the characteristics of a traditional savings account, but also add a safe, conservative element of investment. The money you deposit in this type of account is usually invested in short-term, fixed-income securities, such as U.S. Treasuries. Often, the larger your account balance, the higher the interest rate you will earn. These types of investments provide better returns for savers who carry higher balances and need to access their savings less frequently.
Money Market Funds, unlike a bank deposit or a money market account, are not FDIC insured. The funds are, instead, backed by their respective issuing institutions. Money market fund rates are variable. In other words, you don’t know how much you’ll earn on your investment next month. The rate could go up or down. If it goes up, that may be a good thing. However, if it goes down and you earn less than you expected, you can end up needing more cash.
Because of the inherent and unpredictable risk, we at Key Financial do not offer Money Market Funds as preferred investment vehicles to our Safe Money Investors.