Money Market for the WIN!

In a previous post, I mentioned a few of my investment strategies, and how some of my peers are consistently worried about stock market performance, or cautious to invest their hard earned dollars. A few years back, a friend of mine who is wicked smart asked me where (besides my trusty 401K) I kept all my money - was it just in a savings account?

The answer: of course not!! That would be silly! I think I take for granted the fact that I grew up in a household with a very financially savvy, yet conservative, father. Not everyone (to my surprise) has the benefit of quarterly investment reviews for zero dollars with their parent. I also grew up in a family where I left while manilla envelopes on my dad's dresser with cold hard cash earned from babysitting labeled "for college". So, needless to say, my childhood was far from normal, but for me, it was 100% normal.

Recently, as a means to prevent 'overexposure' to any one portfolio or investment strategy, I opened up a Money Market Account. What is a money market account? A money market account can be opened across a variety of entities (bank, mutual fund, etc.), and it acts similar to a CD (or certificate of deposit). The benefits, and differences, are as follows:

1. Multiple withdraws (with limits): Many money market accounts allow you to deduct or move around $$ ~6 times per month without limits. This is different than a CD in that you are able to touch your money. For this reason (and others), a money market is a great way to park funds you'll likely need within the next ~year (e.g. downpayment, college money, vacation funds, etc.), or money for a rainy day. You know they'll be there, and you'll get a higher rate of return than a typical savings account (see below).

2. Higher Interest Rates: The trick here is to make sure you shop around to determine the right money market for you. If you have a lot of cash on hand ($10K+), you can leverage incremental interest rates. For example, if you park more money in an account, you can capitalize (no pun intended) on a higher return.

3. "Safe": You're guaranteed these funds, regardless of what happens in the market. That is pretty clutch!

Happy Saving and Until Next Time,

AA

PS - Other fun tip. Capital One has HH when all coffee is free for card holders. They also (always) offer 50% off their coffee for card holders - another reason to SAVE!

I love "HH" for Coffee at #CapitalOneCafe!

Note: The ideas above are strictly my own, and should not be taken as any sort of financial or investment advice. I am not a licensed financial planner, and these ideas do not guarantee any sort of return (or loss) in today's marketplace. Thank you!