It is best to start investing as early in life as you are able to do so. It’s often been said that you should pay yourself first and it’s a great piece of advice to save even the smallest amount first, and then invest later. If you start this way first, the smallest amounts will add up quickly if you stay consistent with it. One simple but effective investment strategy is to open a Money Market Account.
What is a Money Market Account? A Money Mark Account is a type of savings account (offered by most credit unions and banks) that normally provides larger returns than a regular checking or savings account. You will also have easier access to your funds than you would if it were a CD or any other long-term investment account.
So, since you now know what a Money Market Account is, what do you look for in choosing the right one?
Most banks are going to offer about the same interest rate, but they can vary from bank to bank. So with that said, it’s best to shop around from bank to bank and see who’s offering the highest and best rate.
Know Your Minimum
Some Money Market Accounts require that you start with a minimum amount of $1000 or higher. Choose an account that you are able to handle; don’t go broke just to get started or put all you have in an account like this just to get started. One other thing to keep in mind is that falling below the minimum amount usually means penalties will have to be paid. Be sure to live within your means when starting an investment account.
Choose an account that allows withdrawals, but if your goal is to save and invest, keep your withdrawals to a minimum. At least with this type of account, withdrawals are usually allowed, however, be mindful that there may be a limit on the number of withdrawals taken per month and if you go over that limit there will be penalties. Penalties normally mean fees.
All Money Market accounts like any other bank account have some fees. Do your research and find out the different fees (monthly and annual), charges and penalties that each bank may have. Some fees may be the same from bank to bank but others may differ and then others may charge for one thing when the other does not.
A Money Market Account is great for the starter investor and is a great way to start investing until you have more experience. This is also a safe and secure way to begin investing. Another great piece of advice would be to speak with your personal banker and let he/she know of your desires to save and invest and also let them know of your short-term and long-term goals. If it is a bank that you are already banking with, these consultations are normally free of charge and can be helpful in understanding what it is that you’re looking for and what it is that you want.