Money Market Funds vs. Online Savings Account

wileymiester · #1 (**permalink**) 09-05-2007, 12:11 PM

I have just recently started to have a close look my investment options so I don't have a whole lot of finance knowledge at this point. One thing I did come across that looked interesting were money market funds that you can use a type of savings account with limited check writing and deposit/withdrawl capabilities.

I've started to compare some of the better rated money market funds and the ones that I have found are comparable to my HSBC online savings account (5.19% APY). Is there some incentive that I am missing regarding money market funds other than the worry that HSBC might try to lower my interest rate at some point?

I am assuming that APY is equivalent to compound yield. Also, this isn't really for investing, more just for a rainy-day type of fund.

Hermes · #2 (**permalink**) 09-17-2007, 03:07 PM

Money Market Accounts are really used to temporarily 'park' your money. It is intended for money which you plan to invest in the near future as money market accounts are very liquid and very low risk investments.

As far as returns are concerned they offer a similar return to your savings account or CD.

Like I said people use them to temporarily 'park' their money.

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