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A money market investment account is a financial tool similar to a savings or checking account. This type of account, however, offers a few distinct advantages over standard banking tools, especially in regard to earnings. In most cases, a money market investment account will have ties to other investments, such as stocks or bonds, which can provide it with a higher rate of return.
How a Money Market Investment Account Works
In most cases, a money market investment account will work in a very similar fashion to a checking or savings account. Account owners will have the ability to withdraw money within reason and still maintain earnings. They are also able to add to the account balance to increase potential for earnings. Most money market investment accounts will require a minimum balance for earnings to result.
How Earnings Work
The specific details of earnings and accruals will depend on the exact money market investment account in question. In most circumstances, however, a variable interest rate will apply to the account. When stocks and bonds tied to the money market account climb, the earnings will, too. When they fall, so will the interest rate paid out. The original investment, however, will maintain its value.
The Security Provided
A money market investment account is often preferred by small investors because of its security. This type of account typically qualifies for FDIC insurance.
A Snapshot Of A Money Market Investment Account
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