Use our UK Finance guide and learn by experience. We outline pitfalls so that you don't have to learn the hard way, as many of us often do.
Sound Advice
Money Market Account
When you decide to start making investments for the future and saving your money, which is hopefully sooner than later, its best to open a specialized account for this purpose. Although its called a 'savings account', for the purpose of saving your money as an investment, you'd be better off using a money market account.
There are a number of reasons why a money market account is a better choice for an investment account.
The interest on savings account's is quite low, whereas money market accounts offer a much higher interest rate. Also, for the most part, money market accounts allow you to still handle your money as you would in a normal account in that you can deposit and withdraw cash as you need to. When it comes to withdrawing, you'll find that there are certain restrictions on the amount of times that you can withdraw in a month. Bearing in mind that with other investment accounts you can only withdraw once or twice a year, this restriction on the money market account is quite minor. Deposits are also regulated with most money market accounts. You'll more than likely find that your bank will require that you deposit a minimum amount in to the account.
These few restrictions are made more acceptable with the knowledge that you're getting such a high interest rate on your money. The small percentage of return on your money in a savings or checking account doesn't even begin to compare with the returns on a money market account. For people who're looking for a low risk investment on their saved money, this would be your best deal.
It must be said though, that if you're looking for a very high return on your invested cash, a money market, whilst having relatively high interest returns, doesn't give you what you could be earning elsewhere. For many people, a money market account is what they use to store their money whilst waiting for the next big investment. Property, stocks and bonds are far better ways to invest your money for high returns. However, as you investigate you next investment, there is no better account to store you money than in a money market account. At least you money will be making money as you wait.
If you have large amounts of money to invest, then the best way to keep that money save and have it earn interest whilst you wait is to put it into a money market account. Speak to your financial institution now about opening your money market account.
