Money Market Accounts Explained

Money Market accounts explained in simple, easy to understand terms. In today's video, I take a look at a type of account you might not be too familiar with - a money market account. I'll explain how money market accounts are different than savings and checking accounts. And I'll explain the best use for a money market account. Your bank or credit union probably offers this type of account, so maybe you'll consider opening one.
Have you used a money market account before? Let me know in the comments.
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FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY. NOT LEGAL OR FINANCIAL ADVICE. The information provided in this video and on this channel is for educational and informational purposes only. It is not intended to be a substitute for legal or financial advice that can be provided by your own attorney, accountant, and/or financial advisor. Practical Personal Finance accepts no liability whatsoever for any losses or damages arising from your own personal financial decisions. You are advised to consult with your financial advisor, tax professional, or attorney regarding any and all financial decisions involving your own income and taxes.

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My dad just passed away and I took over the finances for my mom. Dad had over $200,000 in a MM account earning an embarrassingly low .0025% interest! I couldn't believe my eyes! He got $520.00 in interest for the entire previous year. Needless to say I scooped up that cash and bought various length CD's earning around 5%. My mom will now earn more in three weeks that that same case earned last year.

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[@garym2282]

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Fidelity has MM’s with 5% annual and 7 day yields

[@jackcarraway4707]

Regular savings: Trash. Don't use period. HYSA: Just as liquid as a regular savings account. I like to use these for scheduled stuff like vacations, car maintenance/insurance, etc. Money Market: Largely liquid, but often has a limit on number of withdrawals. Good for emergency funds. CD: Least liquid, higher ARP. Good for saving for big purchases that's years down the road like a car or house. I Bonds: Great as an extension of your emergency fund. The money is locked away for a year, but interest payments adjusts for inflation, aka the mortal enemy of emergency funds.

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[@PracticalPersonalFinance]

You're welcome!

[@Sternschnuppen85]

Thanks for this! How is a money market account different from a HYSA?

[@farlowalexify]

I opened a money market account and it has a higher interest rate is compounded as well at a credit union than what a bank offers

[@angelajohnson7281]

Hello new subscriber, great video and thank you for your simple easy to understand explanation of money market accounts. I really enjoyed this video and will be looking at more all day today. Thanks again.

[@PracticalPersonalFinance]

Thank you Angela! I’m happy to have you as a subscriber. I hope my videos help you improve your personal finances!

[@PayampsCutz]

Hi, can you make a video of navy federal cash account thanks.

[@Kuwandi]

Money market accounts came in around 1977-8 or so - I remember it was popular I was in high school then and it was a constant noise ….as were the super high inflationary rates …ouch …12% interst on a 30 mortg… try that …my parents bought a home in 1980 , but paid off in 5 yrs ✅

[@dnah02]

Interest rates are going up on saving accounts and money market accounts. So far I had a money market account go from .50 to .80% I hear the rates will go up more so let's see.

[@normandeanragle6292]

What happened if banks like SVB fail in California to there money market account

[@Jayydyy]

Hey loved the video! Quick question what’s the minimum balance you’d recommend/suggest for a beginner to open a money market account with Ally? I know there’s no min balance required to start, but I want to get your input on a good min balance (: Thank you 🙏🏽

[@PracticalPersonalFinance]

Hey John, thanks so much for watching!! As I mentioned in the video, I think money market accounts are a great place to store your emergency fund. They gain a little bit of extra interest and the cash in the account is very easily accessed. That being said, I'd go ahead and start a money market account with as little as $100 and build myself a fully funded emergency fund little by little. You gotta start somewhere! If you're interested, I made another video about how much you should keep stashed away in your emergency fund. Here's the link: kzbin.info/www/bejne/pJelpntmr5qVf7s

[@Trignama1]

I'm just getting into this stuff. 2 Months ago I could officially claim I was debt free, and have since been saving furiously. I have started my "nest egg" in a normal savings account, however, after researching the benefits of a money market, I just applied for one. Now I don't have 6 months of my expenses in cash yet, hell no where near it, but I'm going to take what I have, open the account, and just set up an auto deposit to it every time I get paid.

[@broabc66]

$1500 should be your minimum

[@johnlewisiii2076]

A wealthy person wouldn’t even know how much interest they earn on their savings, because they don’t think about savings this way. This could not have been better put.

[@khasimshareef7691]

Then what do wealthy people think about and where do they invest to get excellent or better ROI which makes them well off/richer? I really want to know

[@megggs2614]

Is it better to have a savings account or a money market account? Isn’t saving account the same as emergency $?

[@luxurybuzz3681]

Have both

[@noslipups3657]

so i have a question and i hope you respond and maybe i can book a consultation but im starting a very successful business soon and i want to start a money market account with around 100k or possibly more to put in there.....what type of interest can be grown with that type of money and also besides a money market account are there any other types of accounts i could use to build wealth?

[@PracticalPersonalFinance]

Great question! I would suggest using a money market account to keep your emergency fund, and perhaps any money you’ll be using in the next couple of years. Anything you’ll be hanging on to for longer; I would stash it in a retirement account like a Roth IRA or a brokerage account, invested in something like an index fund, to earn a little more of a return.

[@noslipups3657]

@@PracticalPersonalFinance yea I spoke to someone and they recommended a mutual fund & also a money market account to have my money worth for me

[@Joethebro101]

But what specifically is the money market?

[@drydock43]

How safe are money markets.. Brokerage account, Didn't cover this

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LOL

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YES

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[@Native722]

All these accounts that kind of cross each other a little bit

[@joeysbestfriend2614]

Hello, I have an account at my credit union and they call it “liquid advantage money market” Do you know what the “liquid advantage” part means?

[@OfficialFelipelopez]

Ask them. It means you can access it at anytime.

[@luxurybuzz3681]

It means they dig an irrigation system in your yard after you give the bank a certain amount of money

[@cashfno1000]

How can I make one

[@lilcombofin1366]

👍🏻

[@PracticalPersonalFinance]

:D

[@d.ramirez954]

I have a good amount in a market with Navy Federal giving a little over 1%

[@nobodynothing00000]

NFCU doesn't pay very well with their MMSA. I opened one at Ally Bank nearly 5% interest

[@michaelroberts5644]

You can't at credit unions

[@markovujanic3195]

So good place to keep your emergency money but won’t get rich of it. Sounds good

[@PracticalPersonalFinance]

You hit the nail on the head Marko!

[@bencalhoun8216]

Video starts at 0:48

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Alson invest in Gold

[@PracticalPersonalFinance]

Risky!

[@JdeC1994]

(1:20) TRA-di-tion-al-ly! 🙄🙄

[@wackzingo]

This video is inaccurate and misleading. There is no limit of 6 transactions per month on money market funds. Money Market Funds at banks, especially small banks are not the same thing as the options available at a brokerage like Fidelity, Schwab, E*TRADE, and Vanguard. Most banks are paying 0.6% to 3.75% but you can get 5.25% with VUSXX and near 5% on most other MMFs at brokerages.