Skip to main content

CHOOSING BETWEEN A MONEY MARKET ACCOUNTS,CERTIFICATE OF DEPOSITS(CDS)OR A SAVING ACCOUNT.

At times it's hard to determine the right saving option between a saving account, a CDS account and a Money market account. Let’s compare the accounts;
Savings Account
Savings accounts typically have a higher rate that most current or checking accounts. With a regular savings account, you commit to depositing money each month, without fail. In return, your money earns a higher interest rate than you’d get with a current account. It’s best suitable for savers who are starting out and wish for a disciplined way to save. It’s also advisable to go for it if you are not looking forward to investing a lump sum. The interest rate varies it might be either fixed interest rate or a variable rate.Check before opening whether the interest rate is fixed or variable. Failure to remit the monthly savings may see your interest rate reduced or Charges may accrue on premature withdrawal.
The account might only last for a fixed term. At the end of the term, you get your money plus the interest accrued.Automatic savings plans can be the perfect option for developing a saving culture for spendthrifts. It's Offered by many banks to help customers save.The customer issues a standing order to the bank, to automatically transfer a specific amount of money from your current salary account into your savings account monthly. Most individuals with automatic savings enjoy seeing savings grow monthly while earning interest. However, there is a limit on the number of withdrawals each year. Don’t go for this type of account if you are saving for emergency purposes. Read the rules carefully before choosing a regular savings account.It also likely that a regular savings account has a limit on the maximum allowable savings each
Money Market Accounts
It is a financial account that pays interest on the basis of current interest rates prevailing in the money markets.
These type of investments typically puts its money in low-risk areas such as treasury bills and commercial papers. They have very short maturities, hence a safe haven when there is extreme volatility. Money market accounts are high liquid compared to stocks and bonds. They tend to invest in securities that are of high demand.
Money market deposit accounts require a balance of $100 to $2,500 hence the interest is significantly higher compared to regular savings accounts. The money markets account don’t have a limit on h withdrawals.
Certificates of Deposit (CDs)
A certificate of deposit (CD) is a savings certificate allocated a specified maturity date, a type of promissory note issued by the bank with a fixed interest rate. It is a time deposit, similar to a savings accounts that is insured hence risk-free. CDs also exist as savings certificates allowing you to receive interest periodically. An investor purchases it from the bank directly. CDs in most cases pay the best interest rates compared to all these accounts.
CDs operate on the theory that individuals forfeit cash at hand or liquidity for a higher return in the long run. Long term CDs have higher interest rates compared to short-term CDs.
Since there is more risk involved with holding the investment for a longer period of time and since the individual foregoes liquidity he is compensated with a higher return for a longer period.
From the details given each account has its merits and shortcomings. Educate yourself and learn to know the appropriate way that suits you in investing and saving. Share this article on social media and enlighten your peers on the different ways of investing. I believe they will find it interesting and informative.
For more detailed information visit
https://www.nerdwallet.com/blog/banking/checking-account-savings-account-cd-money-market-account/
https://www.usbank.com/savings/money-market.html

Comments

Post a Comment

Popular posts from this blog

FULIZA MPESA

Fuliza M-PESA is a new service which allows M-PESA customers to complete their M-PESA transactions when they have insufficient funds in their account. 1. What is Fuliza M-PESA?  This is a service that allows M-PESA customers to complete their M-PESA transactions when they have insufficient funds in their M-PESA account.    2.What are the requirements and how do I activate Fuliza M-PESA Service? You need to be an M-PESA registered customers with an active Safaricom line. Dial *234# and select Fuliza M-PESA to opt in. 3. How many accounts can I hold for Fuliza M-PESA services? Every M-PESA registered line will be treated as a different account. Each mobile number will qualify for Fuliza M-PESA and will be awarded a limit. This limit will be reviewed every 3 months depending on your usage. 4. How will I know my Fuliza M-PESA account details? Dial *234# and Select Fuliza M-PESA to check your limit, balance, mini statement and opt out option. Ev...
Post a Comment
Read more

MPESA CHARGES

These are the new Mpesa rates after the government increased tax on mobile money transfers by 2% on July 1 st  2018. The fees include  Mpesa withdrawal rates  for ATM and Agent withdrawals. Safaricom Kenya  has flexible M-pesa tariffs and fees: some services attract no charge. All Mpesa deposits are free. The maximum you can send is Ksh 70,000 per transaction and Ksh 140,000 per day. Use the  Mpesa charges calculator  to get actual Safaricom Mpesa rates for any amount within the allowed limits. Below is the Safaricom Mpesa charges  MPESA CHARGES /. M-PESA charges will depend on the amount you are sending or withdrawing. You can use your M-PESA menu to buy airtime for your phone, or for someone else. This service is free and you will only pay for the airtime purchased. NOTE: Maximum Account Balance is KSHs.100,000 Maximum Daily Transaction Value is KSHs.140,000.Maximum per transaction is KSHs.70,000 You cannot withdraw les...
Post a Comment
Read more

A look at how a playground may pose Fatal Injuries to children.

A look at how a good playground offers more than just fun and games We associate playgrounds with fun, games and exercises. However, danger lurks in playgrounds. Parents of young children should be on the look out to avoid injuries that would otherwise be avoided if proper care is undertaken. It’s always entertaining and a thrill for your child to go play on the playground. According to the emergency medicine physicians’ group, litter, rusty inadequately maintained equipment and bars. Automatically make the playground dangerous place for the children. Permanent disability Shocking statistics from the US Center for Disease Prevention and control indicate that more than 200,000 children receive emergency treatment each year from playground-related accidents. These figures portray a rapid surge in recent years compared to previous years. A Further devastating analysis shows that approximately 20,000 of these injuries are head related injuries including concussions and traum...
Post a Comment
Read more