A money market, different from a money market account, is the trade in short term, low risk securities. These securities, such as certificates of deposits (CD’s) and U.S. Treasury notes. A money market fund is a mutual fund that trades it’s shares to purchase these securities. The income is then distributed to shareholders in the form of additional shares. It’s a fairly safe, conservative way to invest. Finding the top money market funds might be difficult, however.

Most investors are looking for quick ways to make big cash. Yet nowadays, even the top rated money market funds may not have a interest rate of 2%, or if you’re lucky, perhaps 2.5%. That might feel pretty depressing. Especially when some online savings accounts offer a 3.5% interest rate. Why use them at all?

One reason is that all of these funds, both low rated and top money market mutual funds, can be found in taxable and non taxable forms. While a savings account might offer a higher interest rate, the taxes you’ll pay might not bring you out any better at the end. A non taxable money market fund at a lower rate ultimately can sometimes bring in more cash.

Another thing to consider is the safety level. Since a money market fund is a security, if you buy through a firm covered by the Securities Investor Protection Corporation (SIPC), you’re covered even more than what the FDIC insures on a money market account. Even if your brokerage busts, you can be covered up to $500,000 in securities and up to $100,000 in cash. The FDIC insures only up to $100,000. Or perhaps $250,000 for retirement funds.

Some funds are bought through a mutual fund company. Others through retirement investment programs. When searching for the top money market fund, remember that depending on the program, there will be different qualifications in order to invest. Other funds allow deposits from individual investors. They are basically open to anyone. Also remember that funds come with investment management fees. Figure the fees into your calculation before deciding you’ve found the highest rate fund.

And good luck!

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Investing, trading, getting involved in the stock market or real estate…all of these can be very lucrative moves, but also come with a certain risk. A simple, virtually risk free way to make a steady income is by using a money market account. An online money market account will compete for your business, as well, making the opportunity even more attractive.

Of course, first you’d like to know what a money market account is. Basically, it’s a savings account with a high interest rate. The bank, or money market fund, pays you a monthly interest rate simply for using their service. Usually, there is minimal initial deposit and/or a minimal account balance that you have to keep in order to keep the interest privileges. There may also be a maximum number of transactions you can make on that account per month. Over a period of time, however, you might be able to a accrue a decent amount of interest. That means you’re making money just by letting money sit!

In general, the higher the minimum deposit or account balance, the higher interest rate you’ll find. The best online money market account rates are therefore subjective. If you have a lot of money to deposit, say $10,000, you can find a rate and annual percentage yield of 1.5% or 1.6% percent. A minimum deposit account of $1 or no minimum deposit might only yield 1.2% or 1.3%.

Money markets are offered either by banks or credit unions. The safety of a bank is that their money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC). Even if the bank goes out of business, your money– or at least the vast majority of it– is insured and available. The FDIC insures funds up to $250,000. It is an independent agency of the federal government, in contrast to the National Credit Union Administration (NCUA), a federal agency that insures credit unions. Basically, your money is safer in a bank than a credit union.

The advantage of using such an account online is primarily about convenience. Easy depositing, withdrawals, and general access is facilitated by online technology. Fees and paper statements are usually significantly less with online money market accounts, as well.

Make sure that any money market you use is FDIC insured. Read reviews to feel confident that their site is easy to maneuver, customer service is up to par, and that there is a general positive rating. Then, let the money accrue!

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