Points to Consider when Looking for the Best CD Money Market Rates

As an investor you want to get the best CD money market rates to maximize the return on your idle cash, without putting it at risk of loss. Given the turmoil that has been occurring in both the banking and investing worlds, this is no longer an easy task. Areas that were once considered to be a safe haven for those who wanted slow but steady gains on their investments have become somewhat more risky. Both of these forms of investment provide a better ROI than a standard savings account, but they also have their disadvantages.

Those who invest in a CD must be willing to invest their money for a specified length of time in order to earn a guaranteed interest rate. Any time you withdraw your money before the date of maturity, you will be assessed what can be a very large penalty. With money markets you have two different varieties, the money market account in which the bank sets the interest rate and money market funds whose interest rates are tied directly to the markets.

When comparing the best CD money market rates to the rates offered on the best money market accounts, you need to decide how much of a risk you are willing to take with your money and how long you can afford to leave it tied up. If you want a guaranteed interest rate with a safe investment, buy CDs as your money is guaranteed by the FDIC and the bank will guarantee the interest rates. The only real risk here is if the rate you get should end up being significantly lower because the market rates go up.

With money market accounts the interest rates are not guaranteed and you can easily loose the par value of your account especially in light of the current market conditions. This type of account typically has a very high minimum deposit and severe penalties if your account goes below the minimum. However, they are FDIC protected.

The best money market funds are considered the most attractive, but they are the most risky at the same time. They pay higher returns on your investment, but you have absolutely no protection or insurance whatsoever. Remember, even the best rated money market funds can fail. If the funds you are invested in lose money or go bankrupt, your investment goes with them and as many thousands of investors found out in 2009 can leave you with nothing but worthless paper.

Finding the best CD and money market rates is not an easy task, you will need to carefully investigate any company you are considering placing money with and verify their current financial standing as well as how well they are rated with the ratings agencies, the SEC, and their customers. Regardless of how well rated any particular money market fund may be, we believe that in the current financial climate the lack of FDIC insurance is not worth the risk.