Savings Accounts

There are several different types of savings accounts available. Some of the savings accounts are stable and safe investment tools, especially if they are in short-term investments. Short-term investments are traditionally bank savings accounts and money market mutual funds. They are very low risk ways to save your money for retirement, your children's college fund, or just to have a cushion to fall back on in an emergency. No matter what type of savings account that you invest or save money in, whether it is a bank or a money market fund, the account balance will earn interest.

One type of savings account is a money market account. Money market accounts are provided by banks, but they usually offer a much higher annual interest rate than a traditional savings account. Another type of savings account is a CD. A CD is a Certificate of Deposit. With a CD, the money that you invest is held by the bank or other financial institution for a set amount of time and it is not available for you to withdraw the funds before the maturity date, without being subject to fees and penalties. A money market fund is very similar to a traditional bank savings account.

They are offered to the public by mutual fund companies. A money market fund generally generates a much higher yield, which in turn provides the investor with much higher returns. Because the funds are not held by a bank, they are not FDIC insured, but they are usually invested in short-term bonds, which hold much less of a risk of losing the invested funds as with a long-term bond.

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