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Money market account or CD
I'm asking this question for my girlfriend, who has a couple thousand dollars she wants to move out of her checking account to someplace it will be making money (of at least not losing value from inflation). A few requirements for the investment:
1. It has to be liquid in one year when she graduates from college (lord only knows what will happen then, and whatever it is might require cash).
2. It needs to be risk free or at least fairly certain not to lose much value (Not FDIC insured is ok, but stocks probablly aren't).
We were thinking either a money market account or a CD. Can anyone explain what exactly a money market account is, and how it differs from a money market fund? Are there any better ideas for where to put the money?
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