Money market account or CD - Tilted Forum Project Discussion Community

iccky · 04-11-2004, 02:02 PM

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?

Warf Rat · 04-20-2004, 08:26 AM

One year is a very short time to put your money anywhere. You need to think about if you will really need the money.
Both CD's and money market accounts create taxable dividends. Now I now that a few thousand dollars at next to no interest won't cause a big tax problem, but if you factor in taxes when thinking of return, CD's and money markets don't keep pace with inflation. You can always buy a municiple bond with one year left on it. You won't make much money, but it will be safe, and triple taxe free. That means no federal state or local taxes. If you can extend you time frame, there is a lot more that you can do.

Good Luck !!!!!!!!!1

subz · 05-09-2004, 08:12 PM

You're not going to earn too much interest putting a few grand in a deposit account. Interest rates just plain suck right now.

Most banks have investment bankers that will meet with you and go over your options. I don't think they charge either. Have your girlfriend talk with one of the bankers where she holds her checking account and ask about what she can do to get the best return on her money. They'll be more than happy to help her out.

gar1976 · 05-14-2004, 08:22 AM

Just stick it in a money market fund. Don't bother with a CD.

Couple grand? Do some math, and the mattress is looking real good for money storage:

$2,000 * 1% return = $20. Nice dinner or something, I guess. Long story short, not much cash over a very short period of time, just leave it where it is.

gar1976 · 05-14-2004, 08:23 AM

Quote:

Originally posted by Warf Rat
One year is a very short time to put your money anywhere. You need to think about if you will really need the money.
Both CD's and money market accounts create taxable dividends. Now I now that a few thousand dollars at next to no interest won't cause a big tax problem, but if you factor in taxes when thinking of return, CD's and money markets don't keep pace with inflation. You can always buy a municiple bond with one year left on it. You won't make much money, but it will be safe, and triple taxe free. That means no federal state or local taxes. If you can extend you time frame, there is a lot more that you can do.

Good Luck !!!!!!!!!1

Check your state - some states/localaties won't tax interest only if its an in-state/local bond. Others will.

BigBlueWrecking · 05-15-2004, 10:29 AM

Money market mutual accounts are not FDIC insured and CAN lose money. It is very rare. They usually have a little higher return than a Money Market at the bank.

And for the person that says 20 is not enough to worry about, money is money. You never really know when they are going to spend the money, so one year can turn into two or longer. Either way, it adds up and I have never met anyone that has too much money.

04-11-2004, 02:02 PM	#1 (permalink)
iccky Psycho Location: Princeton, NJ	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?

04-20-2004, 08:26 AM	#2 (permalink)
Warf Rat Psycho Location: Philadelphia	One year is a very short time to put your money anywhere. You need to think about if you will really need the money. Both CD's and money market accounts create taxable dividends. Now I now that a few thousand dollars at next to no interest won't cause a big tax problem, but if you factor in taxes when thinking of return, CD's and money markets don't keep pace with inflation. You can always buy a municiple bond with one year left on it. You won't make much money, but it will be safe, and triple taxe free. That means no federal state or local taxes. If you can extend you time frame, there is a lot more that you can do. Good Luck !!!!!!!!!1 __________________ A day late, and a dollar short.

05-09-2004, 08:12 PM	#3 (permalink)
subz Upright Location: Portland, OR	You're not going to earn too much interest putting a few grand in a deposit account. Interest rates just plain suck right now. Most banks have investment bankers that will meet with you and go over your options. I don't think they charge either. Have your girlfriend talk with one of the bankers where she holds her checking account and ask about what she can do to get the best return on her money. They'll be more than happy to help her out.

05-14-2004, 08:22 AM	#4 (permalink)
gar1976 Custom User Title Location: Lurking. Under the desk.	Just stick it in a money market fund. Don't bother with a CD. Couple grand? Do some math, and the mattress is looking real good for money storage: $2,000 * 1% return = $20. Nice dinner or something, I guess. Long story short, not much cash over a very short period of time, just leave it where it is.

05-15-2004, 10:29 AM	#6 (permalink)
BigBlueWrecking Psycho	Money market mutual accounts are not FDIC insured and CAN lose money. It is very rare. They usually have a little higher return than a Money Market at the bank. And for the person that says 20 is not enough to worry about, money is money. You never really know when they are going to spend the money, so one year can turn into two or longer. Either way, it adds up and I have never met anyone that has too much money.