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Money Market Account? There is a Better Way6/9/2016
Often we hear that to save and earn a higher yield for our savings we must use a money market account. Many financial experts recommend keeping your emergency savings in a Roth IRA using a money market account. Is this really the best option, or can you do better? We say this advice is for those who donít know better. Suze says put your emergency money in a money market in a Roth IRA, we say there is a much better, superior option. Why pay high fees with account minimums and lower rates of yield, this doesnít make sense when there is a safe, FDIC Insured easier option.
Typically a Roth IRA is for retirement investment, not an emergency fund. A retirement investment account (Roth IRA) is a long-term investment account with money usually invested in ill-liquid investments. To liquidate (sell) can be expensive, especially if your investment is down, or there are early withdraw fees, marketing fees and commission charges. Itís obvious you wouldnít want to use invested money for an emergency savings. So why have your money sitting in an investment vehicle (Roth IRA) money market account that pays low yield, charges fees and has minimum account balance requirements, this truly doesnít make sense. There is a much better, simpler, more profitable way, itís shocking many so-called financial professionals still tell people to use a money market account for their liquid emergency savings.
High interest savings accounts have been around for many years. These accounts have no minimums, no fees, no transaction fees and usually pay much higher interest, and yes they are FDIC insured, same as most money market accounts. With a high interest savings account, most have no fees, no minimums, and totally liquid meaning you can have your money when you request it, and with higher yields than most money market accounts. This is where your savings and emergency savings should be, not sitting in a money market Roth IRA where you are usually charged fees, high minimum balance requirements, plus your money is accruing lower yield than most high interest savings accounts.
Sorry Suze, and other financial experts, there is a better way. There is a reason why many financial speakers want you to use the money market in a Roth IRA. The simple answer is the fees, service charges, commissions and balance minimums keeps their industry in business.
The high interest savings accounts are offered by many financial institutions that have been around for over one hundred years, FDIC insured and easy to find. We have no vested interest with any of these companies or financial institutions. We are here to educate you how to be smarter and keep more of your money. You can Google, or start at Ratebrain.com to find high interest savings accounts. Your Roth IRA is a retirement investment account, not an emergency savings account.
Phillip Day, President
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