Money Markets: Two Types of Accounts to Consider

Advice / Filed Under: Trust Services / April 4, 2015

Investors have a wide array of options when it comes to saving and growing their money. While some of these options sound similar, they’re actually different products with different benefits and risks. That’s why it’s important to understand the basics before making any investments, small or large. Here’s a look at two similar-sounding products: money market accounts and money market mutual funds.*


Money market deposit account

A money market account is an interest-bearing account offered by Navy Federal and other financial institutions that offers benefits similar to checking and savings accounts. It typically offers higher interest rates than traditional savings accounts in exchange for maintaining a higher minimum balance and limiting withdrawals.

The Benefits

You’ll have the ability to write checks or make transfers, and there are no shares to buy—interest is earned on your deposits, as with a savings account. Interest rates are typically tiered; you’ll earn a higher rate on higher balances. Your deposits are federally insured, which means the funds are backed by the U.S. government. Money market accounts can be ideal for emergency savings or money you plan to use in the near term.

The Downsides:

Money market accounts typically have higher minimum balances than checking and savings accounts. The interest rate also tends to be low—typically higher than those of traditional savings accounts but lower than those of certificates. Federal regulations also limit the number of withdrawals and transfers in a calendar month.

Money market mutual fund

To understand money market mutual funds, you’ll first need some information about mutual funds in general. A mutual fund is an investment vehicle that pools money from investors to purchase securities like stocks, bonds or cash investments. When you purchase a mutual fund, you’re buying shares of those investments. A money manager oversees the fund’s portfolio. You can purchase mutual fund shares within investment accounts such as brokerage accounts or retirement accounts, like individual retirement accounts (IRAs) and thrift savings plans (TSPs). The percentage of mutual funds and the types of mutual funds in your portfolio should depend on your goals, risk tolerance and when you’ll want to use the money.

A money market mutual fund is one type of mutual fund. Money is invested in cash investments, so it’s considered to be a low-risk investment. As a mutual fund shareholder, you’re purchasing shares of those investments.

The Benefits

Mutual funds give small investors access to professionally managed portfolios. You can redeem shares at any time. Fees in a money market mutual fund may be lower than other types of mutual funds, and some funds invest in tax-exempt investments. Some money market mutual funds include check-writing abilities.

The Downsides

As low-risk investments, the returns also tend to be low. While they’re generally considered safe investments, money in a mutual fund is not insured, which is one of the key differences from a money market deposit account.

Learn more!

Check out Navy Federal’s current savings rates for checking, savings and money market accounts.


*Money market funds seek to maintain, but do not guarantee, a stable $1 net asset value.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

Nondeposit investment and insurance products are offered through Navy Federal Financial Group, LLC, (NFFG), and through its subsidiaries, Navy Federal Brokerage Services, LLC (NFBS), a member of FINRA/SIPC, and Navy Federal Asset Management, LLC (NFAM), an SEC Registered Investment Advisory Firm. These products are not NCUA/NCUSIF or otherwise federally insured, are not guaranteed or obligations of the credit union, are not offered, recommended, sanctioned, or encouraged by the Federal Government, and may involve investment risk, including possible loss of principal. Products may be offered by an employee who serves both functions of accepting member deposits and selling nondeposit investment and insurance products. 1-877-221-8108. Trust Services available through MEMBERS Trust Company. 1-855-358-7878.

Image used for representational purposes only; does not imply government endorsement (per 32 CFR 705.13).

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