Methods of Investments - Essay Example

Money market accounts are a type of savings account, in which money is invested at a high-interest rate, with high restrictions on its withdrawal.A money market account offers a very high rate of interest on the amount deposited. Furthermore, the interest is compounded daily, and paid monthly, which means that the interest amount keeps on increasing based on the compounded interest. This normally pays off the highest, and it is safe due to the fact that most money market banking systems are insured by Federal Deposit Insurance Corporation.

There mostly is a high cap on the minimum amount that may be left in a money market account so most banks might not even accept the $1,000 as a deposit amount. Furthermore, there are restrictions on the number of transactions that can be made per month which limits user control, and there are high transaction fees as well. All these things have to be kept in check when a money market account is made.A passbook savings account is one for which all transactions including deposits, withdrawals, and interest, are recorded in a passbook accessible to the account holder.

This is updated by the bank on a routine basis.A passbook savings account allows the account holder to observe his banking trends and extract profitable patterns from the records. Also, this account has a higher degree of transaction freedom than a money market account. Thus it is beneficial to those account holders who have a keen interest in the trends and they do not need a monthly statement.