How do money market accounts work?

canstockphoto4265007A money market account is a savings account with a difference, in that in return for larger scale deposits it offers a highly competitive rate of interest, sometimes called the real rate. A money market demand account or money market deposit account (MMDA), are exactly the same; however, money market funds are different, which is important to be aware of. Here is a quick guide to which is which and how each one works.

Money market accounts

As money market rates of interest are generally higher than regular rates, customers usually have to maintain a minimum balance in their account to benefit from the more attractive money market rates of interest. The minimum balance required may be up to $2,500, though it might well be much more. In addition, some banks or credit unions restrict the number of transactions allowed in any particular month; for example, setting the limit at three to six withdrawals or less.

How money market accounts work 

Money market accounts usually attract a daily compound interest rate, which is paid monthly. This means the lender pays interest on the interest, as well as on the original sum. Interest rates can vary quite considerably; the more money held in a bank account, the higher they can be. In terms of convenience, it is always worth checking the extent to which a bank offers flexible access to money; for example, by check, debit card or online, alongside a high yield. Deposits in money market accounts are FDIC insured, which means the Federal Deposit Insurance Corporation will protect them in the event that a bank or credit union goes out of business, usually up to a limit of $250,000.

Money market funds

While a money market account is a form of savings account, a money market fund (MMF) is a mutual fund. Even though it is possible to invest in a MMF via a bank, a money market fund is not a bank account and therefore does not have FDIC protection. This is important, because an MMF can make investments in the short-term debt of the U.S. government and its agencies and in the short-term obligations of foreign and domestic banks and corporations. The level of risk is therefore greater than that of a money market account.

Short-term interest rates have been badly hit by the recession and while money market accounts might pay around 0.5 percent, on average, money market funds tend to scrape along at around 0.03 percent. Shares in MMFs are designed to be held stable at a value of $1, although prices slipped below this level in 2008. Every time an investor collects $1 in interest, another share is added to the funds. Regulations are being tightened to avoid any recurrence of share price slippage.

Which is best?

Money market funds tend to be convenient and can provide ready cash when needed, but they pay lower interest rates at times of financial uncertainty. At the moment, money market accounts are the clear choice for those seeking higher levels of safety and yield. Should interest rates start to rise, however, money market funds may well regain the upper hand and start paying higher rates than money market accounts, which they often did prior to the financial crisis.

 

Savings Account or Piggy Bank?

canstockphoto16725076For years the most popular way to save money was to open a savings account. However, in recent years people have decided to start using the traditional piggy banks to save their change. Which one do you prefer?

Recent studies have indicated that more and more people are now saving their money at home and stashing it in a piggy bank or other type of container and keeping it at home instead of depositing it into a savings account. Looking overseas, more than 23 million people in the UK alone are now keeping their savings at home instead of in a bank. Recent studies have also indicated that these piggy banks or other types of containers can contain over $1 million.

Most of these containers contain a larger percentage of small coins (pennies, dimes and nickels) however some of them contain larger coins such as quarters and half dollars. Most coin jars contain on an average of $100 or more. Many people started using piggy banks and such mostly because they don’t like carrying change all the time and think it’s an easier way to save money. An even larger percentage of people start their piggy banks because they either don’t have the time to make coin deposits in their savings accounts or think making such deposits is a waste of time since the interest rates are low.

Recent studies have also indicated that many people not only find piggy banks an easy way to save loose change but use them to save money for specific reasons. Many experts have commented that people who save change should be given credit. Back in the day many people would make the statement save the change and the dollars will take care of themselves.

It’s wise to start saving at any age and many people start savings accounts on the birth of a child to save for college or other reasons. Other people prefer to start saving money at the beginning of each tax year to take care of unexpected expenses throughout the year.

Before opening a savings account or starting a piggy bank there are a few things you need to consider. The first question to ask yourself is whether you want to start saving with a large sum of money or make small deposits. If you are opening a savings account consider what type of account you want to open such as an account with a fixed rate of interest.

For those that prefer the traditional way and want to open a savings account be sure to shop around for the best interest rate. You may also want to check out if the interest rate is compounded quarterly or annually since this can make a big difference in the balance of your savings account. Also consider what type of account you want to open such as a regular savings account, fixed rate, or even a checking account. Checking accounts may have less interest associated with them but they also are move forgiving if you are making multiple transactions each month. Savings accounts often will charge you fees if your transactions are over a certain number. Also be aware when ordering checks to not just assume the bank is the only location to obtain them. Often they are very expensive when others can be ordered elsewhere at a fraction of the cost and still have all the security features of bank checks.

5 Ways to Make Money In Your 20’s

canstockphoto1730072When you are in your 20’s, you have the world in front of you and opportunities everywhere. The decisions that you make now will have an impact on the rest of your life. If you are interested in making as much money as possible at a young age, there are a lot of different strategies that you could use. Here are five ways to make money in your 20’s.
1. Join a Management Training Program
One of the best ways to increase your income quickly is to join a management training program, which recruit from organizational leadership programs around the country. Many businesses have management training programs that are open to younger people in their 20’s. These businesses want to get you trained early on in your professional career so that you do not develop any bad habits. These programs can pay pretty well even while you’re in training. Then after a short period of time, you can be in a management position while you are still in your 20’s and making very good money.
2. Precious Metals Investing
If you really want to build your wealth during your 20’s, you should get started in precious metals investing. Buying gold, silver, palladium, and platinum should be a regular part of your financial life. With the way that governments are accumulating debt and central banks are printing paper money, precious metals are one of the few things that will store value over the long-term. Once inflation starts to take off, you’ll be glad that you own precious metals.
3. Start a Website
One of the best ways to make passive income is to start your own website. When you have a website, there are so many different ways that you can make money. You could make affiliate commissions by selling other people’s products, sell your own products, or sell advertising space on your site. Once you start to get traffic on your website, you can monetize it in several ways.
4. Network Marketing
Although network marketing doesn’t a bad reputation, when you are young and energetic, it can make you a lot of money in a hurry. Donald Trump has even said that if he went bankrupt again, network marketing is what he would use to get rich again. If you find the right opportunity, you can build a large team then leverage the efforts of others to grow your income.
5. Use Auction Sites
Another good way to make a quick dollar is to utilize online auction sites like eBay. You can liquidate all of the junk that you have sitting around your house and make some good money on eBay with it. Once you have sold all of that stuff, you can then find things to sell online through sites like Craigslist. Many people make a lot of money just finding undervalued things online and turning around and selling them on eBay or to people in their local markets. If you are going to utilize this type of strategy, you have to know what you are doing. It is easy to get taken advantage of if you are not careful.
If you’ll utilize some of the strategies during your 20’s, you should be able to grow your income pretty quickly.

Wealth Creation Tips

canstockphoto5579807While many people desire to become wealthy (whatever definition that is varies vastly among people) their desire must be backed even more so with a strong motivator. It is not enough to simply want to have significantly more money if you are actually hoping to achieve it. You must find within something that will push you to achieve in ways you may have never experienced before. Lets look at this parallel as a comparison.

If you are in fairly poor running shape and you said I want to run 10 miles today, it is very unlikely that you would or could. Not only are you not in shape for it, but there most likely is not enough of motivator to push you to do so since it would be such a difficult feet to achieve to begin with. If on the other hand you introduce a strong enough of a motivator, this could likely change regardless of the shape you are in. Lets say you would be offered one million dollars to do so, could you do it? I would say yes. Or perhaps something more life threatening to yourself of a loved one made it absolutely necessary to run a distance of 10 miles to get help, could you do it? Again probably yes.   While you will likely not be faced with this kind of decision or necessity to “create wealth” you do have to find something very motivating to do so. I also want to tell you that a simple answer of money itself will almost for sure not do. Despite what some may say, money itself is not enough. Try to look for something tangible from it. One thing someone told me was they had a very difficult job and life circumstances, not your run of the mill type but really difficult times for this person. They where able to propel themselves to study and dig out from their hole and achieve great things because they wanted a better life based on owning a home and a job as an engineer.

I can’t stress enough on the will and desire for this or any other pursuit in life for that matter. You will not get far without a rock solid determination and persistence at all costs attitude. Also here is a tiny bit of encouragement in this. For those who have truly fought for something often are not only more thankful but are often more successful than others who seemingly did not have to try as hard. Michael Jordan the famous Basketball player failed and never made his high school basketball team. But he persisted! With this kind of desire, you start to forget about failure altogether. Failure is something that pushes people back into a pit but with enough determination it will not matter, you will keep going for broke each time.

Read, read and read some more on wealth building strategies and determine what kind of methods work the best for you and given your situation. For some the path is shorter, for others longer but reading ways and educating yourself in this pursuit will give you the tools you need to implement methods that are tailor made for you.

Another thing to keep in mind, is be thankful in as much as you feel you can be then increase it even more. Meaning try to be thankful for everything. You may have to work at this to start, many of us are only temporarily thankful for extra ordinary occurrences in life and this robs us of happiness. Thankfulness is another key that can help you out in life. Studies have shown that Gratitude actually increases your quality of life. While many people think that money alone will do this, don’t be fooled, it can but it will not if your mind set is not right to begin with.

I am sure many people where hoping to read a bunch of tips on what to do specifically with their money in this article. However the truth is, there are thousands of tips on this and finding info on this is as easy as reading it online. I feel the true factor in determining what makes you or breaks you is your will power, determination and increasing this is the first step in pursuing your dreams.

Time for a Second Job?

If you are currently strapped for cash or foreseeing financial difficulties in the future due to the economic downturn,  this could be the optimal time to take a second job. The holidays are around the corner and many businesses would be likely to hire extra help, even temporarily.

Your basic position could be that you need more money and soon, however, keep the following in mind:

* Make sure you are permitted a second job – Many employers’ policies will not allow you to work a second job that is even remotely similar to your first job, therefore check with them first.

* Work in Moderation – You may get tired once in a while but do avoid working yourself to the point of exhaustion. Keep being healthy and make sure your primary job isn’t affected. Also, you will clearly have to re-balance your amount of work and non-work activities. So skipping the occasional party is reasonable, skipping all parties isn’t.

* Make sure the second job is worthy of your time-  If you are missing significant time away from your family, then the second job is not worth it. The revenue you get should offset the costs. The costs being both monetary(for example, hiring a dog walker) to emotional(being away from your family). You may also consider having both jobs in close proximity to each other to save commuting time.

* Will your taxes be affected – It’s easy to forget but earning an extra income could push you over to the next tax bracket, which would mean that you would owe more in taxes.

* Perseverance is important – Although the second job might not be ideal, it’s better to stick with it instead of constantly changing jobs with the hope of finding a perfect one. You might even gain by networking  with people at the second job and mutually benefit in the future. Seek a job that requires a somewhat different skill or a different physical activity than the first job. The change of environment will benefit you and make you last longer in it.

* Set Earning Goals – Prior to taking a second job, calculate how much extra money you want to make. Designate the extra income for something that is a goal, such as topping up your savings account. This will make the work easier.

Invest In a Second Home

HouseIt’s human nature to want what we don’t have. City dwellers long for quiet time in the countryside, landlocked residents dream of warm and sunny beach breaks, and those who live in moderate climates look forward to snowy ski breaks in the mountains. Investing in a second home can give you the kind of mobility you’ve always desired now and in your retirement—and can even help to boost your annual income if you choose to rent out your property. Follow these practical tips when looking for a second home to ensure your investment pays off:

1) Find your niche market.

If you’ll be renting out your second home to earn extra income, it’s important to consider the type of lessee who might be interested in your property. Families and retirees will likely want to be in close range to in-town amenities. Adventure tourists will likely want to be close to national parks or places where they can easily rent out equipment, while couples will want to escape to a destination that’s quiet and romantic. A good rule is to try to cater to travelers with similar interests as yours; that way, you’ll both be content when using your second home.

2) Lock into a good location.

Once you’ve determined your needs and those of prospective lessees, it’s time to brainstorm a list of potential locations. For each location on your list, do some research about the number of tourists it receives each year, as well as the average list price of its rental properties. Remember that a market already flooded with properties will be a tougher sell than one in a less developed area. In Canada, some of the best places to invest in property right now are Regina, Fredericton, Winnipeg, and Moncton; in the United States, strengthening markets include Santa Barbara and Napa in California, Tucson in Arizona, and Raleigh in North Carolina.

3) Set your budget.

Unlike first homes, a good portion of second-time home buyers pay in cash. If you can’t afford to do this, you may qualify for a home equity loan or a conventional loan. Be aware, however, that lending policies are often more stringent for second homes, especially those that will serve as rental properties. You may need to have a higher credit score, a larger down payment, and be willing to pay higher interest rates to qualify for a second loan. Check out the mortgage calculator Canada to help estimate what your mortgage payments will be.

4) Factor in additional expenses.

When you’re weighing the value of your investment, don’t forget to factor in additional expenses beyond your mortgage payments. All second homes require upkeep, though condominiums are generally less costly than houses. Home owner’s insurance is an absolute must for second homes, as it will protect against theft, liability, and fires. Talk to a local accountant to get a better understanding of how much property taxes will be before you make your final decision about buying a second home.

6 Sites to Make Money Online From Writing

Having been an online content producer for some time now, I’ve found myself lucky to stumble across what I consider some of the better sites for online writers. In most instances, before you begin work with an online content site, it’s a good idea to conduct your due diligence. Read some reviews by those who have used the site, look for reports of problems with payments or service, and consider testing the site with an article or two before committing any real work to it. Here are a few of the sites that I’ve had contact with and some of what I’ve learned and liked about each site.

1. Associated ContentIf you are a talented SEO (Search Engine Optimized) content producer, Associated Content can bring in some decent paydays. While their upfront payments aren’t exactly enticing, often ranging in the $2-$5 range, if you know how to produce good SEO material, you can make additional income based upon page views. This means that while a three-dollar article might not seem worth the effort at first, if the topic and keyword density are good, you could supplement that amount each month, making much more money in page views than the article ever paid upfront.

2. HeliumI was a web content virgin when I started working with Helium.com. A friend recommended it as a good site to make a little cash and get some writing experience. From page view residuals, to contests and writing articles for publishers, Helium offers a variety of ways to make money. While you can pick up some decent money by writing articles for publishers, be aware that you are in direct competition with those who are writing to the same topic, so your work will need to be on topic and well written. The downside to this is that if your article is not selected to be purchased by the publisher, there is little reward, as your article will then be banished to the page view vault were it will sit, possibly making you a dollar or two throughout the course of the year if you are lucky. Your material will also be ranked by peers on the site, something that must be done by Helium members to maintain their ability to receive page view payments. Overall, Helium is a great site, but it can be a lot of work with little return if you aren’t chosen by the publishing gods.

3. TextbrokerTextbroker.com was a lucky find I stumbled upon one day while reading an article about how to make money on the Internet. There is an application process by which your writing will be ranked to determine your skill level, as well as what type of articles you will be eligible to write (thereby determining how much you will be paid per word). The great thing about Textbroker is that you can write to a wide number of topics at various skill levels. While working, if you encounter a publisher who really likes your writing style, they can choose to send you orders directly.

4. ContentCurrentWith ContentCurrent.com, you have the ability to select either article writing jobs, forum posting jobs or both, which can offer some nice variety in your work. There is an application process for both types of work (article and forum posts) to ensure your work is of acceptable quality.

5. BukisaWhile you likely won’t get rich on Bukisa.com, it is good for a couple extra bucks a month if you’re willing to take the time to post your articles there. While it doesn’t seem to carry the readership of some of the larger sites like Associated Content or Helium, it is a viable option for writers looking to get established on the web and dip their toe in the online content production waters. There are no upfront payments for content, just page view residuals.

6. WriterAccessWith WriterAccess.com, you can create a profile including writing samples, a resume, and other pertinent information regarding your writing background. The site will ask for information regarding your writing experience as well as a writing sample in the application process. If you are accepted as a writer, WriterAccess offers the ability to apply for projects on their job board. While there are often a limited number of jobs to choose from, there can be some good money to be made if you are selected for a particular job.

You won’t get rich with any of these sites, but they can be helpful in a time of need. For example, a few years ago we were short nearly three hundred dollars for the upcoming month’s rent. Our credit is terrible so neither one of had the ability to borrow the money, but I was so lucky that I stumbled upon TextBroker and was able to make enough money from the writing jobs to cover our shortfall. Hooray!

Let me know how it works for you…

Kris is a freelance worker who writes about managing personal finances for an Australian comparison website offering the best credit cards including a range of products with the cheapest credit card balance transfer available down under.