STOCK INVESTORS HAVE CASH IN MONEY MARKET ACCOUNTS
If you have money in the stock market, you probably have a stock broker account. It is rare that all your money will be invested in stocks at the same time and there will usually be a cash balance in your account. This cash balance, rather than sit there and earn nothing is usually swept into a money market account.
Money market interest is not very high because you can take your money out at any time. Unlike certificate of deposits where the money is locked up for a specific period of time. cash in your money market account is always available to you. For that convenience of immediate liquidity, you will receive a lower interest rate than other investments. However, the beauty of any money market account is that it is at least earning something while remaining available at all times.
You don’t have to own stocks or have a broker to have a money market account. Most any bank, credit union, or other financial institution should have one for you to put your money in. If you have money that is on hold and put aside for buying a house or some other big purchase, money market accounts are typically where people would keep that money. They usually pay more than the very low interest paid by checking accounts and they give you much the same liquidity.
Money market interest that you will be paid depends on how much you have invested. The more you have to put in the account, the higher the interest rate you will get. This is part of the reason that money market interest accounts are sometimes thought of to be only for the rich. That is not the case though, as anyone with money can use them.
