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Money Market Vs. High Yield Savings
Posted on 5/6/23 at 12:52 pm
Posted on 5/6/23 at 12:52 pm
Can someone explain to me what the main differences are between these two types of accounts? What are the pros and cons? Is one better to have than the other? Etc.
2
Posted on 5/6/23 at 2:35 pm to SportsmanParadise
HYS has FDIC coverage up to $250K so that’s the benefit.
Money Market is an investment vehicle that is not insured. Often pays a slightly higher rate due to the lack of insurance.
In most of history, they have behaved very similar to one another. HYS is technically a safer approach.
If you want to read more, then check out this: LINK
Money Market is an investment vehicle that is not insured. Often pays a slightly higher rate due to the lack of insurance.
In most of history, they have behaved very similar to one another. HYS is technically a safer approach.
If you want to read more, then check out this: LINK
This post was edited on 5/6/23 at 7:46 pm
Posted on 5/7/23 at 11:12 am to SportsmanParadise
I use money market funds over HYSA because I use Fidelity for everything. I only use funds like FDLXX which is all t-bills so it's just as safe as a checking/savings account imo.
Sure you can find mmfs with higher yield but they will have commercial debt. So the risk is higher of losing money (aka breaking the buck) which has happened a couple times but rare. Also most of my liquid cash is in individual t-bills. 1 month t-bills over 5.5% currently.
Btw mmfs are covered under SIPC not for loss of value but if the brokerage fails and for some reason short on what they were supposed to hold for you.
Sure you can find mmfs with higher yield but they will have commercial debt. So the risk is higher of losing money (aka breaking the buck) which has happened a couple times but rare. Also most of my liquid cash is in individual t-bills. 1 month t-bills over 5.5% currently.
Btw mmfs are covered under SIPC not for loss of value but if the brokerage fails and for some reason short on what they were supposed to hold for you.
Posted on 5/7/23 at 1:10 pm to lynxcat
quote:Money markets fall under SPIC i.e., at least $250K protection.
HYS has FDIC coverage up to $250K so that’s the benefit.
Money Market is an investment vehicle that is not insured.
Savings/HYS fall under FDIC $250K individual / $500K for couples.
However, some programs like Fidelity divvy their HYS assets among several independent FDIC protected institutions. So a Fidelity HYSA comes with up to $5M in de facto FDIC protection.
Aside from that, the main difference is fungibility. MM cash withdrawal takes a day or so. HYS is nearly immediate.
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