Quick question to all the banking/finance gurus out here. 

What's a money market? My local credit union has money market accounts and I looked into it and saw that they offered not-so-bad rates of dividends. I see that I need a minimum amount in there and that I can only withdraw money from there for a max of 6 times/month.
I am fine with that. 
The thing is, given the investment I am willing to make, with relatively low risks, I can get back 20% per year. I'd love your advice on whether money markets are a good safe option to "grow" money, or the downsides of having capital stuck inside one. Would I be better off using that $$ to buy stocks?

Thanks for your time!

What kind of money market accounts are you looking at? You can get CD money market or savings money market or even IRA. I have savings money market because of better interest rate.

20% per year....
Dude, you gotta be kidding, right?
If you are not, tell me which credit union it is.

Dear Caco,
A money market account is like a savings account but the difference is that they usually pay higher interest and require a higher minimum balance. If you open a money market account, please don't go below the mimimum balance required because if you do, those bastardss will starting charging you monthly fees. I know this cause my eyes nearly popped out when I logged in and saw that my account balance was negative.

Someone mentioned certificate of deposit(CD). CD is different from a savings account in that it has a fixed term(6months, 1year, 5 year) meaning you have to invest money for a fixed period of time. Lets say you get a 5-year CD and you invested $5000. At the end of 5 years, when you redeem your CD, you will get the money you originally invested and the interest but if you try to get the $5000 before year 5, there is a penalty. Usually the longer you invest, the higher the interest rate but it might not always be true. I attached the rate chart to give you a rough idea but please dont ask me which bank offer those rates cause right now I dont know any banks that offer such good rates on CDs.



Oh another thing Caco, interest rates and dividends are different hai. You get interest from your banking accounts or when you invest in CDs. You get dividends when you invest in stocks but not all companies pay out dividends. If you dont know a lot about investing in stocks, i think mutual funds are the best way to go about.

Overall, I think a money market account is a safe option because a lot of them are FDIC insured but you gotta make sure it is FDIC insured. Don't come scream at me if you lose your money. But is money market account the best option out there, I sure as hell dont know.

Sincerely,
Violet

buy GOLD

20% in a MMA? Impossible.

MMA are a hybrid of checking and savings, from a consumer point of view. You can cut checks with it, but have some limitations on number of withdrawals and minimum balance. They pay relatively higher interest rate than saving account.

Banks and financial institutions make money from the fund you deposited in MMA, by investing that sum into government/private securities. In a typical saving account, they loan out the money you put in the bank to other entities. Interest they collect from those entities are then shared with you (obviously smaller interest goes to you). In MMA case, banks actually invest it in market (hence Money Market) securities.

For them to pay you 20% interest, they should be investing in a Burnie Madoff Triple fund.

Make sure you are reading it correct; it could be 2% not 20%.

 Hey guys, 

Thanks for the feedback! Especially you Vi (That was most helpful, charts and what not ;)).

Firstly you guys are right, I misunderstood the figures. It's definitely not 20% !!  I was unsure of what a money market is so wasnt aware what the normal rates for those are to have been able to pick out the anomaly.

Secondly do you guys have suggestions on what would be a good safe investment with a decent returns. I know 20% is a lot, so what would be a reasonable expectation for the dividend %. A CD, or a MMA, or even stocks?

Are there any legal restrictions for a non-citizen to buy stuff like this? 

In return for your time and effort here's something for the guys, and here's something for the ladies. (2012 issues magazines).

For CD expect anywhere from 1 to 2% (1 year to 5 years).
For MMA I think upto 1% is reasonable, you will probably get 0.7 or 0.8%.

Interest rates are really low these days; they used to give 5-6% interest on CD; these days 2% is considered high. Economy and Fed Reserve are to blame for this low rate.

If you don't plan to withdraw your money for another 3-5 years, CD is a good bet. Otherwise go with MMA. I think rates should go higher atleast in 3-4 years, so a CD for 3 years might not be a bad bet.
Stock is a higher risk bet. As for divident, as Violet said, it depends upon what stock you are buying; stocks like GE and Microsoft give you good dividents. You are probably not talking about dividents here though; you are talking about rate of return.
You definately need to do a quick refresher of these investment terminologies before you make an investment. Just too many things to cover here for you.

 Kiddo,

Appreciate the honesty!

I'll catch up on my homework. Thanks for the info. TC.