BANKING AFFAIRS

Detailed explanation-1: -Money market accounts are interest-bearing accounts at banks or credit unions that are a sort of mix between a checking account and a savings account. They are considered low risk so they can be ideal for an emergency fund. Money market accounts can provide APYs of about 3% to 4%.

Detailed explanation-2: -For a money market mutual fund, “liquidity” refers to the extent to which the fund’s holdings can be quickly converted to cash. Liquidity is a particularly important attribute of a money market mutual fund, as it measures the fund’s ability to meet near-term shareholder redemptions.

Detailed explanation-3: -Assets in an emergency fund tend to be cash or other highly liquid assets. This reduces the need to either draw from high-interest debt options, such as credit cards or unsecured loans, or undermine your future security by tapping into retirement funds.

Detailed explanation-4: -The best place for your emergency fund is a liquid savings account, where you’ll be able to access the money quickly, if needed. An example is a high yield savings account.

Detailed explanation-5: -You should keep your emergency savings in an account that has high liquidity. The liquidity of an account refers to how quickly you can convert your assets into cash. Using a checking account or a money market account that comes with a debit card or checks is a good choice.