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 Dear
Dr. Don,
We have $10,000 in an emergency savings account at our credit union earning only 1 percent. We are thinking of putting it into a MMMF a MMA savings account. Which is the best way to go or are there other options? We would like to have access without penalty.
-- Patrick Pecuniary
 Dear
Patrick,
Either a money market mutual fund, MMMF, or a
bank money market account, MMA, is a great place
to park your emergency savings. The MMA
has limited access, defined as up to six withdrawals
or transfers per month, only three of which can
be by check, but it could be an FDIC- or NCUSIF-insured
deposit, backed by the full faith and credit of
the United States government.
The money market mutual fund invests
in a pool of money market instruments -- short-term
debt securities with a final maturity of a year
or less. You can choose between taxable funds
and mutual funds that invest in tax-exempt securities.
Bankrate tracks the highest yields for MMAs and
MMMFs, along with high yield savings accounts
and CDs, on its "Compare Rates" Web
page.
For a primer on the difference between these two investments,
read the earlier Dr. Don column, "MMAs
and MMMFs: Know the differences."
Getting your emergency fund to earn more than 1 percent (pretax)
is a very smart move. You should be able in today's
market to earn over 5 percent on the money while
still having the access to the funds that you
require.
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