Sapphire Wealth Advisory Group > Blog > Investments > Investing in a Money Market Account
Financial Planner New York

“I invest all the time. My money is in a money market account.”

In the most traditional sense, investing means committing a sum of money to an endeavor with the expectation of obtaining additional income or profit. Whether it might be placing money in an interest-bearing bank account, investing it in the stock market, or perhaps buying certificates of deposits (“CD’s”) one usually places their money in one of these endeavors with the intention of making additional income over time.

Usually, when our colleagues discuss investing, they are talking about putting their money in the stock market where the returns frequently are greater and achieved in a shorter period of time. As a rule of thumb, their portfolio is usually comprised of either stocks, mutual funds, or even exchange-traded funds (“ETF’s”) and the volatility of these investments typically yields a higher return over time.

One of the first things I do when clients engage with me is complete a fact find. This gives me a chance to learn about the family, their philosophy about money, investing, saving, and spending. At the same time, I also review their investments to get an idea if what we have discussed is reflected in their current portfolio. For example, if a new client is someone nearing retirement, or has a low tolerance for risk, I may question why they’re invested in an aggressive portfolio.  Conversely, if the client is someone who just graduated college and has just started saving for retirement, or has a high-risk tolerance, I may question why they’re invested in a conservative portfolio.  While both portfolios may be the right choice for each of them, the point I’m making is that as a financial professional it’s important for me to get to know them so we can work together to design a financial strategy that meets their short- and long-term goals.

During the fact-finding process what I frequently discover is that many clients’ ‘investing’ consists of depositing monies into money market accounts or purchasing CDs.  While one should absolutely have money invested in accounts that earn interest and are safe, and easily accessible (like money market and savings accounts) should an unforeseen expense occur – the boiler breaks, or an expensive piece of the car needs to be replaced – it’s important to note that these accounts are not the only options available for long term investing.

Frequently, more volatile investments like stocks, mutual funds and ETF’s offer returns that may be better aligned to meet long-term goals.  Additionally, their potential for higher returns may offer protection against the effects of inflation.  But keep in mind, investing does involve risk including the potential loss of principal.

If you’re unsure which investment options are best for you, a financial professional may be able to help.  He or she can review your current portfolio, help you identify your short- and long-term goals and risk tolerance, then design a plan to help you meet them. 

Registered representative of and securities offered through Hornor, Townsend & Kent, Inc. (HTK), Registered Investment Advisor, member FINRA/SIPC, 600 Dresher Road, Horsham, PA 19044, (215) 957-7300. HTK does not accept time-sensitive or action-oriented messages delivered via e-mail, including authorization to “buy” or “sell” a security or instructions to conduct any other financial transaction. 2347204PH_Feb21