This is a type of service offered by financial firms such as credit unions, banks, savings and loans firms. Advantages It enables people to withdraw their money from a federally protected account. While banks vary as regards terms of check accounts, it has another advantage that holders of checking accounts pay debts with personal checks as substitute for cash. Further, holders can use automated teller machine cards or electronic debit cards to make withdrawal or access individual accounts (Marce, 2009). Therefore this will be a choice if the money is needed to be spent on regular basis.
This lies in the fact that with $1000, there is no accruing interest on deposited funds. The other disadvantage is that a penalty is applied if one falls below a minimum. One may also be charged fee depending on the policy of the bank. SECTION B Money market account is similar to regular savings account. It is a form of savings offered by credit union (Baztelsmit, 2007). The difference lies in the fact that on the contrary, they give opportunity for only 3-6 withdrawal in a month and they also offer great interest rates. Its advantage over checking account is that interest is earned on funds deposited.
Also, one can write up to 3 checks in a month in money market account. Disadvantages Their minimum balance requirements are higher and can be up to $1500 – $2500. The other disadvantage lies in that there is no guarantee return. The expected amount to be earned is not guaranteed and possibility of losing money in such account exists in rare case (Marce, 2009). SECTION C The Passbook This is good especially for investors who don’t need monthly statement and transact infrequently. This form of investment means is a midway option used by some individuals. Advantages Passbooks are updated with information from time to time.
It is a liquid account in that fund is readily available and accessible to holders just like in checking account, although, unlike checking accounts, interest here is nominal and small (Baztelsmit, 2007). Disadvantage Deposited money could earn a higher return. SECTION D Certificate of Deposit This is a financial product usually offered to investors by credit unions, banks and thrift institutions. Advantage Banks offer a fixed interest rate having agreed to lock certain funds for a set period of time. Interest rate also increases with increasing period of time the money is locked which varies and can be between a month and ten years.
Another advantage is that CDs are insured by FDIC for banks or by NCGA for credit unions and are almost risk-free (Marce, 2009). Disadvantage A major disadvantage of CD is that it’s not a good option if the money to be invested will be needed anytime as withdrawal of money before maturity date attracts heavy penalty. The type of account I have chosen and why I have chosen that account Considering the fact that I have $1000 to invest, the best option for me to invest would probably be the Certificate of Deposits. My reason for this is that I have committed the amount for long term investment and do not need to withdraw funds constantly.
It gives me the best and highest return on my investment over the shortest possible period of time (Baztelsmit, 2007). If I had needed to withdraw money frequently, money market would have been my choice account. Furthermore, certain bank allow further investment to be made on this principal fund over time and in this way are a mirror image of savings account and so allows me to deposit additional money. References Marce, (2009). What is Certificate of Deposit? Retrieved on August 7, 2010 from. Baztelsmit (2007). Managing your cash and savings: Case management strategy. Retrieved in August 7, 2010 from www. willey. com.