How to Open a Money Market Fund Philadelphia PA

In a different article, we discussed how to find the best money market rates. Now that you've decided where you want to put your money, what do you do?

1. You will need several things. First, an application from the bank or investment firm you've chosen. Second, you will be required to provide your social security number and probably a copy of your driver's license. The driver's license is needed to comply with various Homeland Security and Securities laws that require that the institution must "know the customer". The social security number is required so that the bank can accurately file 1099 returns for you with the IRS after the first of each year. Any interest or dividends that you earn are considered income to the IRS. The bank files the form with the IRS and also sends you a 1099 in January or February of the following year.
2. You will of course need to deposit your money in your chosen institution. If you are doing this in a branch, you can open the account and make the deposit all at the same time. If you are doing this with an online bank, they may ask that you get all the account paperwork finished before sending them any money. They want to make sure that the paperwork is complete so that they have someplace to put your money. Check with your chosen institution to find out exactly how they want to proceed.
3. Once your account is open, you should get statements ranging from once a month to once every three months. You may get an option as to whether you want physical statements mailed to you if you use a regular bank. The online bank may only offer online statements.
4. Don't forget to keep track of any conditions that you need to meet in order to get the stated money market rate. Some banks require that you maintain a certain level of savings in the bank or you don't get any interest. Others want you to do something specific, like have a monthly payroll deposit, or have at least one online bill pay done each month to get that rate. If you have gone to all the trouble to find that "best" rate, make sure you don't lose it by not following their rules.
5. Money market rates fluctuate. They aren't fixed for a period like CD rates are. You should be able to find your current rate somewhere on your statement. It's probably not the best to keep moving the account just because you find a better rate, but it is a good idea to monitor it regularly. Remember that money market funds ARE NOT insured - even if the account is at a bank! You should be getting slightly better rates than regular savings accounts to help make up for the slightly higher risk of using a non-insured savings type. Because money market funds aren't insured, make sure you are using a reputable financial institution.

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