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The Curious Bag
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<h4 class="dechead">On One Hand: What Are The Benefits?
IRA money market accounts are a smart choice because it is tax deferred and has a steady interest rate. There are no taxes on the money in these accounts until it is withdrawn. This is a safe way to invest money for those who are close to retirement and don't want to partake in risky investments.
On the Other: What Are The Risks?
IRA money market accounts provide a safe avenue as it is very conservative compared to other investments. However, over a long period of time, most other investments will surpass money market accounts in performance. Another disadvantage is that interest rates paid in IRA money market accounts slightly outpace inflation rates.
Bottom Line
If you are young and nowhere near retirement age, IRA money market accounts are not a wise choice. Younger workers should take more risks in order to gain greater financial rewards. Retirement investments need to be more conservative as retirement age gets closer and IRA money market accounts fill this need very well.
Source:
MoneyRates: IRA Money Market Accounts: Good and Safe
Investopedia.com: Money Market Mutual Funds: A Better Savings Account
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