Regulated Money Market Vs. Cash Account
Regulated money market accounts and cash accounts are both accounts used for purchasing investments, but they have different purposes and meanings.
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Money Market Funds
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Money market accounts that are regulated are often called market mutual funds (MMF). They are used by people who buy and sell stocks. Money is received from a stock sale and is placed in an MMF until the owner decides where to reinvest the money.
Money Market Facts
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MMFs are not Federal Deposit Insurance Corporation (FDIC) insured but contain little risk because they are highly regulated by the Securities and Exchange Commission (SEC). They also invest in short-term debt securities that are considered very safe. MMFs offer slightly higher interest rates than regular money market accounts do. They also offer check writing capabilities and electronic transfers.
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Cash Account Facts
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Cash accounts are brokerage accounts used for purchasing securities. Customers are required by Regulation T to pay the total amount due for the purchases by the settlement date, which is typically 2 days after the purchase. Regulation T is a federal regulation that controls the amount of credit customers are given by brokerage firms for the purchase of securities. Customers using cash accounts are not allowed to purchase on margin. Individual retirement accounts and trusts for minor children are two types of cash accounts.
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