Cash Management

I found an brochure called "Complete Financial Planning for Today's Woman" by Grace W. Weinstein for the National Association of Life Underwriters.

The information within this publication is so good, I wanted to bring some excerpts of it to you.

"The basic tools of cash management are checking and savings accounts. You may also use money market deposit accounts or money market mutual funds for readily available funds, especially when higher rates of interest can be obtained.

Checking accounts, particularly NOW accounts, often pay interest if you keep a minimum balance in the account. Credit unions offer share draft accounts which, for practical purposes, serve as checking accounts for their members. Many of these accounts also pay interest. Checking accounts are a great convenience, but you should always find out about minimum balance requirements and service charges before you open an account."

"Savings accounts pay interest on your money. With passbook or statement savings you have access to your money whenever you need it, but you may trade some loss of income (when inflation rates are higher than the interest you're earning) in exchange for convenience and security."

"Certificates of deposit or time deposits have minimum deposit requirements and typically pay higher rates of interest than regular savings accounts. The drawback: You must commit your funds for a set period of time, and face substantial penalties if you withdraw money before maturity."

"Market rate accounts are checking and savings accounts earning fluctuating market rates. You must maintain a minimum amount in the account at all times in order to earn the higher rate and, with market rate checking accounts, you will also face limitations on how many checks you may write."

"U.S. Government Savings Bonds offer a way to earn higher interest on cash you can put aside for a period of time. They are readily available at financial institutions as well as through payroll deduction plans. EE-bonds pay a minimum guaranteed rate of interest, but pay a variable rate of interest tied to an index of Treasury bills if they are held at least fie years. They are redeemable for cash at any time after the first six months."

"Asset management accounts are all-in-one accounts offered by many securities firms. For an annual fee and an initial minimum balance (often $15,000.00 to $20,000.00), these accounts permit you to conduct a variety of financial transactions - securities purchases and sales, money market deposits, cash advances, debit card purchases - and receive a single monthly statement."

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