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Two Safe, Short-Term Investments

In the quest for higher yields, many consumers ignore lower-yielding -- but more secure -- options like certificates of deposits and money market accounts.

Both of these short-term investments can be useful tools for investors looking for a safe place to park their money, while still earning a little something from their cash. But there are differences between the two options, and it's important to understand what you are getting before you hand your money over to the bank.

In the spectrum of yields, CDs and MMAs are located somewhere between investing in the stock market (which is a pretty volatile place these days, and depositing it in a savings account (which is practically equivalent to stuffing it under your mattress, with the anemic interest rates currently offered on savings accounts).

If you have $5,000 to $10,000 that you want to keep close, CDs and MMAs offer a viable option. Both types of investment are insured by the Federal Deposit Insurance Corporation up to the $100,000 limit per depositor per insured institution. Unlike other investing options like mutual funds or equities, CDs and MMAs pretty much guarantee that you'll walk away with more than your initial investment.

The main difference between these two types of deposit accounts lies in the access they offer to your money. CDs are less accessible, or liquid, because they require you to give your money to the bank for a set period of time -- generally for intervals of six months, one year, two years and on, up to 10 years.

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