Login | June 30, 2026
Money Market Funds vs. Accounts
Motley Fool
Published: June 30, 2026
Q. What are money market accounts and money market funds? -- B.B., Austin, Texas
A. They're both low-risk investments. Money market accounts are bank or credit union accounts with yields that are usually higher than typical savings accounts. They let you write checks and are insured by the Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration.
Money market funds -- which are not bank accounts and offer no federal insurance -- are mutual funds invested in short-term, high-quality investments such as Treasury bills and certificates of deposit (CDs). They're viewed as fairly safe, with a low risk of losing money. They generally offer better interest rates than bank accounts, but don't expect them to grow quickly.
Money market accounts are great for short-term savings, and money market funds are solid places to stash your cash -- such as cash sitting temporarily in a brokerage account.
Q. What's a follow-on offering? -- A.C., Grand Rapids, Michigan
A. Sometimes called a secondary offering, it's when a public company issues more shares to raise money. When a company begins trading on the stock market, it typically has an initial public offering (IPO), selling shares to the public and collecting money from the sale. (Those shares will then be traded between investors, without the company profiting directly from that.) If it later needs a cash infusion, perhaps to invest in growth, it might sell off some assets, borrow money or sell more shares of stock, via a "follow-on offering."
Issuing more shares can seem preferable, but by issuing new shares, the company dilutes the value of existing shares, making each worth a little less. It's a little like cutting a pizza into 10 pieces instead of eight.
Fool's School
Be Careful With Annuities
Annuities can be wonderful investments that can provide regular, dependable income throughout your retirement. But there's a wide range of annuities, and some kinds are much more complicated and, often, more problematic than others. Here's a brief introduction to annuities.
When you buy an annuity, you typically fork over a meaningful sum to an insurance company or bank in exchange for income over a specified period. This arrangement can take several forms.
Fixed annuities are the simplest and, arguably, the best for most people to consider. With a fixed annuity, the rate of return and the payment amounts are specified ("fixed") and guaranteed by an insurance company (or, sometimes, a bank). You should only buy annuities from stable companies rated highly by rating agencies such as AM Best or Moody's.
Variable or equity-indexed annuities (EIAs) are more complicated, and they come in several varieties. They tie the return on your money and the ultimate payouts to a variable factor, such as the performance of the stock market or of bonds.
Variable annuities offer growth potential and the chance of higher payouts, but those are not guaranteed. Market downturns can shrink your income. An EIA addresses that risk, often by guaranteeing a minimum interest rate, but your gains are often capped.
Both the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) have noted that EIAs tend to feature complexity, steep fees, restrictive terms and other problems. Read the fine print of any annuity you're considering. As the SEC has warned: "You can lose money buying an indexed annuity. Ask your insurance agent, broker or other financial professional questions to understand how the annuity works."
The SEC has also weighed in on variable annuities: "The value of your contract will vary depending on the performance of the investment options you choose. If they perform poorly, you could lose money."
Consider keeping things simple by sticking with fixed annuities. Investing in healthy and growing dividend-paying stocks can also be effective. Learn more at Fool.com/retirement.
My Dumbest Investment
Vail vs. Costco
My husband was a ski patroller for over 42 years, so he bought stock in Vail Resorts. But last year, many ski patrollers went on strike during high season, and then the CEO was replaced by the former CEO; the high cost of lift tickets turned off many skiers, and the stock price fell, so my husband sold his shares at a loss. I remind him daily that he should have bought my favored stock, Costco. My point is not to buy stock solely on an emotional attachment to a product or service. -- K.M., via email
The Fool responds: Costco has indeed been a terrific performer, averaging annual gains of 19% over the past 15 years. Vail, too, has performed decently over that period, averaging 10% annually -- but its stock has been falling in more recent years. Meanwhile, Costco's shares recently seemed a bit overvalued, with a recent price-to-earnings (P/E) ratio of 48.4, higher than their five-year average of 45.3. Vail's shares are more attractively priced, with a recent P/E ratio of 21.4, well below their five-year average of 30.1.
You're right to avoid emotional attachments to stocks, but remember that you can (and should) invest in multiple stocks to spread your risks -- or in a low-fee, broad-market index fund.
(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)
Foolish Trivia
Name That Company
I trace my roots back to 1954, when two fellows founded me in Miami. In 1957, one invented the flame broiler, while the other invented the Whopper. They got franchising rights in 1961 and soon after launched Whopper College to train franchisees. Pillsbury bought me in 1967, and in 1988, Grand Metropolitan PLC bought Pillsbury. I was sold to Texas Pacific Group (and partners) in 2002, then to 3G Capital in 2010. In 2014, I was merged with Tim Hortons, under the Restaurant Brands International umbrella. I boast more than 19,700 locations in 120-plus markets. Who am I?
Last Week's Trivia Answer
I trace my roots back to 1935, when a Canadian in the United Kingdom formed an alliance of seven bakeries. I acquired many companies over time, expanding into grocery stores, clothing, animal feed and more. I took on my current name in 1960. In 1964, I bought the Twinings tea company, which is more than 300 years old. My brands today include Mazola, Karo, Fleischmann's, Argo, Patak's and Primark, though I plan to spin off my Primark retail business by 2027. My recent market value was near $18 billion, and I employ around 138,000 people worldwide. Who am I? (Answer: Associated British Foods)
The Motley Fool Take
Talking Defense Stocks
Recent conflicts in the Middle East, Ukraine and elsewhere are likely to strengthen military muscle and turn over munitions stockpiles, adding to defense stock revenue. Here are some companies to consider -- though only after researching them further.
Lockheed Martin (NYSE: LMT) is the world's largest defense company. It's the lead contractor on the F-35 Joint Strike Fighter and a leader in advanced fighter planes, high-tech missiles and cutting-edge electronics. (The Motley Fool recommends Lockheed Martin.)
Northrop Grumman (NYSE: NOC) is responsible for stealth bombers and has a large space portfolio. The company is closely tied to the nuclear triad -- a combination of land-based missiles, bombers and submarines able to strike back if the nation is attacked.
General Dynamics (NYSE: GD) is one of two primary military shipbuilders and has a portfolio of tanks and land vehicles, making it one of the go-to vendors for the U.S. Army. It also has one of the largest defense-focused information technology and services businesses.
RTX (NYSE: RTX) is the product of the 2020 merger between Raytheon Technologies, a defense electronics and missile specialist, and United Technologies, which makes aircraft engines and various other aerospace parts. (The Motley Fool owns shares of and recommends RTX.)
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