Expert: Shane - 4/21/2009

Question
QUESTION: ok i heard something about money fund but i'm not sure what it is
and i have idle cash
i'm 17 and i have a few thousand dollars of idle cash, i want to put it into something that'll make more money but isn't too much of a risk
i mean like i'm young, it can grow little at a time.
i think i've heard of this type of bank account at certain banks that uses your money to loan to business or government and you get higher interest rate but you can't take your money out for a long time?
can you give me some suggestions on what i can do with idle money to make it grow?

ANSWER: money funds are completely safe they are  called money market accounts and they function as regular savings accounts.  cds wouldnt be a bad idea those are all fdic insured

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QUESTION: can you break it down for me? sorry i'm very new to this.
what is cds and fdic?
and what bank should i go for? what do i say to them that i want?
and anything i should watch out for? con's and pro's?

Answer
cds are time deposits so if you put it in for 10 months for example if  you needed to withdraw before that there would be a small penalty.  if you need your funds available at all times the money fund is the way to go.  fdic is the government insurance that protects your money in the event the bank were to go out of business or something