Money market fund to save money for a mortgage down payment

[MisterW]

Today I looked at my PayPal quarterly statement and noticed their money market is at 4.77% right now. I'm planning to buy a house next year so I can save money in the meantime for a down payment. I would like that money to be earning interest and it looks like a money market is the best way to go since it is appears to earn the most interest while still being a nearly liquid investment (as opposed to opening 9 month CDs or lower yielding savings accounts).

I searched this forum and found that most people recommend ING or Emigrant to open a money market because they are FDIC insured, whereas PayPal is a money market mutual fund and not FDIC insured.

First question... After reading PayPal's prospectus, under the "Annual Fund Operating Expenses (expenses that are deducted from Fund assets)", they list net operating expenses at 1.10%. This is a little unclear, does this mean that the money market earns 4.77% interest for you after all expenses are paid or does that 1.10% chunk come out of the 4.77% to give you 3.67%?

Next question... I currently have my money in a credit union money market earning 2.52% interest. Should I put that money in PayPal or open up an account with ING or Emigrant (or other - and why)?

Thanks Much

MisterW

[eastbay]

Never put any amount of money that you care about in Paypal. They are unregulated and you have no protection against fraud whatsoever. And Paypal itself seems to think that money in Paypal accounts is theirs to do with as they see fit without your permission. I have a merchant account and they regularly debit my account without my permission to cover their credit card fraud and paypal account fraud costs.

Get one of the high yield savings accounts from a real bank. If you are saving for a house you're talking about real money and need to be protected.

eastbay