money funds can be simply understood as an open-end fund operated and kept by fund managers. Their main investment direction is the money market with minimal risk. Compared with other funds, money funds have the characteristics of high security, high liquidity and stable income.
money funds are still funds, similar to bank wealth management products, and the income is usually greater than one-year fixed period and less than three-year fixed interest, so they are not suitable for long-term holding and can be used as investment of idle funds. The money fund's principal is relatively safe, and most money market funds have the lowest risk among all kinds of funds. Money fund contracts generally do not guarantee the safety of the principal, but in fact, due to the nature of the fund, the money fund rarely loses its principal in reality.
The investment threshold of money funds is generally 1 yuan or even several hundred yuan, which is far lower than that of bank wealth management products. There is no need to worry about selling out and not buying it. There are also gains on weekends and holidays, leaving no blank period for gains, and every little makes a mickle, making full use of the remaining funds in daily life.
simply speaking, the balance treasure under Alipay belongs to a kind of money fund. Compared with the deposit interest of the bank, the interest of the bank is constant for a long time. Different money funds will change every day. Just look at the balance treasure and you will know that it shows the annualized rate of seven days, not the interest rate.
second, the product characteristics of the money fund?
1. security of principal: most money market funds have the lowest risk among all kinds of funds, and money fund contracts generally do not guarantee the security of principal, but in fact, due to the nature of funds, money funds rarely lose principal in reality. Generally speaking, money funds are regarded as cash equivalents.
2. Strong liquidity: liquidity can be comparable to demand deposits. The fund is convenient to buy and sell, the time for funds to arrive in the account is short, and the liquidity is very high. Generally, funds can arrive in the account within one or two days after redemption. At present, some fund companies have opened the instant redemption business of money funds, which can be received on the same day.
3. Higher rate of return: Most money market funds generally have the income level of national debt investment. Money market funds can not only invest in exchange repurchase and other investment tools that ordinary institutions can invest in, but also enter the inter-bank bond and repurchase market and the central bank bill market for investment. Its annual net rate of return can generally be compared with the one-year fixed deposit rate, which is higher than the income level of bank deposits in the same period. Moreover, money market funds can avoid hidden losses. When there is inflation, the real interest rate may be very low or even negative. Money market funds can grasp the interest rate changes and inflation trends in time and obtain stable and high returns.
4. Low investment cost: generally, there is no handling fee for buying and selling money market funds, and the subscription fee, subscription fee and redemption fee are all zero, so it is very convenient for funds to enter and leave, which not only reduces the investment cost, but also ensures liquidity. Subscribe/purchase 1 yuan for the first time, and purchase again in increments of 1 yuan.
5. Dividend exemption: The par value of most money market funds will always be 1 yuan, and the income will be calculated every day, with interest income every day. Investors enjoy compound interest, while bank deposits are only simple interest. Monthly dividends are carried forward as fund shares, and dividends are exempt from income tax.