With the development of internet finance, the scale of money funds is also called a continuous upward trend. Monetary fund is an open-end fund, which mainly invests in short-term monetary instruments. Its main advantage is low risk, but this does not mean that the money fund is capital preservation. What are the advantages and risks of the money fund?

I. Advantages of the Monetary Fund

1, the expected return is stable.

Although the expected income of the money fund is not as good as before, it is mostly higher than the bank's one-year fixed deposit rate, even higher than the bank's deposit rate. Although the 7-day annualized expected return of the Monetary Fund is floating, the change range is small, so its expected return is stable and safe.

2. Strong flexibility

There are many channels to buy money funds, and the operation is simple. Third-party platforms such as Alipay and JD Finance are common channels for purchasing money. You can buy it 24 hours a day, and you can take it out or pay directly when you need it. Liquidity can be compared with bank demand deposits.

3. Low investment threshold

The investment threshold of money funds is very low. Baby money funds like Yu 'ebao, such as 1 yuan, can be invested, and there is no need to pay any handling fee for redemption.

Second, the risk of the money fund.

1, liquidity risk

The longer the remaining maturity of the varieties invested by the fund, the higher the liquidity risk, and the funds with higher leverage ratio generally have higher liquidity risk, especially when encountering huge redemption.

2. Opportunity cost

On the whole, the expected return of the money fund is low. If a large amount of money is invested in the money fund for a long time, it will actually increase the opportunity cost of investment and miss the profit opportunity.

The above contents about the advantages and risks of the money fund, I hope to help you. Warm reminder, financial management is risky and investment needs to be cautious.