Before buying a money fund, we should know its rate of return. The yield of the money fund includes ten thousand shares and seven-day annualized rate of return, as follows: ten thousand shares refers to a data that the income from the daily operation of the money fund is evenly distributed to each share, and then calculated and compared with 654.38+100000 shares. Seven-day annualized rate of return refers to the average annualized rate of return in the past seven days. Divide the daily rate of return of the past seven days by seven to get the annualized rate of return of seven days.
When choosing a monetary fund for investment, we should try to choose a fund with a moderate scale, because if the scale is small, investors will have greater pressure to purchase and redeem, which is not conducive to the full use of funds; If the scale is large, then too much money will easily dilute the income of the money fund.
Monetary fund is an open-end fund that collects idle social funds, is operated by fund managers and kept by fund custodians. It specializes in investing in low-risk money market instruments, which is different from other types of open-end funds. It has the characteristics of high security, high liquidity, stable income and "quasi-savings".
From the early 1970s to the 1980s, the United States was in a "stagflation" environment of economic recession and high inflation. At that time, the Federal Reserve controlled the interest rate of bank deposits, the interest rate of residents' deposits was lower than the inflation rate, and deposits were always in a state of depreciation. In order to attract funds, banks have introduced certificates of deposit with interest rates higher than the inflation rate. However, the initial deposit amount of this time deposit certificate is relatively large, and the minimum investment unit is often one hundred thousand or one million dollars. Only a few institutional investors have enough cash to make such investments.
For most Americans, the only financial investments they could participate in at that time were bank savings accounts, stocks and bonds with pitifully low interest rates. When times are hard, people will naturally look for assets with good security and strong liquidity. However, many financial assets are either too risky, illiquid or have low returns, which cannot meet the financial needs of investors.
Most money market funds have the lowest risk among all kinds of funds, and money fund contracts generally do not guarantee the safety 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. Most money market funds generally have the income level of national debt investment. Money market funds can not only invest in investment tools that ordinary institutions can invest in, such as exchange repurchase, 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 time deposit interest 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 keep abreast of interest rate changes and inflation trends and obtain stable and high returns.