Posts with keyword money market→

I just came across this Savings Bond Advisory:

Given that the current fixed base rate is 1.20%, it would much better to invest in I bonds this month rather than waiting until May 1 or later. I bonds you purchase today will earn a composite rate of 4.28% for six months, followed by six month of 6.06%. These are much higher rates than are available in bank CDs or even other US Treasury securities

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(This post is a part of the series Basics of Finance and Investing.)

Unlike a debt type security such as a money market or a bond, a stock is an equity or ownership type security, which entitles its buyer one share in the ownership of the issuing corporation. Because the risk of investing in a stock is significant (you may lose your entire invested asset if the corporation faces bankruptcy), stocks are examples of a variable income type security.
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(This post is a part of the series on Basics of Finance and Investing.)

An interest rate is the monthly rate you pay as a borrower, or receive as a creditor/lender. If you save money in bank, or invest in a money market, you are indirectly lending money to a borrowing corporation (or the government). If the interest rate goes up, the borrower must pay you more, which makes them unhappy but you happy (your bank balance soars). The mood swings the other way when interest rate goes down.
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(This post is a part of the series on Basics of Finance and Investing.)

You have bought a 1-year CD for $10,000 at 5% interest rate. After one year you collect $10,500 – a gain of $500. What is your real gain? This depends on what $10,000 can buy one year later, compared to what it does now.
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(This post is a part of the series on Basics of Finance and Investing.)

Like money market, a bond market is a debt instrument issued by both the US government and corporations to borrow fund from public. But there are two differences: a bond market has longer term maturity, and bond returns are not always fixed (and so it is not totally correct to categorize them as fixed-income securities).
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(This post is a part of the series on Basics of Finance and Investing.)

A money market, or “cash”, is a low-risk, short-term, liquid, debt type security. Reading from left to right, the italicized words mean – the risk of losing the principal (money you paid for the security) is low, it matures typically in a year or less, you can sell it quick, and corporations (and the government) issue these securities to borrow funds. Because of the low risk and fixed returns, a money market is an example of a fixed-income security. Following are the three major types of money markets.
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(This post is a part of the series on Basics of Finance and Investing.)

Merriam-Webster Online Dictionary defines the word security as “the state of being secure”. Then further down, “an instrument of investment in the form of a document (as a stock certificate or bond) providing evidence of its ownership”. These two definitions are not unrelated. A security is an investment instrument that is supposed to secure your financial future.
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Well, there is the handy “Rule of 72″, which says the number of years it takes for the money to double at x% yearly (compounded) rate is roughly 72 divided by x. For example, if you have $10,000 in a money market fund earning a sedate 5%, it will grow to $20,000 in about 14 (=72/5) years. By contrast, if the same $10,000 is invested fully in a stock fund that appreciates at a healthy 10% (not a fairytale), doubling your kitty should take only 7 years.
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Last week’s CNN Money magazine ran a short feature on online banking, which seems to be the order of the day. Gone are the snaky queues at our neighborhood branch, often with a growling stomach yearning for a delayed lunch. This visual is still futuristic, but the day may not be that far away, with virtual banks sprouting up everywhere like wild mushrooms.
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