1. What is the Money Market Fund Calculator?

The Money Market Fund Calculator estimates the future value of an investment in a money market account based on compound interest calculations. It's specifically designed for 2025 projections.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( Principal \) — Initial investment amount
• \( Rate \) — Annual interest rate (decimal)
• \( Compounds \) — Number of compounding periods per year
• \( Time \) — Investment duration in years

Explanation: The formula accounts for the effect of compounding interest, where interest is earned on both the principal and accumulated interest.

3. Importance of Money Market Calculations

Details: Accurate projections help investors understand potential returns, compare investment options, and plan for financial goals in 2025.

4. Using the Calculator

Tips: Enter principal amount in dollars, annual rate as a decimal (e.g., 0.05 for 5%), select compounding frequency, and investment duration in years.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal, while compound interest is calculated on principal plus accumulated interest.

Q2: How often do money market funds typically compound?
A: Most money market funds compound daily, but some may compound monthly or quarterly.

Q3: Are money market funds guaranteed?
A: While generally safe, money market funds are not FDIC insured and carry some risk, though minimal compared to other investments.

Q4: What's a typical return for money market funds?
A: Returns vary but are typically lower than stocks (often 1-3% annually) with correspondingly lower risk.

Q5: How accurate are these projections?
A: Projections assume constant rates and no additional contributions/withdrawals. Actual returns may vary.