Why money market funds may be a better choice than bank deposits
An article last week in the Economist contained some valuable information about the differences between bank deposits and investing in money market funds. In particular, this quotation puts rates in perspective, “Gara Afonso and colleagues at the Federal Reserve Bank of New York find that use of money-market funds rises along with rates, since returns adjust faster than those from bank deposits. Indeed, the Fed has raised the rate on overnight-reverse-repo transactions from 0.05% in February 2022 to 4.8% [today], making it much more alluring than the going bank-deposit rate of 0.4%.”
Read the full article here: https://www.economist.com/finance-and-economics/2023/03/21/americas-banks-are-missing-hundreds-of-billions-of-dollars