Saturday, August 25, 2007

PayPal money market fund yield remains at 5.04% as of 8/25/2007

Despite the chatter about the so-called "credit crunch" and "subprime crisis" and the potential risk of even money market funds, money market funds are still an extremely safe place to park cash.

Here are some recent money market mutual fund yields as of Saturday, August 25, 2007:

  • iMoneyNet average taxable money market fund 7-day yield fell from 4.76% to 4.54%
  • GMAC Bank Money Market account rate remains at 5.16% or APY of 5.30% (only $500 minimum for that rate)  -- Note: This is an FDIC-insured bank deposit account, not a money market fund 
  • Vanguard Prime Money Market Fund (VMMXX) 7-day yield fell from 5.11% to 5.09%
  • Vanguard Federal Money Market Fund (VMFXX) 7-day yield fell from 5.03% to 4.99%
  • AARP Money Market Fund 7-day yield fell from 5.07% to 5.04%
  • TIAA-CREF Money Market (TIRXX) 7-day yield rose from 5.03% to 5.05%
  • PayPal Money Market Fund 7-day yield remains at 5.04%
  • ShareBuilder money market fund (BDMXX) 7-day yield rose from 4.47% to 4.63%
  • Fidelity Money Market Fund (SPRXX) 7-day yield fell from 5.07% to 5.05% ($25,000 minimum)
  • Fidelity Cash Reserves money market fund (FDRXX) 7-day yield fell from 5.05% to 5.03%
  • Fidelity Prime Reserves money market fund (FPRXX) 7-day yield fell from 4.51% to 4.50%
  • Fidelity Municipal Money Market fund (FTEXX) 7-day yield rose from 3.26% to 3.42% or tax equivalent yield of 5.26% (up from 5.02%) for the 35% marginal tax bracket and 4.75% (up from 4.53%) for the 28% marginal tax bracket -- this may be the best rate that most of us can get for "core cash" in a checking-style account
  • Fidelity Tax-Free Money Market fund (FMOXX) 7-day yield rose from 3.22% to 3.36% or tax equivalent yield of 5.17% (up from 4.95%) for the 35% marginal tax bracket and 4.67% (up from 4.47%) for the 28% marginal tax bracket
  • 4-week (1-month) T-bill investment rate rose from 4.65% to 4.85%
  • 13-week (3-month) T-bill investment rate fell from 4.76% to 2.92%
  • 26-week (6-month) T-bill investment rate fell from 4.91% to 4.10%
  • Treasury I Bond composite earnings rate (semiannual compounded annually) for new I Bonds is 3.74% (down from 4.52%), with a fixed rate of 1.30% (down from 1.40%) and a semiannual inflation rate of 1.21% (down from 1.55%) -- updated May 1, 2007, next semiannual update on November 1, 2007
  • NetBank 6-month CD APY remains at 5.40%
  • NetBank 1-year CD APY rose from 5.35% to 5.40%
  • Bankrate.com highest 6-month CD APY rose from 5.50% to 5.55% (Countrywide Bank, $10,000 minimum)
  • Bankrate.com highest 12-month CD APY is at 5.65% (Countrywide Bank, $10,000 minimum)

Note: APY yield is worth somewhat less than the same 7-day yield. See my discussion and table for Comparing 7-day yield and APY.

When I look at the sharp decline in the iMoneyNet average rate and the sharp decline in the 13-week T-bill rate, I can't help but wonder whether some money market fund managers got spooked and put more of their maturing commercial paper holdings into "safe" T-bills. Who knows.

Update: Still no confirmation on the apparent shortfall of the PayPal dividend for July.

Right now, Fidelity Cash Reserves (FDRXX) is my preferred parking place for the bulk of my cash. I do appreciate the higher yield I have been getting these past few weeks, which is probably due to higher yields on commercial paper.

DISCLAIMER: I am not an investment adviser, so my opinions and the data presented here should not be considered as advice for where to invest your money. You should examine this and other available data before deciding how to invest your money. And, seriously, past returns should not be construed as a guarantee or even an "indication" of future returns.

-- Jack Krupansky

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