With the Federal Reserve raising short term rates again, it is translating into higher rates in money markets and bank rates. Effective January 1st, the Alerus Money Market interest rate will increase to 3.82% (3.89% APY). As of December 31st, the 1-year yield on the Alerus Money Market is 0.77% and the 5-year yield is 1.10%. Alerus benchmarks and sets this rate on a quarterly basis, however, the rate is subject to change at any time.
In 2022 bond yields have been rising, which can and has caused a decline in the prices in existing bond prices. Most bond funds are negative for the year. In a rising rate environment, a money market fund can be a good option for investors seeking capital preservation and/or low to medium risk investors.
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