With the Federal Reserve raising short term rates, it is translating to higher rates in money markets and bank rates. Effective October 1st, 2022, the Alerus Money Market interest rate will increase to 2.25% (2.27% APY). As of September 30th, the 1-year yield on the Alerus Money Market is 0.20% and the 5-year yield is 1.04%.
In 2022 bond yields have been rising, which can cause a decline in the prices in existing bonds. 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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