1. What is a Co-operative Money Market Fund?

A Co-operative Money Market Fund (MMF) is a type of mutual fund that invests in short-term, high-quality debt securities. It offers investors a relatively safe place to invest easily accessible cash-equivalent assets while earning a modest return.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( Principal \) — Initial investment amount
• \( Rate \) — Annual interest rate (in decimal form)
• \( Time \) — Investment period in years

Explanation: The formula calculates how much your investment will grow over time with compound interest.

3. Importance of Future Value Calculation

Details: Calculating future value helps investors understand potential returns and make informed decisions about their investments.

4. Using the Calculator

Tips: Enter principal amount in dollars, annual interest rate as a decimal (e.g., 0.05 for 5%), and investment period in years. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: How often is interest compounded in MMFs?
A: Most money market funds compound interest daily and pay dividends monthly.

Q2: Are money market funds risk-free?
A: While very low risk, they're not entirely risk-free. There's minimal credit and interest rate risk.

Q3: What's the difference between annual rate and APY?
A: APY (Annual Percentage Yield) includes compounding effects, while the annual rate doesn't.

Q4: Can I withdraw money anytime?
A: Most MMFs allow withdrawals at any time, though some may have minimum balance requirements.

Q5: How are returns taxed?
A: Earnings are typically subject to income tax, though some government MMFs may be state tax-exempt.