How can I evaluate the performance of the cash market?
The performance of the cash market is evaluated by determining the extent to which the initial investment will grow for a specified period of time at the expected interest rate. The money market account can be evaluated on the basis of other investment options such as fixed annuity or deposit certificates. The performance of the money market can also be evaluated on the basis of comparable funds of the money market offered in competing financial institutions.
The performance of any investment is based on the financial concept of the time value of money. The time value of money assumes that money now has more than in the future. According to this concept, they have the money available today, in the future in the future higher than the same amount due to increased ability to earn more money through interest for a certain period of time. Usually, the potential gainful strength of the investment is determined by the time before maturity and the level of return that the investment receives.
Potential and actual money marketplace is determined by calculation, how much initial investment will bet value in the planned due date. An investment option that produces a higher amount of money at the end of the specified time period is a better artist. Performance for a specific year in the total time frame can be determined by calculating the amount that would be expected that the initial investment will be worth the end. The amount is often referred to as the future value, equal to the initial investment plus its compound interest payment.
When evaluating the performance of the money market, it is important to consider individual investment goals, the amount of the initial investment, whether further contributions, the amount of time until the money is needed, and available interest rates on different investment products. The money market performance is usually less than the performance of investment options because there is a lower risk. The longer period of investment and volatility corresponds to a higher amount of risk. The higher the risk that participates in investing inThe specific fund, the higher the rate of return and potential payouts.
The interest rate on the Fund is a good indicator of its potential performance. Funds that have higher interest rates usually overcome funds with lower rates in the long run. In the short term, funds that have differences between interest rates can actually work on the same level. The shorter the time needed before maturity, the less likely it is that there will be a big difference between the performance of one fund and the power of one fund.