# What will my money market earn?

Computes the balance and interest of a money market account or fund from its APY or 7-day yield, with an optional monthly deposit, year by year.

- Page: https://www.acalculator.org/finance/money-market-calculator
- JSON spec: https://www.acalculator.org/finance/money-market-calculator.json
- Version: 52f2e3933c09

## Default answer

Example with the default inputs (Opening deposit $10,000.00, Added each month $200.00, Yield 4%, The yield is APY (account), Years 5): At 4% a year, $10,000.00 plus $200.00 a month grows to $25,402.33 in 5 years.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| deposit | Opening deposit | The amount in the account at the start. |
| monthly | Added each month | A deposit added at the end of every month. Leave it empty or 0 for none. |
| rate | Yield | The account’s APY, or the fund’s 7-day yield, as a yearly percent. Type your own rate. |
| quote | The yield is | An APY (annual percentage yield, as banks quote a money market account) or a 7-day yield (as a money market fund quotes it). |
| years | Years | How many years the money stays in the account. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| balance | Balance at the end | The balance after the last month. |
| paidIn | Money put in | The opening deposit plus every monthly deposit. |
| interest | Interest earned | The balance minus the money put in. |
| firstYear | Interest in the first year | The interest earned in months 1 to 12. |
| apy | APY used | The effective yearly yield: the APY typed, or (1 + 7-day yield × 7 ÷ 365)^(365 ÷ 7) − 1. |
| monthlyRate | Monthly rate | The rate that compounds to the APY in 12 months: (1 + APY)^(1 ÷ 12) − 1. |

## Method

Each month, interest = balance × ((1 + APY)^(1/12) − 1), then the deposit is added. A 7-day yield Y becomes APY = (1 + Y × 7 ÷ 365)^(365 ÷ 7) − 1.

## Assumptions

- The yield stays the same for the whole time; money market rates change often, so use this as an estimate.
- Deposits are added at the end of each month.
- Fees, taxes and withdrawal limits are not included.

## Worked examples

1. deposit = $10,000.00, rate = 4%, quote = apy, years = 5 gives balance = $12,166.53, interest = $2,166.53, firstYear = $400.00. Source: APY is the yearly growth with compounding (CFPB Regulation DD, Truth in Savings, 12 CFR 1030 Appendix A, https://www.consumerfinance.gov/rules-policy/regulations/1030/a/).
2. deposit = $0.00, monthly = $500.00, rate = 4.5%, quote = apy, years = 3 gives paidIn = $18,000.00, balance = $19,207.27, interest = $1,207.27. Source: Future value of monthly deposits at the monthly rate (1 + APY)^(1/12) − 1 (Microsoft Excel FV function, https://support.microsoft.com/en-us/office/fv-function-2eef9f44-a084-4c61-bdd8-4fe4bb1b71b3).
3. deposit = $50,000.00, rate = 5%, quote = seven, years = 1 gives apy = 5.124591%, balance = $52,562.30. Source: SEC Form N-1A, Item 26(a): yield = 7-day base period return × 365/7, effective yield = (base period return + 1)^(365/7) − 1 (https://www.sec.gov/files/form-n-1a.pdf).

## FAQ

### How does a money market account earn interest?

A money market account pays interest on your balance, usually compounded daily or monthly, and quotes the result as an APY (annual percentage yield). The APY already includes compounding: a 4% APY grows $10,000 to $10,400 in a year, whatever the compounding. The calculator spreads it over the months at (1 + APY)^(1/12) − 1 each month.

### What is a 7-day yield?

Money market funds quote a 7-day yield: the fund’s income over the last 7 days, net of fees, times 365 ÷ 7. By the SEC’s rule the effective yield, with compounding, is (1 + 7-day yield × 7 ÷ 365)^(365 ÷ 7) − 1. A 5.00% 7-day yield is an effective 5.1246% a year. Choose “7-day yield (fund)” and the calculator converts it.

### What is the difference between a money market account and a money market fund?

A money market account is a bank or credit union deposit account, covered by FDIC or NCUA insurance up to the limits. A money market fund is a mutual fund that buys short-term debt; it is not insured and its yield changes daily, though it aims to keep a stable $1 share price. The maths here works for either: only the yield differs.

### Do money market rates change?

Yes, often: they follow short-term interest rates. The calculator keeps the yield you type for the whole time, so the result is an estimate. It never looks up a rate: type the one your bank or fund quotes today.

### How much will $10,000 earn in a money market account?

At a 4% APY, $10,000 earns $400 in the first year and grows to $12,166.53 in 5 years with no deposits. Adding $200 a month raises the balance further; type your own numbers.

### Is money market interest taxed?

In the U.S. the interest is usually taxable income in the year it is paid, like savings interest. This calculator does not take tax out.

## Sources

- U.S. Securities and Exchange Commission, Form N-1A, Item 26(a): money market fund yield and effective yield. https://www.sec.gov/files/form-n-1a.pdf
- Consumer Financial Protection Bureau, Regulation DD (Truth in Savings), 12 CFR 1030, Appendix A: annual percentage yield. https://www.consumerfinance.gov/rules-policy/regulations/1030/a/
- U.S. Securities and Exchange Commission, Investor.gov: Money market funds. https://www.investor.gov/introduction-investing/investing-basics/investment-products/mutual-funds-and-exchange-traded-5