Personal Investments • Is this interest double dip?

If I purchase a Money Market MF today from a bank account. The MF will accrue interest today, and the bank account won't get deducted until after Labor Day weekend, i.e. next Tuesday.

So for 4 days, Friday, Sat, Sun and Monday, I will earn double interests. Does this sound right?

It would be trivial for smaller amount, but for bigger amount, this would make a difference.

Let's say 2 mil balance and 5.25% rate,

2,000,000 * 5.25% / 365 * 4 = $1150

There are five Monday holidays this year when market closes,

New Year's Day: Monday, January 1
Martin Luther King Jr. Day: Monday, January 15
Presidents' Day: Monday, February 19
Memorial Day: Monday, May 27
Labor Day: Monday, September 2

The total would be
$1150 * 5 = $5753

A risk free return of 5753/2,000,000 = 0.287%

Not quite trivial any more.

Sounds too good to be true. What am I missing?

Statistics: Posted by well9boy9 — Fri Aug 30, 2024 1:14 pm — Replies 6 — Views 258

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