7-day SEC yield
The calculation is performed as follows:
- Take the net interest income earned by the fund over the last 7 days and subtract 7 days of management fees.
- Divide that dollar amount by the average size of the fund's investments over the same 7 days.
- Multiply by 365/7 to give the 7-day SEC yield.
To calculate approximately how much interest one might earn in a money fund account, take the 7-day SEC yield, multiply by the amount invested, divide by the number of days in the year, and then multiply by the number of days in question.
This does not take compounding into effect.
The examples assume interest is withdrawn as it is earned and not allowed to compound.
- If one has $1000 invested for 30 days at a 7-day SEC yield of 5%, then:
- (0.05 × $1000 ) / 365 ~= $0.137 per day.
Multiply by 30 days to yield $4.11 in interest.
- If one has $1000 invested for 1 year at a 7-day SEC yield of 2%, then:
- (0.02 × $1000 ) / 365 ~= $0.05479 per day.
Multiply by 365 days to yield $20.00 in interest.
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