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Important News about the PayPal Money Market Fund

Started by ctwjr, January 30, 2006, 05:16:35 PM

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I just got this message in my email today and thought it was interesting.  Although it is not the best news, it is not THAT bad.  Mainly I was just impressed that I got domething that said it was from PayPal and it actually WAS FROM PAYPAL!

QuoteSubject:   Important News about the PayPal Money Market Fund
Date:   Mon 01/30/06 01:37 PM
Important News from the PayPal Money Market Fund

Dear Customer,

PayPal's Money Market Fund has delivered competitive returns, with
no minimum investment or balance required. As a result, over the
years, many investors have placed their money in the Fund.

Even as the Fund has grown, PayPal has continued to pay the costs
of administering the Fund - without any reimbursement. However,
beginning March 1, the Fund will start to reimburse PayPal for a
portion of its expenses, which include legal, technical,
compliance and advisory services, and related charges that are
customary for mutual funds. As a result, the yield of the Fund
will be reduced by 0.25% (one quarter of one percent).

PayPal's Money Market Fund will continue to have no minimum
investment or balance. And you'll continue to have the same
immediate access to your money. (Note: Redemptions can occur only
on business days.)

Thanks for being part of the Money Market Fund.



I yam what I yam - Mr Potato Head


Wait, after all the fancy words and stuff what does this mean?


Well, when you carry a positive balance in your PayPal account (have $$ in there) it is automatically put in to a Money Market Fund (a type of mutual fund *).  A mutual fund is very much like a savings account that you would open at a bank, but they are known to have slightly higher interest rates in exchange for minumum balances (i.e. $500 or however much).  In recent years, mutual funds have become so popular that ther sometimes is no minimum balance, as is the case with Pay Pal.  So every month you get paid $$ for having a balance in there.  It encourages you to keep a higher balance so you can accrue more money in interest.  The contraversial thing about it is that I have not met anybody who would advise to keep a lot of money in their PayPal account, mainly, I assume, for security reasons.  From what I understand, it is not FDIC insured  :o

* Money market funds have relatively low risks, compared to other mutual funds (and most other investments). By law, they can invest in only certain high-quality, short-term investments issued by the U.S. government, U.S. corporations, and state and local governments. Money market funds try to keep their net asset value (NAV) — which represents the value of one share in a fund — at a stable $1.00 per share. But the NAV may fall below $1.00 if the fund's investments perform poorly. Investor losses have been rare, but they are possible.


Oh I see, well last week I had about $0.45 in there and I received $0.01 from the Money Funds :P. So good luck to those with tons of money in there.


I still have yet to find any truth to this and to the contrary I have quite a lot of money in my account and do quite well making over 4% on my money.