Money Market Fund vs. Bank DepositMoney Market Fund vs. Bank Deposit

Because of the difference in taxation. In a money market fund, for an individual investor, the tax is generally 25% on the real gain—meaning the gain beyond the increase in the Consumer Price Index. In an unlinked shekel deposit, the tax is generally 15% on the nominal gain. Therefore, the higher the inflation, the greater the potential tax advantage of the money market fund.

Because it is not only the tax rate that matters, but also the gain on which it is paid. In an unlinked shekel deposit, you generally pay 15% on all the interest. In a money market fund, you generally pay 25% only on the real gain. During a period of inflation, the fund's tax base may be significantly smaller.

No. Unlike a fixed-interest deposit, where the interest rate is set in advance according to the deposit terms, the return on a money market fund changes according to the returns of the assets in which the fund invests and market conditions. Therefore, enter an estimated annual return in the calculator, and do not treat it as a guaranteed return.

Enter the expected annual return after the fund's management fees and before tax. If you rely on past returns, remember that they do not guarantee that the return in the coming year will be the same.

Enter the annual interest rate the bank offers you before tax. The calculator is designed for comparison with an unlinked shekel deposit, on which the calculator's tax calculation is based.

In such a situation, no positive real gain is created for the purpose of the simple tax calculation, so the calculator does not deduct tax from the fund's gain. In some cases, a capital loss may arise that can be offset against other capital gains, depending on tax laws and individual circumstances.

No. The calculator compares only the net monetary gain after tax. A money market fund is a tradable investment that can generally be sold on any trading day, whereas in some deposits the money is locked in for a period or early withdrawal is subject to the bank's terms. Therefore, it is also advisable to consider when you will need the money, not only which alternative yields more.

There is no single answer that suits everyone. Consider the interest rate offered by the bank, the fund's expected return, inflation, taxation, liquidity, and the level of certainty you are seeking. The calculator is intended to help you understand what is expected to remain in your pocket after tax—and from there make a more informed decision.