Idle Funds

AAA

DEFINITION of 'Idle Funds'

Money that is not invested and, therefore, earning no interest or investment income. Idle funds are simply funds that are not deposited in an interest bearing or investment tracking vehicle, that is, not participating in the economic markets. These funds are often thought of as "wasted" funds, since they do not appreciate in any manner.

INVESTOPEDIA EXPLAINS 'Idle Funds'

In instances where there is a positive inflation rate in a domestic nation, idle funds will actually decrease in value from a purchasing power perspective, as the funds fail to keep up with the rate of inflation. One option individuals have to earn income on funds, while maintaining liquidity of those funds, is to invest in money market or short-term interest accounts that will provide the depositor with a short-term rate of interest.

RELATED TERMS
  1. Money Market Account

    An interest-bearing account that typically pays a higher interest ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. ...
  3. Checking Account

    A transactional deposit account held at a financial institution ...
  4. Idle Time

    Unproductive time on the part of employees or machines as a result ...
  5. Bidder

    The party offering to buy an asset from a seller at a specific ...
  6. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position ...
Related Articles
  1. Forces Behind Interest Rates
    Economics

    Forces Behind Interest Rates

  2. What Investors Should Know About Interest ...
    Investing Basics

    What Investors Should Know About Interest ...

  3. Interest Rates And Your Bond Investments
    Investing Basics

    Interest Rates And Your Bond Investments

  4. The Bear On Bonds
    Home & Auto

    The Bear On Bonds

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center