How is interest on Flexible Accounts calculated and paid?
Flexible accounts performance fluctuates every day, as it is an investment product, which leads to daily changing yields. The interest rate is expressed in the form of Annual Percentage Yield (APY).
The APY indicates how much your money could grow if you held the investment for an entire year and the yield remained constant (which in practice does not) after deducting the applicable fees. The APY is updated daily in the app based on the performance of the fund on the previous day, which is provided by the fund manager. The APY is calculated by deducting from the fund's yield of the previous day the relevant fees. Fees vary depending on the MMF, your subscription plan and region. For more information, please review the fee disclosure.
The interest you earn and the fees you pay are calculated on a daily basis by applying the APY to the principal invested in the MMF. You'll only see the interest earned reflected in your Flexible Account when the net interest amount is more than 0.01 USD.
When you add money into your Flexible Account, you issue a buy order in the respective MMF and you'll start earning interest the day after it reaches the fund manager. If you submit orders before 5am UTC on a business day, your money will reach the fund manager on the same day. Otherwise, it will reach the fund manager on the next business day.
For example, if you invest $10,000 on a given business day (Day 1) at 4am UTC into your Flexible Account with an APY of 3%, this would mean you'd have USD10,001.64 on Day 3.
Day 1: $10,000
Day 2: $10,000 + ($10,000 X 3%/365) = $10,000.82
Day 3: $10,000.82 + ($10,000 X 3%/365) = $10,001.64
This is an estimation. The exact calculation may differ depending on the time of investment, bank holidays, and more.