Is Your Cash Working for You?

You probably review your investment statements regularly, but are you giving the same level of attention to your cash?

Brokerage account cash options

In today’s shifting interest rate environment, where you park your cash matters more than ever. Many brokerage account default sweep (core) positions offer disappointing yields. For instance, Schwab’s core money fund yields just 0.05%. To earn more, investors often need to take action—manually moving cash into higher-yielding money market funds.

Fidelity recently updated the default core position in non-retirement accounts to FCASH, which currently yields around 2.1%. However, Fidelity money market funds have significantly higher yields—approximately 4.1% at present. If you’re holding a substantial cash balance, we evaluate cash options that may offer higher yields.

Certificates of deposit

Certificates of deposit (CDs) also require close attention. That great rate you locked in last year? It may have dropped significantly upon renewal—often without clear notice from the bank. One client was surprised to find her 4.5% CD had auto-renewed at just 0.05%. Monitoring CD maturities and rates—and contacting your bank before the renewal deadline—is critical.

Brokerage money market fund vs. bank money market account

It’s also important to distinguish between a Fidelity money market fund and a bank money market account. Fidelity’s funds typically offer competitive yields, but they are not FDIC insured. In contrast, bank money market accounts are insured up to $250,000 per depositor, but they often offer lower returns.

FDIC insurance limits

Additionally, some clients unknowingly exceed FDIC insurance limits in a single bank or across multiple banks. We can help you review your cash holdings, optimize yields, and ensure proper diversification to stay within coverage limits.

Short-term safety vs. purchasing power

Cash may feel safe, but low returns can quietly erode its purchasing power over time. We can help align your cash strategy with your financial goals. To explore your options, simply reply to this email to schedule a meeting with your advisor. Not a client? We are happy to talk to you about this or any other questions you have.