3 Things To Do If You Have Cash In A Brokerage Account Bankrate.com Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Klaus Vedfelt/Getty Images November 13, 2018 Matthew Goldberg is a consumer banking reporter at Bankrate. Matthew has been in financial services for more than a decade, in banking and insurance. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Here is a list of our . Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Your has probably performed very well over the past several years. Both the Dow Jones industrial average and the S&P 500 are up more than 50 percent since November 2013. But you probably can’t say the same for the cash in your brokerage account. Generally, savings accounts at brokerages aren’t paying an annual percentage yield (APY) as high as you can earn at some online banks. “I do think that there’s a tendency to ignore the earning power of the cash that’s in your brokerage account,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “It may be sitting on the sidelines for a while until you find another compelling investment option. You want it to be earning a competitive return in the meantime.” Here are three things to do if you have cash in a brokerage account. 1 Check the interest you re earning – or not earning
First, check to see what interest your cash is currently earning. Check your brokerage account statement, log in to your account or call your brokerage to see what type of account your cash is in and how it’s performing. Also confirm that your ; otherwise, they might be accumulating in a low-yielding account. “They may think they’re in a money market fund because that’s traditionally where your cash in a brokerage has been parked, but a number of brokerages have somewhat slyly changed the default cash holding to an FDIC-insured bank account,” McBride says. “On the surface, that sounds great. But the reality is the yield they’re paying is about 0.1 percent instead of .” If the cash is in a savings account, see what the APY is. If it’s a mutual fund, it’s going to specify the name of the fund and its ticker symbol, McBride says. “If that’s not what’s listed — if it just says cash or something like that — that’s an indicator that it might be in a very low-yielding bank account,” McBride says. Also check to see if you’re receiving monthly interest payments. If you’re not, you likely aren’t earning interest. 2 Know whether the account is insured
Don’t confuse . Money market mutual funds or money market funds likely qualify as securities for Securities Investor Protection Corp. (SIPC) protection. They’re protected when held at an SIPC-member broker-dealer. It’s possible for these securities to lose value, and the SIPC doesn’t protect your shares against market losses, . A lot of people consider these two to be the same, but there are some subtle differences, McBride says. “While the bank account is federally insured and rock solid from a protection standpoint, money market funds are very stable as well,” McBride says. “Most big brokerage and mutual fund companies would move heaven and earth to preserve the one dollar net asset value on their mutual funds. There’s too much reputational risk and risk of capital flight if they break the buck.” Money market funds are likely going to earn competitive yields that keep pace with changes in the market, McBride says. So, if there is money that you want ready to trade at a moment’s notice, this may be a good spot for that bucket of money. For the other money that you’re not going to invest, there are FDIC-insured savings accounts earning as much as 2.26 percent APY. You’re not likely to find those yields in a brokerage account savings account. “The FDIC-insured bank accounts that most brokerages are offering are going to pay next to nothing because the brokerage is getting the return on your cash. Not you,” McBride says. 3 Find a better place for your emergency savings br
Your emergency fund needs to keep up with inflation. Otherwise, it’s going to have lost purchasing power when you need to use the funds. This is why your emergency fund should be in a , McBride says. “That’s where you’re going to get the best yield — even better than what you’re going to find on money funds,” McBride says. A brokerage account is the perfect place for cash that you want to invest when you see a buying opportunity in the market. “You don’t want your entire emergency fund sitting in a brokerage account money market fund,” McBride says. “You’re leaving yield on the table, relative to what you could get in an FDIC-insured online savings account.” SHARE: Matthew Goldberg is a consumer banking reporter at Bankrate. Matthew has been in financial services for more than a decade, in banking and insurance. Related Articles