Managing the Cash in One's Brokerage Account

What to do with cash in a brokerage account while waiting for an opportunity to deploy it?

My preference is to park it in T-Bills, which some brokers will execute for you at auction commish-free. The min at Schwab is one bill. At E*Trade, it’s five. If you’ve got less than $5k, that’s a lotta cash sitting idle, earning whatever low rate your broker is probably offering.

The solution is to park all cash less than the amount of a T-Bill purchase in a money market fund. The choices at Schwab are limited. But the 7-day yield on their in-house MM fund is decent, and the min initial purchase is $1. The advantage of using a MM fund rather than T-Bills is quick access if you do find something you want to invest in.

The situation at E*Trade is different. They offer no in-house MM funds, just a list of about 80 of them, divided into the usual three categories of ‘Prime’, ‘Tax-free’, and ‘Taxable’. Here’s what I found for ‘Prime’ (with no guarantees I’ve got the facts right). Be sure to double check my numbers, also whether the fund has a redemption fee (typically not).

The top seven funds by 7-day yield are all within 8 bps of each other. So choosing one over the other isn’t going to make you rich or poor. But choosing the ones with the lowest expense ratios and the lowest initial investment minimums might make sense.


True, I just want to mention that there are no guarantees behind a MM fund, no matter what the pedigree. Exceptionally unusual for one to “break the buck”, but just a reminder that there’s no US Govt standing behind as they do with T-bills, no FDIC, no nuthin’.

And bad stuff has happened in the past. Rare, but not zero.


The US has been defaulting on its debts since 1913, several times “officially”. E.g., in 1971 when Nixon closed the gold window. There is every reason to think they are preparing to do so again with their plans to roll CBDC’s. So the risks of owning MM funds versus the risks of owning US govt issued debt is a distinction without a practical difference. (IMHO, 'natch)


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