If you have an account with a brokerage firm, you might have idle cash. This could be funds from the sale of a stock or ETF, or cash you're intentionally keeping aside as a buffer against market fluctuations. Earning a reasonable return on these uninvested funds is a wise move and all brokerage firms offer a money market fund for you to deposit your idle cash, although the yields differ.
The three largest brokerage firms-Charles Schwab, Vanguard, and Fidelity-currently offer money market yields in the upper 3% to lower 4%. Vanguard provides the highest yield of 4.20%, whilst Fidelity's return is the lowest at 3.92%. Charles Schwab fits in the middle, offering most customers 4.12%. However, investors with a minimum of $1 million in uninvested funds have the opportunity to earn a higher rate of 4.27%.
These rates are reasonably competitive but you can significantly improve your earnings by transferring uninvested cash to a top-performing savings account. Numerous high-yield savings accounts offer 4.40% or higher rates, with the best offering a rate of 5.00% APY.
Keeping your cash with your investment accounts' institution maybe convenient, though moving some of it to a high-yield savings account can potentially help it earn a better rate. Moreover, there are also options of putting a portion of your savings in top-performing CDs. As the rate of CDs is guaranteed for the entire term, you can secure a return between 4.28% to 4.65% for terms varying from 3 months to 5 years.
To find the best returns, it's worthwhile to compare offerings from different institutions. Research costs nothing and can lead to higher returns on your idle funds. Note that while national averages tend to be low, shopping around can unearth rates 5, 10 or even 15 times higher. Ultimately, the best strategy may be a blended one – maintain some idle cash in your brokerage account for quick trades, while optimizing earnings through high-yield savings accounts or CDs.