Here’s how you could earn more on your cash (without buying stocks)

You can still put your money to work even if you don’t want to invest it in the stock market.

November 17, 2022

Money market fund

Money sitting in traditional savings accounts isn’t really earning much interest these days. When you combine that with the fact that the price of many products and services has also risen dramatically, it’s bad news for buying power. Our money may actually lose value over time because we can’t buy as much with it.

So what can we do with our short-term savings? Isn’t there somewhere to put our cash where we can access it when we need it, that gives it opportunity to grow, but isn’t super risky? Actually, there is. And it’s called a money market fund.

What’s a money market fund?

A money market fund is technically a type of mutual fund that’s considered low-risk, easy to access, and can even help your money earn some interest over time. You can think of it like a holding place for your cash.

When you deposit money into your Plynk brokerage account, it’s automatically put into a money market fund.

Which money market fund is my money held in at Plynk?

At Plynk, the money you deposit into your brokerage account is held in the Fidelity Government Money Market Fund. This is sometimes called your “core fund” or your “core position.”

You can read more about the fund here.

What can I do with the cash sitting in a money market fund?

You can use your cash in that fund to invest in stocks, ETFs, and/or mutual funds. Or you could decide to keep it there to earn some potential interest.

While it’s unlikely that cash in a money market fund would earn enough to keep up with rising inflation, it could be better than the miniscule interest it might earn in a traditional savings account.

Is my cash safe in a money market fund?

Money market funds are known for being a low-risk, stable place to keep your cash, but they’re not entirely risk free. There’s technically a chance that it could lose value.

In terms of insurance protection, the cash held in a money market fund is insured by the Securities Investor Protection Corporation (SIPC) up to $250,000. This would replace the amount you had in the fund in the event of a brokerage failure (but doesn’t replace any amount you might have lost in value).

Money market funds are not insured by Federal Deposit Insurance Corporation (FDIC) like most traditional savings accounts, which would replace the exact value of the cash if the bank were to go under.

The bottom line: If you’re looking for a place to keep your cash, that’s low-risk, easy to access, and that offers the opportunity for it to grow (and you’re comfortable taking on a slight amount of risk) consider the money market fund available to you in your Plynk brokerage account.