Cash Should Work For You

With interest rates essentially at 0.0%, it is worth a bit of time looking for alternatives to low-paying money market funds. Two default core positions at Fidelity are SPAXX and FDRXX. FDRXX is Fidelity® Government Cash Reserves and SPAXX is Fidelity® Government Money Market Fund. In the past I have kept extra cash in these mutual funds. However, now that Fidelity is making money on these with 0.38% and 0.42% expense ratios and only paying 0.01% to the client, alternatives should be considered.

My first move was to change my core account from FDRXX or SPAXX to an FDIC insured account that Fidelity also offers. The interest rate is still nothing, but it sets the stage for what I plan to do next. Alternatives might include short-term CD’s, which also pay a low interest rate, but are far better than 0.01%. It looks like I can get 0.25% on 3-month CD’s and 0.30% on 6-month CD’s at Fidelity.

Fidelity CD Link: CD

Another strategy I will use is to transfer cash from our Fidelity Brokerage account to our online Ally Bank savings account. Ally is currently paying 1.50% on their savings account offering. They also have decent CD rates for three/six-month CDs.

Ally Bank Link: SAVINGS

Ally Bank Savings Account (We have one of these)
Ally Bank 3-Month CD
Ally Bank 6-Month CD

One other thought: if you are a Christian, give some cash away and earn eternal dividends. Stockpiling cash is not the best use of all your available wealth.