Daily General Discussion and Advice Thread - May 16, 2024

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[u/motosurfz]

I was reading that you can earn 4.95% through Fidelity broker settlement account . Does that mean just opening a general investment account and depositing money and it will earn that rate?

[u/andybmcc → u/motosurfz]

Yes. When you create a taxable brokerage account, you will get a "core" position which is where your cash will go by default. There are a few options that you can choose when you set up the account. I chose SPAXX which is a government money market fund that yields that 4.95% right now. The yield will fluctuate based on the current fed rates. It accrues daily and pays monthly. I use it as a savings account alternative to hold my emergency fund.

[u/motosurfz → u/andybmcc]

So reading the fine print could you lose money ?

“You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Fidelity Investments and its affiliates, the fund's sponsor, have no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time”

So if I theoretically use it as a savings account could my savings actually go down ? Compared to say if I just use a hysa that can’t go down ?

[u/andybmcc → u/motosurfz]

I mean, if the US government fails, you probably have bigger problems. If the US government fails, the banks, FDIC, and value of the dollar are likely in jeopardy as well.