Fidelity FCASH? Curiosity. Good for ANYTHING?

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Fidelity FCASH? Curiosity. Good for ANYTHING?

Postby nisiprius » Thu Oct 09, 2008 8:18 am

Fidelity, and I presume all brokerages, have a kind of cash account that is not a money market fund. Fidelity calls it FCASH. I'm 99.99% sure that this is not an overlooked resource for people seeking safety in money. I'm 99.99% sure it's not a place where a sane person would park their nest egg.

I'm just asking because, well, it's a place for money that isn't a money market fund or a bank account, and I'm curious about it. It's apparently not a mutual fund, and I can't find a prospectus for it on Fidelity's website.

I have no idea what it actually is or what it's backed by or what it is good for. Is it good for anything at all? Is it just there as an accidental legacy of past history, or a regulatory requirement, or something?

Here's Fidelity's description:

For Brokerage accounts, your Core is an interest-bearing cash account called FCASH, unless you specified otherwise when you opened your Fidelity Account. FCASH should be used for cash temporarily awaiting reinvestment; it is not intended solely for the purpose of earning interest. Investors should consider higher yielding investment alternatives for funds not needed immediately....

FCASH Rates - As of 05/29/2008
Greater than $500,000 0.73%
$100,000-$499,999 0.51%
$50,000-$99,999 0.11%
Less than $50,000 0.11%
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: Fidelity FCASH? Curiosity. Good for ANYTHING?

Postby jpsfranks » Thu Oct 09, 2008 9:49 am

nisiprius wrote:I have no idea what it actually is or what it's backed by or what it is good for. Is it good for anything at all? Is it just there as an accidental legacy of past history, or a regulatory requirement, or something?


I think it's just a bad sweep option that Fidelity defaults a lot of accounts to so that they can earn a little off your money unless you actually bother to ask for something better.
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Postby Easy Rhino » Thu Oct 09, 2008 10:36 am

Some other brokerages have "free cash" investment options instead of MMF sweeps, and they're uniformly terrible.

It's probably protected by SIPC.

Anyone can rearrange their sweep to a municipal money market fund of some sort. IRAs can use a taxable money market.

If for some reason you really don't like munis, you can get Fidelity's "mysmartcash" account, which invests in FDICs insured bank deposits, with a fairly low yield (2+%), but still higher than FCASH.
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Postby smithdad » Thu Oct 09, 2008 12:49 pm

Is it good for anything at all?


Fidelity...
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