By Vinayak on Saturday, September 14, 2013 with 0 comments
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Fidelity FCASH is designed to be a temporary "parking place" for cash deposits and balances that are awaiting investment. It is similar to interest-bearing accounts at any financial institution. Have a question? Get an answer from a Personal Finance Professional now!
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Brokerage Account Basics
- Brokerage accounts can hold many types of securities, such as individual stocks, bonds, mutual funds and options. At times, funds are either not invested or need to be immediately available ("liquid") for other purposes, such as a withdrawal. In these events, cash must be set aside to meet these needs.
- FCASH is the default temporary "parking place" for uninvested account balances in Fidelity brokerage accounts, unless otherwise arranged. It is an interest- and dividend-bearing balance that begins accruing interest on the first business day after that portion of the account is credited, and the earnings are paid at the end of each month. Other cash-equivalent parking places (money market mutual funds) can be designated--by phone--for deposits or proceeds from securities sales or dividends.
Money Market Funds
- Money market mutual funds differ from FCASH. They are slightly higher yielding securities that seek to maintain a stable value of $1. It is important to note that they are not cash. They are a cash equivalent that, as a mutual fund, is a portfolio of professionally-managed securities consisting of very stable, short-term, fixed-income securities, such as commercial paper and repurchase agreements from other financial institutions.