Where to keep my cash until I'm ready to invest?

[fruitbowlk]

Money Market account or a sweeps account
Pros and Cons?

[autoxer]

When will you be ready to invest?

[fruitbowlk]

When will you be ready to invest?

In six months.

[kork13]

Money Market account or a sweeps account
Pros and Cons?

In many cases, the two are one and the same. But if you're waiting 6 months (may I ask why?), park it wherever you'll be able to earn some interest until then... Most MM/sweep accounts only give .01%-.1% interest. An abundance of online savings accounts give at least .8%-1%, or perhaps a short-term CD.

But really, I don't see what you're waiting for. Why wait the six months? You know that most of us don't agree with market timing, so I won't launch into that spiel... But I will say that in most cases, you'll do better for yourself by giving yourself more time in the market. The only reason I would wait is if you're expecting to potentially need the money for a different purpose during the interim months.

[fruitbowlk]

Maybe my wording is making this question more difficult than what it should be. I have never heard of a sweeps account and wanted to hear from those who have and want to know from the ones that have had an experience with it I just want t know what it is all about what it. I have read about it but I like to hear from people that might have actually used one. I'm familiar with MM since I have had one but I have never heard of a sweeps account. I threw out six months just as a number. I"m not that advance to try to time the market. And ready don't care do so. Just like with some company you would have to have a certain amount of cash to invest for ex: T Rowe price I think you can't send in a $50 to purchase they want $100. So what I'm basicly doing is having my cash sent into a sweeps or MM account until I have enough money to purchase stock. Nothing fancy or complicated. Sorry if the question seem more complex that it need to sound. I will be talking to an advise before I do anything but I like to hear from some of this board and what they might have experienced.

In many cases, the two are one and the same. But if you're waiting 6 months (may I ask why?), park it wherever you'll be able to earn some interest until then... Most MM/sweep accounts only give .01%-.1% interest. An abundance of online savings accounts give at least .8%-1%, or perhaps a short-term CD.

But really, I don't see what you're waiting for. Why wait the six months? You know that most of us don't agree with market timing, so I won't launch into that spiel... But I will say that in most cases, you'll do better for yourself by giving yourself more time in the market. The only reason I would wait is if you're expecting to potentially need the money for a different purpose during the interim months.

[Retired To Win]

It's All About the Return on AND Return OF Your Money

FruitbowlK...

I think it's all about the return you'll get on your money and how easily you'll be able to get your hands back on your money when you are ready to use it or invest it.

I have found savings accounts at both Sallie Mae and Ally Bank to meet those requirements admirably. The yields are around 1%, which beats a money market all to hell, and it just takes a simple phone call to get your money sent to your checking account whenever you are ready. Been there and done that, so... I see no advantage in dribbling money into a sweep account as you seem to be doing. Anyhow, that's my two-cents worth.

Good luck with your investing!

Retired To Win
making the most of my time and my money

[bjl584]

A six month time frame isn't going to make or break you. With interest rates so low it's not going to really matter where you park the money. Maybe shop around for some 6 month CD rates.

[kv968]

A sweep account is just basically a MM account at a brokerage. It usually pays way lower than what you could get in an online or "normal" MM account but its there and ready to trade when you want it.

Since you're just saving up money until you invest, you could keep in an online MM account and get a little more interest on it and then transfer the money over. Although with rates as low as they are, unless you're talking about a substantial amount of money, I don't think it really matters either way.

The only thing that would matter is if you wanted to trade something immediately. If the money was in the sweep account, it already be at the broker and you could do it. If you were to transfer the money to the broker from a different MM account it may take one to a few days or maybe even a week before the funds would be available to trade.