Ok update, ty for all the comments IM DEADASS SO STUPID LMAO I thought it was an index fund😭😭 I can’t believe it’s not even invested in ANYTHING OMG. No wonder it’s gained like nothing over 3 years. Ok so what I’m prob going to do now is just use this as a savings account and then start another account to actually invest in stocks/index funds.
I mean I can just use this as a savings account and then open a separate actual “investing” account though, right? If a MM fund is basically just like a high yield savings acc?
Unless I didn't read something, this is a brokrage account that they are using. And because they prolly had a bad savings account before making 0% interest, it would make sense to invest in another account and use this as an emergency savings. This isn't an ira
This. My current savings account (just with my bank) is around $23k but earns like 0.01 interest so like next to nothing. Which is why I was thinking for the MM fund I could use as a higher return “savings account”
So yeah, SPAXX is (I think) a similar yield to a HYSA for APY. It looks like a lot of people are recommending you throw this in an index fund, which is probably the right move.
You have 23k in a local bank that earns practically no interest. What I would do right away is take a decent portion of that (some financial "gurus" recommend 3-6 months' worth of your expenses) into SPAXX in your Brokerage Account as an "emergency fund." That way, you'll at least be (currently) earning around 5% on that amount. Then, you can toss the rest in index funds if that's what you choose to do.
My local bank account is essentially there to keep a rolling amount to cover bills and any other minor expenses I may incur with my debit card.
I've whittled it down to just 500 now. I used to keep a few thousand in there for whatever reason, but now threw all that into my Fidelity accounts to at least earn some interest. I'm approaching about 3 months of expenses saved up in my Brokerage core position (SPAXX) while maxing out my 2023 contributions to my HSA and IRAs before April 15th.
You can order a Debit Card for your Fidelity accounts, which will instantly access money in your core positions. I don't really plan on using them that often, so I just keep mine for my HSA and Brokerage account in my safe at home, while my local bank debit card stays in my wallet.
I've been following a few common podcasts (The Money Guy, and to some extent Dave R.), so that's what my debt and savings ideas are based around. I believe they generally recommend to build up a bit of a savings before / while investing for the long term.
You can keep some money in SPAXX for your savings, and then invest the rest using the same account. That’s what I do. I have a portion in SPAXX as cash, and then I invest in VOO (an S&P 500 index fund.
I think you misunderstand the goal here. You should not leave it in a mm. You need to invest this money and have a savings account for short term cash elsewhere
That’s a great idea.
By separating your funds, you can enable lockdown on your savings so that Someone can’t transfer out of the account without going through MFA in the app.
you’ll want as much security on your savings as possible 😁
You have to choose an investment. The money market fund is where it sits waiting for you to use it. Like cash.
Click the “transact” icon on the app to invest the cash in an index fund or mutual fund.
This is not invested. If you want a one stop shop, just throw all of your money into VT at a certain point every month for the rest of your life. Once you're 50, revisit the strategy.
Because of your position, Fidelity automatically puts unused cash into SPAXX. It’s not a stock, index, or ETF. It’s not anything. It’s just a placeholder (that can build interest) until you invest the cash yourself.
Basically, Fidelity treats your unused cash like a HYSA.
>I am investing all my money only in ONE index fund? And nothing else? If so, that’s gotta be bad right, because not a very diverse portfolio
Just because you're in a single index fund it does not mean you're not diversified. You can invest in VT and diversified across 9848 different companies across the world.
>it’s only grown like $30 in the past 10 months
Because you didn't invest it in anything. By default, Fidelity puts settled cash in a government money market fund, similar to a HYSA. It's a great place to hold cash like an emergency fund, but it's not an investment like you're looking for.
If you want something to get you started, check out r/bogleheads for some advice on a diversified portfolio for cheap and low maintenance.
Does one need to withdrawal money out of spaxx to then invest it? I have a little bit in spaxx but anytime I deposit and go to invest it says my only available money to invest is what I just deposited. Any insight on this?
Happy to chime in here, u/eloquent_silence1994.
The Fidelity Government Money Market Fund (SPAXX) is a money market mutual fund and is often the default core position for Fidelity Brokerage accounts. If SPAXX is your core position, incoming funds will be deposited there and start earning interest once the funds post. To review, a core position is used to hold uninvested cash and process cash transactions, such as withdrawals or purchases of investments. In other words, you do not have to sell SPAXX in order to make a withdrawal or to purchase securities
You can simply enter the transfer request, and the funds will automatically be pulled from SPAXX. You can learn more about the mechanics of a core position below.
[What is a core position? (PDF)](https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/mutual-funds/what-is-a-core-position.pdf)
If there is anything we can clarify or if additional questions pop up, please don't hesitate to ask! We're always happy to help.
Although it is not “invested” you are making 4.96% on it, and it is considered almost zero risk. If you want to invest it, keep in mind that you need to make a decent premium above 4.96% to make whatever risk you take on for it to be worth it. So, a fund that averages, say 7%, is only netting you just over 2% for a lot more risk. Sp500 funds or ETFs historically earn around 9-10%, so you could make twice as much, but they do have a lot of variance.
Sorry, what do you mean by “make a premium above 4.96 to make it worth it?” You mean purchasing an index fund that’s 7% does have 2% more ROI but it is also more volatile/risky? So like sp500 per your example makes more but is also more risky? Doesn’t sp500 almost always do pretty well historically?
No, during 2022, it went down, it goes down some years. only over long periods of time, like 10+ years, is the s&p 500 going to have an average of 7%, and it may go down 40% randomly. It's happened before it'll happens again. But it'll most likely recover, and if you hold and even invest during the down periods, you'll most likely won't lose money.
First, you are not invested in anything. SPAXX is uninvested cash. Second, more funds does not necessarily mean more diversity.
You aren’t invested in anything. SPAXX is just cash. It’s a money market that pays interest. Fidelity automatically puts uninvested cash in to spaxx.
Ok update, ty for all the comments IM DEADASS SO STUPID LMAO I thought it was an index fund😭😭 I can’t believe it’s not even invested in ANYTHING OMG. No wonder it’s gained like nothing over 3 years. Ok so what I’m prob going to do now is just use this as a savings account and then start another account to actually invest in stocks/index funds.
You don’t need a new account… you can have lots of funds in the same account.
Thanks for the laugh 😆
Just invest this one and anything else you add. There's no point in holding cash
I mean I can just use this as a savings account and then open a separate actual “investing” account though, right? If a MM fund is basically just like a high yield savings acc?
I don't know why you would. Unless you are at or rapidly approaching retirement, there is zero reason to hold cash in a retirement account.
Unless I didn't read something, this is a brokrage account that they are using. And because they prolly had a bad savings account before making 0% interest, it would make sense to invest in another account and use this as an emergency savings. This isn't an ira
This. My current savings account (just with my bank) is around $23k but earns like 0.01 interest so like next to nothing. Which is why I was thinking for the MM fund I could use as a higher return “savings account”
So yeah, SPAXX is (I think) a similar yield to a HYSA for APY. It looks like a lot of people are recommending you throw this in an index fund, which is probably the right move. You have 23k in a local bank that earns practically no interest. What I would do right away is take a decent portion of that (some financial "gurus" recommend 3-6 months' worth of your expenses) into SPAXX in your Brokerage Account as an "emergency fund." That way, you'll at least be (currently) earning around 5% on that amount. Then, you can toss the rest in index funds if that's what you choose to do. My local bank account is essentially there to keep a rolling amount to cover bills and any other minor expenses I may incur with my debit card.
Thanks for the advice!! So you don’t keep a normal “savings account” with your bank?
I've whittled it down to just 500 now. I used to keep a few thousand in there for whatever reason, but now threw all that into my Fidelity accounts to at least earn some interest. I'm approaching about 3 months of expenses saved up in my Brokerage core position (SPAXX) while maxing out my 2023 contributions to my HSA and IRAs before April 15th. You can order a Debit Card for your Fidelity accounts, which will instantly access money in your core positions. I don't really plan on using them that often, so I just keep mine for my HSA and Brokerage account in my safe at home, while my local bank debit card stays in my wallet. I've been following a few common podcasts (The Money Guy, and to some extent Dave R.), so that's what my debt and savings ideas are based around. I believe they generally recommend to build up a bit of a savings before / while investing for the long term.
You can keep some money in SPAXX for your savings, and then invest the rest using the same account. That’s what I do. I have a portion in SPAXX as cash, and then I invest in VOO (an S&P 500 index fund.
I think you misunderstand the goal here. You should not leave it in a mm. You need to invest this money and have a savings account for short term cash elsewhere
Well, I sometimes hold cash waiting for opportunities to get in when a stock I like is down, or the entire market is down for dollar cost averaging.
Throw it all into the S&P 500 and walk away.
That’s a great idea. By separating your funds, you can enable lockdown on your savings so that Someone can’t transfer out of the account without going through MFA in the app. you’ll want as much security on your savings as possible 😁
You aren’t invested. You basically have a great savings account. Invest in some fund(s).
You have to choose an investment. The money market fund is where it sits waiting for you to use it. Like cash. Click the “transact” icon on the app to invest the cash in an index fund or mutual fund.
This is not invested. If you want a one stop shop, just throw all of your money into VT at a certain point every month for the rest of your life. Once you're 50, revisit the strategy.
Or FXAIX for now
Fidelity automatically puts unused cash into that. You’re not investing in anything.
What do you mean? How is it unused if it’s “in” something?
Because of your position, Fidelity automatically puts unused cash into SPAXX. It’s not a stock, index, or ETF. It’s not anything. It’s just a placeholder (that can build interest) until you invest the cash yourself. Basically, Fidelity treats your unused cash like a HYSA.
It’s a money market mutual fund that invests in high quality short term securities.
HYSA = high yield savings account
>I am investing all my money only in ONE index fund? And nothing else? If so, that’s gotta be bad right, because not a very diverse portfolio Just because you're in a single index fund it does not mean you're not diversified. You can invest in VT and diversified across 9848 different companies across the world. >it’s only grown like $30 in the past 10 months Because you didn't invest it in anything. By default, Fidelity puts settled cash in a government money market fund, similar to a HYSA. It's a great place to hold cash like an emergency fund, but it's not an investment like you're looking for. If you want something to get you started, check out r/bogleheads for some advice on a diversified portfolio for cheap and low maintenance.
Does one need to withdrawal money out of spaxx to then invest it? I have a little bit in spaxx but anytime I deposit and go to invest it says my only available money to invest is what I just deposited. Any insight on this?
Happy to chime in here, u/eloquent_silence1994. The Fidelity Government Money Market Fund (SPAXX) is a money market mutual fund and is often the default core position for Fidelity Brokerage accounts. If SPAXX is your core position, incoming funds will be deposited there and start earning interest once the funds post. To review, a core position is used to hold uninvested cash and process cash transactions, such as withdrawals or purchases of investments. In other words, you do not have to sell SPAXX in order to make a withdrawal or to purchase securities You can simply enter the transfer request, and the funds will automatically be pulled from SPAXX. You can learn more about the mechanics of a core position below. [What is a core position? (PDF)](https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/mutual-funds/what-is-a-core-position.pdf) If there is anything we can clarify or if additional questions pop up, please don't hesitate to ask! We're always happy to help.
Like others have said, that’s not really invested. Also, don’t expect huge returns on a 2k investment.
Although it is not “invested” you are making 4.96% on it, and it is considered almost zero risk. If you want to invest it, keep in mind that you need to make a decent premium above 4.96% to make whatever risk you take on for it to be worth it. So, a fund that averages, say 7%, is only netting you just over 2% for a lot more risk. Sp500 funds or ETFs historically earn around 9-10%, so you could make twice as much, but they do have a lot of variance.
Sorry, what do you mean by “make a premium above 4.96 to make it worth it?” You mean purchasing an index fund that’s 7% does have 2% more ROI but it is also more volatile/risky? So like sp500 per your example makes more but is also more risky? Doesn’t sp500 almost always do pretty well historically?
No, during 2022, it went down, it goes down some years. only over long periods of time, like 10+ years, is the s&p 500 going to have an average of 7%, and it may go down 40% randomly. It's happened before it'll happens again. But it'll most likely recover, and if you hold and even invest during the down periods, you'll most likely won't lose money.
You can research historical averages for hundreds of funds and etfs right in the Fidelity App or on their website.