SPAXX is Fidelity’s government money market fund that’s not invested or settled. After depositing money into your account on Fidelity.com, it’s automatically placed into SPAXX as cash earning interest.
From this “core position”, cash stays in SPAXX in your Fidelity money market account, earning interest (similar to an FDIC savings account) until it’s invested on the next stocks, ETFs, mutual funds, or options trades. (When the Federal Reserve starts lowing the fed funds borrowing rates, wondering what happens to SPAXX and your savings rate?)
Why Did Fidelity Put My Money in SPAXX?
Don’t fret if you wake up and find SPAXX in your portfolio without making a direct purchase.
Fidelity does this to park your cash safely. It’s like a safeguard for your money, ensuring it’s readily available when you need it. This way, your money can still earn some interest even if you have yet to invest it.
Is SPAXX FDIC insured? Explore the risk comparison analysis between SPAXX vs. FDIC.
How Much Can I Earn With SPAXX?
As of September 2023, the yield for SPAXX is 4.98%.
As for how much you can earn with it, check out the example below.
If you have $50,000 in your SPAXX core position, it could earn about $2,450/yr or $204/month.
If you’re interested in figuring out how much interest you can earn from SPAXX, you can use UseFidelity’s online tool to calculate compound interest from a money market account.
Your un-invested cash accumulates interest daily, and your Fidelity account gets paid on the final business day of each month.
What’s great is that your funds aren’t stuck or restricted in Fidelity’s SPAXX position. You can use this cash to buy securities whenever you want.
Is Parking $100,000 in SPAXX a Smart Move?
I often hear Fidelity investors asking about investing a large sum of money into SPAXX. And I wouldn’t be surprised if many have already taken this step. The yield is undeniably appealing.
But is it a smart move, though? Let’s find out.
In this particular scenario, we will use $100,000 as an example.
Pros of Keeping your Money in SPAXX
Stability in Uncertain Times
One of the key advantages of SPAXX is its stability. With economic uncertainties and market volatility, having a portion of your capital in a reliable fund like SPAXX can provide a sense of security.
Monthly Reinvestment
Interests earned from SPAXX is also reinvested into your core position on a monthly basis. This means that your investment can grow more rapidly over time.
Emergency Cash Reserve
For many, having a substantial sum parked in SPAXX serves as an emergency cash reserve. If the stock market is going down, you’re already have the cash available to invest in the market.
Cons of Keeping your Money in SPAXX
Opportunity Cost
By parking your money in SPAXX, you may miss out on higher returns from other investment opportunities. Consider the trade-off between stability and the potential for higher gains.
Inflation Impact
While SPAXX provides a steady yield, you should still assess whether it can outpace inflation and maintain the value of your capital.
Limited Accessibility
If you need to withdraw your money from Fidelity to your external checking or savings account, it may take 2-3 business days. If immediate access to funds is a top priority, you may need to explore other options.
I’m new here. I’m a big fan of Fidelity, but I’m curious about SPAXX. I see that it’s listed as “cash,” but I’m not sure if it’s cash that I can use to invest or if it’s already invested in the market. Can anyone clarify this for me?
This is an interest-bearing money market account that holds your cash until you decide to invest it.
SPAXX and SPRXX keep climbing slowly. It’s the perfect place to park some cash as opposed to CDs, where you have to commit to a timeline.
While my bank offers a 3.75% interest rate on my savings account, I’ve noticed that options like SPAXX yield over 4%. Currently, it is the simplest choice for flexibility.
I looked at the SPAXX information and noticed that the 1 year yield is 1.31%, which is much higher than the local bank’s money market. But then it drops down a bit. At the end of the chart, it shows 2.54% for Life.
This was under the Quarter-End Annual Average End Returns. Although I see 7 Day yield at 4.11%, which is fascinating. Am I to understand that this SPAXX fund will compound/yield/grow over time if I keep some of the money in there even if I don’t invest in other stocks or bonds?
I know it’s not FDIC insured, but it accrues a tiny bit faster than a money market or savings account that a regular bank does, and as long as I keep depositing/contributing to it. Otherwise, it does look like it’s designed for short term than long term investing.
I want to move money to my Fidelity individual account as the SPAXX money market is paying 4.99% interest right now. The amount I want to move represents about 80% of our emergency fund. I know money takes a day or two to get from the bank to Fidelity, but my question is, when you want it sent back to your bank (so you can use it), how long does it usually take to actually make it safely back to your bank account? Please be informative, kind and non-judgmental in your response.
It seems to take mine a couple days to actually post going both ways in Fidelity.
I have 90% of my emergency fund in that one and 10% at my local bank.
But I also have another emergency fund at Fidelity that had a debit card linked to it so in theory I could transfer from Fidelity money market to the Fidelity debit card account same day and funds are immediately available.
I believe Fidelity says 1-3 business days. Every time I’ve transferred into my trading account the cash is settled by the next day. Haven’t taken it back out yet, but I believe it’ll show you 1-3 days at the confirmation screen when you go to take it out.