Key takeaways

  • The optimal strategy for managing your excess cash depends on your personal situation and goals – including your time frame, desired returns and risk tolerance.
  • Various products – including brokered CDs and money market funds – may offer higher yields than what you could earn with a traditional savings account.
  • It’s important to understand the risks associated with any product you’re considering. Federally insured deposits offer a layer of protection that uninsured investments don’t always provide.


Angelena Mascilli

Managing Director, Head of J.P. Morgan Wealth Management Banking

The phrase “cash is king” has some merit, but it ignores the fact that building long-term wealth depends on other types of investments with more potential to grow. At the same time, you’ll likely need some cash to cover everyday expenses, and you may want to keep your emergency fund in a readily accessible cash account.

Like most financial decisions, determining how to make the most of your cash depends on your personal situation and goals. You may want to ask yourself what level of returns you’re aiming for, when you think you’ll need the funds and how much risk you’re willing to accept.

Let’s look at a few financial products that might pay attractive rates on your cash. Once you know the characteristics of these different options, it will be easier to make an informed choice about the most advantageous way for you to store your excess cash.

High-yield savings

Through your brokerage or wealth management firm, your advisor may be able to offer you a product or account that pays competitive rates on your cash deposits. Generally, these products or accounts enjoy the same protection from the Federal Deposit Insurance Corporation (FDIC) as traditional bank savings products but often provide a more competitive interest rate than traditional bank savings. You may need to make a steep initial deposit to access this offering, but the payoff for storing your money there rather than a traditional bank savings is likely to be positive.

Certificates of deposit (CDs) and brokered CDs

Certificates of deposit (CDs) are a type of FDIC-insured deposit product that holds a fixed amount of money for a fixed period of time. In return, the CD holder will earn interest on the deposit over that fixed period of time, and once the CD reaches maturity, the CD holder also receives their principal amount in full. If you have cash on hand that does not require overnight access, and can possibly be held for a fixed period of time, you can typically benefit from a higher rate than you would earn on a more liquid savings account. In addition, CDs can be particularly advantageous when interest rates are headed lower because they allow you to lock in higher yields for a fixed period of time.

You can open CD accounts directly through the bank (i.e., bank CDs), or purchase them through a brokerage account (i.e., brokered CD). Brokered CDs may offer higher yields and flexibility than standard bank CDs. In example, Bank CDs typically charge a penalty if you withdraw the money before maturity, whereas with Brokered CDs,  you may be able to resell the CD on the secondary market (fees may apply). Brokered CDs do come with increased complexity and risks, including call features where the issuing bank may redeem the CD before maturity.

Money market funds (MMFs)

A money market fund (MMF), on the other hand, is a type of mutual fund that invests in low-risk securities with the aim of maintaining a net asset value (NAV) of $1 per share, distributing any excess profits as dividends to shareholders. The most common MMFs invest in government securities, tax-exempt municipal securities, and corporate and bank debt securities. An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency; however clients may be offered some protection by the non-profit Securities Investor Protection Corporation (SIPC).


Considered low-risk investments because of their backing by the U.S. government, Treasuries could represent another place to park your cash. Although you can invest in government bonds over the long term, Treasury bills (“T-bills”) may be a particularly suitable place to store some cash because they mature within one year of being issued. In other words, T-bills could generate lower-risk yield without tying up your funds for an extended period.1

Bottom line

Cash may not be the best investment in terms of growing your wealth for the long term, but you can still aim to make the most of the cash that you hold. This might mean exploring higher-yielding options, from money market funds to CDs, searching for a product whose risk profile and time commitment are suitable for your needs.

A J.P. Morgan advisor can help you develop a strategy for managing your cash that supports you along the path toward your overall financial goals.



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