If you’ve got a Fidelity investment account, you’ve probably encountered several options for your “core position” for cash: SPAXX, FDIC, FCASH, FDRXX, and/or FZFXX. Is there a best option? I compare them here.
Update January 2023: When I originally wrote this post in mid-2022, all these choices were paying the same thing which was basically zero, so a comparison was pretty meaningless. Since then, interest rates have risen rapidly and drastically so now there’s a bit more to talk about. We’re essentially concerned with yield and fees (and subsequent yield net of fees), so the choice basically comes down to a higher yield with something like SPAXX, FDRXX, or FZFXX (3.68% in January 2023) or FDIC insurance but a lower yield with the FDIC-Insured Deposit Sweep Program (yield of 2.19%). I have updated these numbers below as well. The details below about what investment products are contained in each vehicle are still valid so I would encourage you to still read through those so that you fully understand what you’re choosing.
Note that the yields and fees for these options change all the time, so the information and numbers you see on this page may be outdated by the time you see them. Be sure to do your due diligence and check for yourself.
Disclosure: Some of the links on this page are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality, ad-free content on this site and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful, not because of the commission I get if you decide to purchase through my links. Read more here.
Contents
Fidelity Core Position Video
Prefer video? Watch it here:
Introduction – What Is the Fidelity Core Position?
Your “core position” at Fidelity simply refers to where your uninvested cash goes inside your account. For example, if you have 75% in an S&P 500 index fund like VOO and 25% uninvested cash, that 25% cash will automatically go into whatever fund or vehicle you select as your “core position.”
The core position basically acts as a wallet. When you buy something in your Fidelity account like a stock, you pay for it with money from that wallet. When you sell something, proceeds go into that wallet. The core position also facilitates transactions like check processing, electronic funds transfers, direct deposits, wire transfers, authorized credit cards, and other payments. There is no minimum balance requirement for the core position.
You have several options for how exactly that cash is held, which is why you’re on this page in the first place.
First, let’s get the obligatory reminder out of the way that market timing is usually more harmful than helpful, and DCA is inferior to investing a lump sum on average, so you probably shouldn’t be holding much actual cash in the first place. But note that I’m not referring to something like T-bills or short-term government bonds, which are considered a “cash equivalent,” and which may be a perfectly sensible investment depending on your personal goals, time horizon, and risk tolerance. While several of these funds do indeed have allocations to T-bills, none of these options we’re discussing here for the core position would be considered a dedicated T-bills fund.
By the way, here’s the section and button you’re looking for in your Fidelity account:
Now that that’s out of the way, let’s compare SPAXX, FZFXX, FDIC, FCASH, and FDRXX.
SPAXX vs. FZFXX, FDIC, FCASH, & FDRXX
So which Fidelity core position should you go with? Let’s talk about ’em.
SPAXX – FidelityGovernment Money Market Fund
As the name suggests, SPAXX is what’s called a money market fund. This is a fund that holds ultra-short-term instruments that are considered cash equivalents – such as CDs, commercial paper, and repo agreements – in order to pay what is usually a tiny interest rate.
This type of fund usually pays a marginally higher interest rate than that of a plain ol’ savings account at a bank. The tradeoff, of course, is that a money market fund is not insured.
SPAXX is specifically collateralized by government securities, and would thus be considered safer than a broader money market fund that includes corporate debt. If we look at the holdings of SPAXX, it’s mostly U.S. government repurchase agreements, followed by U.S. Treasury Bills and U.S. Treasury Coupons.
We would expect a fund like this to have volatility no greater than about 3% in either direction. At the time of writing, SPAXX has a yield of 3.68% and a net expense ratio of 0.42%.
You may see SPRXX instead of SPAXX. They’re both very similar and should have the same fee, but SPRXX is slightly broader in its scope of debt instruments. As such, SPRXX may pay a higher yield than SPAXX.
FDIC – FDIC-Insured Deposit Sweep Program
As the name suggests, this is simply an FDIC-insured vehicle into which cash is “swept” inside the account. FDIC stands for Federal Deposit Insurance Corporation, which is quite literally the organization that insures your cash deposits up to $250,000. This is basically a true savings account like you’d have at your regular bank. In fact, Fidelity actually spreads your deposits here among several banks; that’s why it’s called a “program” and is not an actual investable fund.
As such, we’d expect it to pay less than the other options on this list, but it can be considered comparatively less risky and less volatile. With this program, your cash is not exposed to any kind of market risk like with others on this list. That said, “less risky” in this context just means we’re basically going from extremely safe to riskless.
As of December 2022, this FDIC cash sweep program has an interest rate of 2.19% and also a fee of 0.01%.
FCASH
FCASH is another option you’ll see in your taxable brokerage account. Note that this is going to be the default option inside your account. This is a free credit balance from Fidelity that earns interest. At the time of writing, its interest rate is 2.19%.
FDRXX – FidelityGovernment Cash Reserves
Like SPAXX, FDRXX is another U.S. government money market fund. For all intents and purposes, it is basically an older version of SPAXX. Their holdings are nearly identical and they have the same yield and the same historical returns.
FDRXX launched in 1979 and has a fee of 0.27% and a yield of 3.86%.
FZFXX – FidelityTreasury Money Market Fund
You may encounter FZFXX as an option in your taxable account. It’s basically the same as SPAXX and FDRXX except it does not have the 10% or so in agency securities. This one is entirely U.S. Treasury securities.
In that sense, it is slightly more tax-efficient and thus may appear as a choice for your taxable brokerage account with Fidelity. Its yield should be roughly the same as SPAXX. Right now it is exactly the same as SPAXX at 3.86%. its net expense ratio is 0.28%.
Conclusion
Don’t overthink your Fidelity Core Position.
If you are willing to sacrifice return/yield for zero volatility and virtual risklessness, go with the FDIC-insured cash sweep program. If, however, you want a very safe parking garage for cash that would be expected to have a positive nominal return, a government money market fund is a fine choice.
For all intents and purposes, the 3 money market funds on this list are nearly the same thing. Out of these, you may simply want to aim for the highest yield net of fees. SPAXX is the most popular option.
You can also switch between them at any point based on whichever one is paying the most, but this basically comes down to comparing the money market funds and the FDIC program (banks).
Conveniently, interest from the government securities will also be state-tax-exempt.
At the end of the day, this is definitely not a decision to lose sleep over.
What’s your Fidelity Core Position? Let me know in the comments.
Fidelity Core Position FAQ’s
Lastly, here are some frequently asked questions regarding the Fidelity Core Position and its fund options.
SPAXX pays dividends monthly, typically at the beginning of the month.
When does SPAXX pay interest?
SPAXX pays interest monthly, typically at the beginning of each month.
Is SPAXX safe?
SPAXX holds ultra short term, high quality debt instruments, and is thus very safe.
Can you lose money in SPAXX?
While it is technically possible to lose money in SPAXX, it is highly unlikely.
Can SPAXX lose value?
While it is technically possible for SPAXX to lose money (because we can’t guarantee positive returns), it is highly unlikely.
Is SPAXX a good fund?
SPAXX is a good fund if you need a safe vehicle in which to park cash.
How does SPAXX work?
SPAXX aims to maintain principal while paying monthly dividends (its yield) close to the risk-free rate of T bills.
Can you sell SPAXX?
In this context, SPAXX would simply be the vehicle that temporarily holds cash inside your Fidelity account, so you wouldn’t need to sell it. If you specifically buy SPAXX as an investment, yes you can sell it.
Which Fidelity Core Position is best?
It’s hard to objectively conclude that one Fidelity Core Position option is “best,” as some of them are extremely similar. Ideally, one would usually aim for the highest yield net of fees. Assess your own goals and risk tolerance to choose the most suitable vehicle.
Is Fidelity Core Position FDIC insured?
Your Fidelity Core Position is only FDIC insured if you choose the FDIC-Insured Deposit Sweep Program inside your account.
What Fidelity Core Position should I choose?
Only you can decide which Fidelity Core Position to choose. Some are money market funds and one is basically an FDIC-insured savings account. Assess your own goals and risk tolerance to choose the most suitable vehicle.
Does Fidelity Core Position earn interest?
Yes, all the options for the Fidelity Core Position earn interest.
Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.
Don't want to do all this investing stuff yourself or feel overwhelmed? Check out my flat-fee-only fiduciary friends over at Advisor.com.
Although their composition allocation is not exactly the same, they're mostly identical with very similar yield and historical returns. FDRXX used to have a higher expense ratio, but now seems to be lower than SPAXX.
SPAXX is the most popular option. You can also switch between them at any point based on whichever one is paying the most, but this basically comes down to comparing the money market funds and the FDIC program (banks). Conveniently, interest from the government securities will also be state-tax-exempt.
Your core position holds the cash in your account. When you open a Fidelity account, a core position is set up to process cash transactions and to hold uninvested cash. Watch this video to learn how a core position works.
Fidelity Government Money Market Fund (SPAXX), a taxable money market mutual fund investing in U.S. Government Agency and Treasury debt, and related repurchase agreements. Intended for investors seeking as high a level of current income as is consistent with the preservation of capital and liquidity.
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Morningstar has named Fidelity portfolio manager Joel Tillinghast as its Outstanding Portfolio Manager of 2021. Tillinghast, who holds an A rating with Citywire, beat out three other nominees for the top prize: JP Morgan's Jeffrey Geller, BlackRock's Rick Rieder, and Baird's Mary Ellen Stanek.
U.S. government money market funds are typically regarded as the safest of the three, and within that category, those with a high concentration of Treasuries—with full government backing—would be exposed to a lower likelihood of default risk.
Opening a Fidelity account automatically establishes a core position which is needed for processing cash transactions and for holding univested cash. It's a position in your account that acts like a wallet.
Fidelity U. S. Treasury money market fund is the safest of the lot while Fidelity U. S. Government Reserves and Fidelity Government Money Market Fund are a close second. Money market funds investing in commercial paper or debt issued by municipalities tend to carry a bit more risk.
No Transaction Fee Fidelity funds are available without paying a trading fee to Fidelity or a sales load to the fund. However, the fund may charge a short-term trading or redemption fee to protect the interests of long-term shareholders of the fund.
Go to Fidelity.com/movemoney or call 800-343-3548. Use this form to make a one-time withdrawal from your nonretirement Brokerage or Mutual Fund Only account.
For example, self-report by therapists was used to measure fidelity in the SOLAS study24 and was based on previously reported criteria; 80% to 100% adherence to the fidelity checklist (ie, >80% of items on the checklist were implemented) was interpreted as high fidelity, 51% to 79% as moderate, and 50% or below as low ...
Customized to investor preferences for risk tolerance and income vs returns mix. Schedule monthly income from dividend stocks with a monthly payment frequency. Diversify across sectors or allocate more towards a bullish sector thesis.
It depends on why you want to invest. For retirement, options include a traditional IRA, Roth IRA, rollover IRA. For general investing and trading, investing for a big goal (like the down payment on a house), or simply giving your money the potential to grow, consider the Fidelity brokerage account.
Fidelity offers an FDIC-insured Deposit Sweep Program for certain account types: Cash Management1 health savings accounts (HSAs) and most IRAs. Cash balances in the Fidelity FDIC-insured Deposit Sweep Program are swept into an FDIC-insured interest-bearing account at one or more program banks.
Cash Only (Core + Other Money Markets) amount collected and available for immediate withdrawal. This balance includes both Core and other Fidelity Money Market funds held in the account. This balance does not include deposits that have not cleared.
The fund is typically 99.5% or more invested in cash or cash equivalents in the form of short-term U.S. government securities or repurchase agreements that are fully collateralized by cash or such securities.
With our Customer Protection Guarantee, we reimburse you for losses from unauthorized activity in your accounts. We also participate in asset protection programs such as FDIC and SIPC to help provide the best service possible. See our protection guarantee and account coverage.
On average, the Fidelity Contrafund has beaten the S&P 500 Index by 2.31% per year. Growth of $10,000 invested in Contrafund versus S&P 500 Index, September 17, 1990 to December 31, 2022. Total value December 31, 2022 for Contrafund was $457,343, compared to $234,530 for the S&P 500 Index.
What are the safest types of investments? U.S. Treasury securities, money market mutual funds and high-yield savings accounts are considered by most experts to be the safest types of investments available.
The yield is similar to an interest rate: the higher the yield, the higher the money market fund payout to you. Yields may fluctuate on a daily basis, so consider a fund's current yield and yield history.
Is Fidelity good for beginners? Fidelity is a great option for beginners, especially since it provides a wealth of educational tools to help new investors get started. It also offers low costs which are especially beneficial to new investors.
What does trade around a core position strategy mean? Trading around a core position is a trading strategy whereby a trader has a relatively longer-term position in a security but then makes some short-term trades as the market moves without tampering with the initial long-term position.
While Vanguard stands out with its suite of funds, the brokerage is more limited when it comes to other offerings. However, it does allow investors to trade individual stocks and bonds. Conversely, Fidelity allows clients to invest in individual stocks, bonds, ETFs, options, mutual funds and more.
Lower-risk investment types can help maintain the value of your 401(k), but it is important to consider that lower risk usually means lower returns. Bond funds, money market funds, index funds, stable value funds, and target-date funds are lower-risk options for your 401(k).
It's important to have a plan for reducing your margin balance to minimize the interest amount you're charged which you can do by selling a security or depositing cash into your account through electronic funds transfer (EFT), bank wire, or depositing a check.
Fidelity Investment's latest analysis of its retirement accounts reveals Americans have, on average, six-figure balances in their IRA and 401(k) retirement accounts. As of the fourth quarter of 2022, the average balances in an IRA, 401(k) and 403(b) were (respectively) $104,000, $103,900 and $92,683.
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Fidelity Government Money Market Fund (SPAXX), a taxable money market mutual fund investing in U.S. Government Agency and Treasury debt, and related repurchase agreements. Intended for investors seeking as high a level of current income as is consistent with the preservation of capital and liquidity.
Redemptions: Fidelity does not charge a transaction fee on any redemption of shares of a transaction-fee fund that were purchased with no load. A fund's own redemption fees may apply. You can buy shares in a transaction-fee fund from its principal underwriter or distributor without a Fidelity transaction fee.
With some planning, you can retire at 60 with $500k. Remember, however, that your lifestyle will significantly affect how long your savings will last. If you're content to live modestly and don't plan on significant life changes (like travel or starting a business), you can make your $500k last much longer.
Yes, you can retire at 60 with $1.5 million. At age 60, an annuity will provide a guaranteed income of $91,500 annually, starting immediately for the rest of the insured's lifetime.
You invest in the Fund/s through your core position, and you hold shares of the Fund in your account. Fidelity may, but is not required to, pay interest on FCASH balances. Interest on FCASH balances is payable in accordance with a schedule set by Fidelity, which may be changed at any time.
The maximum withdrawal amount using Fidelity.com or telephone is $100,000 per account. For withdrawals greater than $100,000, requests must be made via a completed paper form. To get a copy of the form, contact a Fidelity representative at 800-544-6666. For brokerage IRAs, only one withdrawal per day may be processed.
As an estimate, aim to withdraw no more than 4% to 5% of your savings in the first year of retirement, then adjust that amount every year for inflation.
1. There is no minimum amount required to open a Fidelity Go account. However, in order for us to invest your money according to the investment strategy you've chosen, your account balance must be at least $10. 2.
There are three program tiers in the Rewards Program (“Tiers”) — Gold, Platinum, and Platinum Plus. Tier eligibility is determined based on the aggregate balance of your Eligible Account(s).
2.56% The performance data featured represents past performance, which is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance data quoted.
A cash account is appropriate for the majority of investors. It allows you to buy investments with money you deposit into the account. A margin account is for investors who want to borrow money from the broker to buy investments. Margin trading is a riskier type of investing that is best suited for advanced traders.
On the Trade Stocks, Trade Options, or Enter Funds to Sell or Buy pages, select the Choose Specific Shares check box, then click Continue when you've specified the rest of your order details.
You may encounter FZFXX as an option in your taxable account. It's basically the same as SPAXX and FDRXX except it does not have the 10% or so in agency securities.
The Cash Balance1 in your core position that is swept to Program Banks is eligible for FDIC insurance coverage subject to the applicable FDIC coverage limits.
The fund is typically 99.5% or more invested in cash or cash equivalents in the form of short-term U.S. government securities or repurchase agreements that are fully collateralized by cash or such securities.
You can withdraw money via check from most non-retirement accounts. On Portfolio Summary, select Withdraw Money from the Select Action drop-down box. There are some restrictions which may prevent withdrawals from being requested online. These restrictions are in place to protect customers.
As always, Fidelity suggests having a diversified mix of stocks, bonds, and other investments consistent with your personal goals. If you have a diversified portfolio filled with stocks, bonds, and short-term investments, you may already be well-protected from inflation.
Is it safe to keep more than $500,000 in a brokerage account? It is safe in the sense that there are measures in place to help investors recoup their investments before the SIPC steps in. And, indeed, the SIPC will not get involved until the liquidation process starts.
Fidelity U. S. Treasury money market fund is the safest of the lot while Fidelity U. S. Government Reserves and Fidelity Government Money Market Fund are a close second. Money market funds investing in commercial paper or debt issued by municipalities tend to carry a bit more risk.
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Fidelity Investment's flagship FXAIX fund remains one of the most popular S&P 500 index funds among U.S. investors, and for good reason. With a 0.015% expense ratio, or just $1.50 in fees for a $10,000 investment, this fund offers extraordinary value.
Introduction: My name is Saturnina Altenwerth DVM, I am a witty, perfect, combative, beautiful, determined, fancy, determined person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
