SPAXX is essentially your cash’s cozy home within Fidelity or, as they called it, your “core position.” It stands for Fidelity Government Money Market Fund.
When you deposit money into your Fidelity account, it automatically get put into SPAXX. This also includes any cash that’s not currently invested or settled.
So, in a nutshell, SPAXX is where your cash stays put before you spend it on the next stocks, ETFs, mutual funds, or options trades.
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.
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 this tool: Money Market Account Calculator.
Your uninvested 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.
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
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.
While SPAXX provides a steady yield, you should still assess whether it can outpace inflation and maintain the value of your capital.
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.