What's the safest way to hold cash in a brokerage account?

Money market funds and sweep accounts

Many brokers automatically deposit idle cash into a money market fund or sweep account, which earns a modest yield. Read the fine print: some money market funds carry small fees or restrictions. Sweep accounts vary by broker; some offer competitive rates, others don't.

Check FDIC insurance limits

If your broker holds cash in a bank account (rather than a fund), it should be FDIC insured up to $250,000 per depositor. Some brokers have relationships with multiple banks to extend coverage. Verify this before depositing large amounts.

Earn more elsewhere if you wait

If you're holding cash you won't invest for months, a high-yield savings account or short-term certificate of deposit outside your brokerage may pay more. Transfer it back when ready to invest. This small effort can add meaningful returns on larger cash balances.