Cash management.
Where to keep money you are not investing.

Section 1 · The hierarchy of cash placement

Not all cash serves the same purpose. Before choosing where to put it, determine what it is for.

Emergency fund (1-3 months expenses)

• Needs: immediate access, no loss of principal, some yield.
• Best fit: HYSA or money market fund at Fidelity (SPAXX or FZFXX).
• Not: CDs (early withdrawal penalty), T-bills (require selling on secondary market), investment accounts (can be down when you need the money).

Short-term savings (3-12 months)

• Use case: a trip, a car, a down payment in the next year.
• Best fit: T-bills or CDs maturing near the target date. Money market fund works too.

Medium-term savings (1-5 years)

• Use case: down payment in 2-3 years.
• Best fit: T-bill ladder, short-duration bond fund, or I-bonds (under the $10K/year limit).
• Not: stocks (too volatile for a known near-term need).

Long-term savings (5+ years)

• Use case: retirement, financial independence.
• Best fit: invested in low-cost index funds or Bitcoin allocation. See Index Funds and the Three-Fund Portfolio and How Much Bitcoin Should You Actually Own?.
• Not: cash or money market funds. The real return on cash is approximately zero after inflation over time.

Section 2 · Money market funds, compared

A money market fund (MMF) is a mutual fund that holds ultra-short-term, high-quality debt: government securities, commercial paper, repurchase agreements.

It is not a money market account at a bank (those are FDIC-insured, typically lower yield). It is not invested in stocks or bonds. It is not FDIC-insured (though government MMFs are extremely safe and SIPC-protected as securities up to $500,000).

SPAXX (Fidelity Government Money Market Fund)

• Holds: US government securities and repurchase agreements.
• 7-day yield as of April 29, 2026: 3.29% (approximately 3.3%) verify×DON'T TRUST, VERIFYClaim: SPAXX 7-day yield is approximately 3.3% as of April 2026.Verify at: Fidelity SPAXX page ↗Yields change weekly. Tracks short-term Fed-influenced rates..
• Expense ratio: 0.42%.
• State tax: interest is partially exempt from state income tax (the government-securities portion).
• Default sweep for Fidelity Cash Management Account and brokerage accounts.

FZFXX (Fidelity Treasury Money Market Fund)

• Holds: US Treasury securities only.
• 7-day yield as of April 29, 2026: approximately 3.20% (typically slightly lower than SPAXX in normal markets).
• State tax: Treasury interest is fully exempt from state income tax in most states verify×DON'T TRUST, VERIFYClaim: Interest on US Treasury securities is exempt from state and local income tax under federal law.Verify at: IRS Publication 550 ↗31 USC 3124 exempts US obligations from state and local taxation. The portion of an MMF that holds direct Treasuries is exempt; the repo portion may not be.. Significant for high-tax states (CA, NY, NJ, OR).

FDLXX (Fidelity Treasury Only)

• Holds: only direct US Treasury obligations (no repurchase agreements).
• Highest state-tax exemption: 100% Treasury, so 100% state-tax-exempt.
• 7-day yield as of April 29, 2026: 3.27% (slightly lower than FZFXX, but the highest state-tax-exempt option for high-tax-state residents).
• Best for: very high state-tax residents who want maximum state-tax efficiency.

Worked-out after-state-tax math comparing FDLXX, SPAXX, and a top-of-market HYSA across no-state-tax, SC, CA, and NYC residents is on the FDLXX-inside-the-CMA section of the HYSA page.

VMFXX (Vanguard Federal Money Market) and SWVXX (Schwab Value Advantage)

Vanguard and Schwab equivalents of SPAXX. Default cash sweeps at each respective brokerage. Schwab also offers SNOXX for Treasury-only equivalent.

Section 3 · High-yield savings accounts (HYSA)

A HYSA is a bank savings account with a higher-than-average yield.

Differences from money market funds

• FDIC-insured up to $250,000. Safer than MMFs in an extreme scenario.
• Typically slightly lower yield than comparable MMFs.
• No state-tax exemption on interest.
• Yield moves up and down with the federal funds rate.

Current HYSA range as of April 2026: approximately 3 to 4% APY for top-tier accounts verify×DON'T TRUST, VERIFYClaim: Top-tier HYSA rates are approximately 3 to 4% APY as of April 2026.Verify at: Bankrate HYSA tracker ↗ · NerdWallet HYSA list ↗Rates track the federal funds rate (3.5 to 3.75% as of April 2026)..

Section 4 · T-bills and the CD ladder

T-bills (Treasury Bills)

Short-term US government debt with maturities from 4 weeks to 1 year. Why they are useful:

• Direct obligation of the US government.
• Interest fully exempt from state and local income tax.
• Higher yield than most bank savings accounts.
• Available directly at TreasuryDirect.gov or through any brokerage verify×DON'T TRUST, VERIFYClaim: Current T-bill yields can be looked up at TreasuryDirect or FRED.Verify at: TreasuryDirect.gov ↗ · FRED 1-month Treasury ↗Yields update each business day. The 4-week, 13-week, 26-week, and 52-week T-bills auction on a published schedule..

CD ladder

A CD ladder staggers Certificate of Deposit maturities so you have regular access to funds while earning higher yields than savings accounts. Example 5-rung ladder with $10,000:

• $2,000 in 3-month CD
• $2,000 in 6-month CD
• $2,000 in 9-month CD
• $2,000 in 12-month CD
• $2,000 in 18-month CD

As each matures, reinvest at the longest maturity or take cash if needed. Result: access to $2,000 every 3 months, with most of the money earning longer-duration yields. Online banks and credit unions typically offer higher CD rates than traditional banks.

Section 5 · I-bonds

I-bonds are US savings bonds with inflation-adjusted yields. The composite rate equals a fixed rate plus a semi-annual inflation adjustment.

Key features

• Purchase limit: $10,000 per person per year (additional $5,000 via tax refund).
• Minimum hold: 12 months.
• Early-withdrawal penalty: 3 months interest if redeemed before 5 years.
• Interest deferred until redemption (federal-tax advantage).
• Interest exempt from state and local income tax.
• Cannot be sold on a secondary market. Must be redeemed at TreasuryDirect verify×DON'T TRUST, VERIFYClaim: I-bond purchase limit is $10,000 per person per year, plus $5,000 via tax refund. Minimum 12-month hold. 3-month interest penalty if redeemed before 5 years.Verify at: TreasuryDirect I-bonds ↗Treasury Direct is the only place to buy or redeem I-bonds..

When I-bonds make sense

• When the composite yield exceeds comparable T-bills or CDs.
• For 1-5 year money you definitely will not need for 12+ months.
• For inflation protection in the fixed-income portion of a portfolio.

When they do not: when you need the money within 12 months; when T-bill yields exceed I-bond composite yield; for amounts above $10,000/year.