If you’re opening a Fidelity brokerage account, one of the first decisions you’ll encounter is choosing a core position. Many investors click through this setting without giving it much thought, but that small choice can have a meaningful impact on how much interest your uninvested cash earns over time.
When comparing SPAXX vs FCASH, understanding the differences can help you maximize returns on cash that is temporarily sitting in your account.
What Is a Core Position?
A core position is where your uninvested cash is held inside your Fidelity account.
Whenever you deposit money, receive dividends, or sell a stock or ETF, the cash has to go somewhere while it waits to be invested. That temporary holding place is your core position.
Many beginners assume this cash simply sits idle, but that’s not the case. Your core position can earn interest while you decide what to do with your money.
SPAXX vs FCASH: Understanding the Two Options
When choosing between SPAXX and FCASH, you’re essentially deciding how your uninvested cash will be managed.
SPAXX
SPAXX is the Fidelity Government Money Market Fund. Cash held in SPAXX is invested in a money market mutual fund that primarily holds short-term U.S. government securities.
The fund generates daily dividends and typically offers a higher yield than a standard cash balance. At the time of writing, SPAXX yields approximately 3.3% annually.
This means your cash continues working for you even while it’s waiting to be invested.
FCASH
FCASH is Fidelity’s interest-bearing cash option. Instead of being invested in a money market fund, your cash remains as a free credit balance held by Fidelity.
FCASH also earns interest, but historically the yield has been significantly lower. At the time of writing, FCASH pays approximately 1.82% annually.
While FCASH provides the same accessibility and convenience as SPAXX, it generally offers lower returns on idle cash.
SPAXX vs FCASH: Which Pays More?
The biggest difference in the SPAXX vs FCASH comparison is the interest rate.
For example:
- $1,000 in SPAXX at 3.3% earns about $33 per year
- $1,000 in FCASH at 1.82% earns about $18 per year
- $10,000 in SPAXX earns about $330 annually
- $10,000 in FCASH earns about $180 annually
Both options provide immediate access to your money, but SPAXX typically pays nearly double the interest.
Why Most Investors Choose SPAXX
For the average investor, SPAXX is usually the preferred choice.
Your cash is automatically invested in the money market fund, earns daily dividends, and remains available whenever you want to purchase stocks, ETFs, or other investments.
There is no extra management required. Fidelity automatically handles everything behind the scenes.
When you place a trade, Fidelity simply pulls the necessary cash from SPAXX instantly.
Is SPAXX Safe?
Some investors become concerned when they hear the term “money market fund,” assuming it involves additional risk.
In reality, SPAXX primarily invests in short-term U.S. government securities and is generally considered one of the safest places to hold cash within a brokerage account.
The word “fund” often sounds intimidating to beginners, but SPAXX is designed specifically as a cash management solution.
How to Change Your Core Position to SPAXX
If you’ve already opened your Fidelity account and selected FCASH, you can switch to SPAXX later.
To change your core position:
- Log in to Fidelity on a desktop computer.
- Click Accounts & Trade.
- Select Account Positions.
- Find the account you want to update.
- Scroll down to the Core Position section.
- Click Change Core Position.
- Select SPAXX.
- Confirm your selection.
The update typically takes effect within one business day, and any cash currently sitting in your old core position will automatically transfer to the new one.
It’s important to note that this change cannot currently be completed through the Fidelity mobile app.
Common Mistakes Investors Make
Choosing FCASH Without Realizing It
Many people rush through the account-opening process and accidentally select FCASH.
As a result, they may leave money sitting in a lower-yielding position for months or even years without realizing it.
Assuming SPAXX Is Risky
The term “money market fund” can sound more complicated than it actually is.
SPAXX is designed to provide stability and liquidity while generating income from short-term government securities.
Leaving Too Much Cash in SPAXX Long-Term
While SPAXX can be an excellent place to temporarily park cash, it is not intended to replace long-term investing.
Historically, the stock market has produced higher average returns than money market funds. If you’re holding cash that you plan to invest soon, SPAXX can be a smart choice. However, keeping large amounts of money there indefinitely may limit your long-term growth potential.
Final Verdict: SPAXX vs FCASH
For most investors, SPAXX is the better core position.
It provides the same convenience and accessibility as FCASH while typically offering a significantly higher yield on uninvested cash. Since Fidelity automatically manages the fund in the background, there is no additional work required.
When comparing SPAXX vs FCASH, the decision often comes down to earning more interest on money that would otherwise be sitting idle. If your goal is to maximize the return on your cash while maintaining liquidity, SPAXX is usually the preferred option.
