Hey Jeremy! I started a Chase Roth IRA and It started me on a cash and sweep fund. I tried clicking around and googling the definition but i still dont understand all the lingo. Could you explain what it is… in regular english haha. Thanks
Welcome @Chrismarte89!
When you have a normal savings or checking account everything inside of it is just cash.
But when you open up a brokerage account (a Roth IRA is a type of brokerage account), LOTS of stuff can go in there. You put cash in, then use that cash to buy, stocks, bonds, mutual funds, index funds, etc. So when you look at your Roth IRA you will see your “portfolio” of all the stuff contained within. So let’s say you put $6,000 into your Roth IRA, then buy $4,000 of stocks, bonds and mutual funds.
Drumroll please…
That remaining $2,000 is in the cash and sweep fund. It’s just the name for where all that leftover cash is that hasn’t yet been spent on an investment. (i.e. dividends and other cash get swept to that cash fund to keep it all in one place). If you haven’t yet bought anything, then ALL your money is in the cash and sweep fund.
THAT SAID, you shouldn’t hold cash inside a Roth IRA. The point is to INVEST. So make sure to go into your account and click BUY to use ALL of your money in that account to invest. You should keep your cash and sweep fund at $0!
I think Chase lets you buy target date index funds with no loads or fees. (Never pay a transaction fee when you buy something!)
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