How to Use Brokerage Cash
So you have a brokerage account piled up with cash. You bought in lows and sold in highs, transferred funds from a bank, and you haven’t reinvested your dividends yet. You have a truckload of money in your brokerage account and don’t know how to use brokerage cash; you have a good problem and this article can help you find a remedy to it.
I will be writing on how to use brokerage cash. From this article, you will be exposed to several ways you can use that idle money. So if you have money just lying around somewhere and you’re thinking of what to do with it, then you’ll enjoy this article.
What is Brokerage Cash?
Brokerage cash, for some simply refers to found cash; that surprise stash of money that piled up when you weren’t watching. It refers to piled-up cash from stock sales, dividends, and transfers.
How to Use Brokerage Cash
1. Buy More Stocks, Bonds, ETFs
If you have a good risk appetite; meaning you can afford short-term dips in pursuit of long-term gains, then the investment is your go-to game on how to use brokerage cash. Keep investing.
When you make a gain on a stock sale, put it back into the market.
If you’re getting dividends, reinvested them; buy more stock. If you keep doing this, they won’t pile up in your brokerage account
2. Put the Cash in a Short-Term Debt Instrument
If you don’t think you will need the money soon, maybe soon but not immediately, some financial experts recommend you put your brokerage cash in an ultra-short bond fund.
Ultra-short funds are secured organizations that hold fixed income that matures in less than one year or more depending on the specified date. They also pursue higher yields by investing these incomes in riskier securities than traditional bond funds.
3. Leave It Alone
You can choose to leave it alone. Yes, let it remain there at least you’ll be seeing it and it will be there whenever you need it. In some cases, the money will be moved into an FDIC-insured account.
However, the interest rate you’ll earn is equivalent to that of a bank savings account.
4. Spend It
This is a fun option in deciding how to use brokerage money. You can simply choose to just spend the money. Most brokerage accounts will allow you to pay bills with your returns. Brokerages like Charles Schwab, Interactive Brokers, TD Ameritrade, and many others permit this. All you have to do is set up a payment account.
You can go on vacations, get new shoes, and cars, buy a house, and so on. After all, it’s your money, go ahead and spend it.
Conclusion
Brokerage cash can be seen as surprise money that has accumulated over the years from stock sales or dividends. In this article, we have discussed a few ways to use brokerage cash. I hope you find this article useful.
