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The role of your money market settlement fund

This fund paves the way for buying and selling brokerage products.


  • Your settlement fund is a Vanguard money market mutual fund.
  • You should consider keeping some money in your settlement fund so you're ready to trade.
  • You can use your settlement fund to buy mutual funds and ETFs (exchange-traded funds) from Vanguard and other companies, as well as stocks, CDs (certificates of deposit), and bonds.

How to use your settlement fund

When you buy or sell stocks, and other securities, your transactions go through a broker, like Vanguard Brokerage. Money to pay for your purchases is taken from your money market settlement fund and proceeds from your sales are received in your settlement fund.

When you buy

Plan ahead. While you're not required to have a balance in your settlement fund at all times, keeping some money in the fund has these advantages:

  • You're more likely to have money to pay for purchases on the settlement date, when your account will be debited for the amount you owe.
  • You'll reduce the risk of your trades being rejected, because you'll have money available when you're interested in placing a trade.
  • You'll likely avoid restrictions being placed on your account as a result of committing a trading violation.

When you sell

Proceeds from the sale of securities transfer to your settlement fund and begin accruing dividends on the settlement date of your trade.

How your settlement fund works

Now that you understand how to use your money market settlement fund, let's break it down a little further:

  • When you put money into your settlement fund, you're actually buying shares of that money market fund.
  • When you buy securities, you're paying for them by selling shares of your settlement fund.
  • When you sell securities, the proceeds from the sale go directly into your settlement fund on the settlement date.

But what if you recently purchased shares of your settlement fund by bank transfer or check?

In this case, the money may not be immediately available to pay for brokerage transactions. That's because shares purchased by electronic bank transfer or check are subject to a 7-calendar-day hold.

So it's wise to check your funds available to trade before you transact.

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An investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits.

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A licensed individual or firm that executes orders to buy or sell mutual funds or other securities for the public and usually gets a commission for doing so.

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Settlement fund

A money market mutual fund that holds the money you use to buy securities, as well as the proceeds whenever you sell.

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Settlement date

The date by which a broker must receive either cash or securities to satisfy the terms of a security transaction.

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The distribution of the interest or income produced by a mutual fund's holdings to the fund's shareholders, or a payment of cash or stock from a company's earnings to each stockholder. Dividends can be distributed monthly, quarterly, semiannually, or annually.

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A single unit of ownership in a mutual fund or an ETF (exchange-traded fund) or, for stocks, a corporation.

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Money market fund

A mutual fund that seeks income and liquidity by investing in very short-term investments. Money market funds are suitable for the cash reserves portion of a portfolio or for holding funds that are needed soon.

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Funds/Money available to trade

The amount of money available to purchase securities in your brokerage account. It includes your money market settlement fund balance, pending credits or debits, and margin cash available (if approved for margin).

The figure is adjusted for open orders to purchase stocks or ETFs at the market or to purchase Vanguard mutual funds or mutual funds from other companies. Money recently added to your account by check or electronic bank transfer may not be available to purchase certain securities or to withdraw from the account.

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Funds available to withdraw

The money available to withdraw from your settlement fund, such as by transferring to your bank account or to another Vanguard account. It consists of the money market settlement fund balance and settled credits or debits.

The figure is adjusted for open orders to purchase stocks or ETFs at the market or to purchase Vanguard mutual funds or mutual funds from other companies. Money recently added to your account by check or electronic bank transfer may not be available to withdraw from the account.

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Stocks, bonds, money market instruments, and other investment vehicles.