Managing your brokerage cash

Introducing Vanguard Cash Deposit

Vanguard Cash Deposit is a new option for your settlement fund. It’s eligible for FDIC insurance up to $1.25 million ($2.5 million for joint accounts).*

Options for your settlement fund

Brokerage accounts at Vanguard come with a settlement fund that facilitates all buying and selling. New this year, you can choose Vanguard Cash Deposit for the cash you're waiting to invest. It offers:

FDIC insurance
This insurance protects your money in the unlikely event of a bank failure. Coverage is automatic and free of charge.*

A different rate of return
Now you have a choice for your settlement fund. Choose between Vanguard Federal Money Market Fund, which invests in short-term U.S. government securities, and Vanguard Cash Deposit, which is a bank product. Both options strive to provide capital preservation. However, they may perform differently depending on the interest rate environment.

Vanguard Cash Deposit

3.7% APY±


±The annual percentage yield (APY) on Vanguard Cash Deposit is 3.70% as of August 1, 2023. The APY will vary.

Consider making the switch to Vanguard Cash Deposit today.

Consider making the switch to Vanguard Cash Deposit today.

What is a settlement fund, and why do I need one?

A settlement fund is the vehicle that holds funds or money in your Vanguard Brokerage Account before or after you make trades. You need a settlement fund to pay for and receive proceeds from brokerage transactions. Your settlement fund can hold your funds or money while recently deposited money clears or while you choose which security to purchase.

Should I keep a balance in my settlement fund?

You're not required to have a balance in your settlement fund at all times. But you might want to keep some money in the fund for trading or other purposes. One benefit: It can make the trading process go more smoothly as you'll be more likely to have money to pay for purchases on the settlement date (when your account will be debited for the amount you owe).

What are some of the differences between the 2 options?

Vanguard Cash Deposit is a bank product that offers FDIC insurance (subject to applicable limits). Vanguard Federal Money Market Fund is a mutual fund that may be eligible for SIPC protection. Both options strive to provide capital preservation. However, because they’re different types of products, the income they provide may be different. For additional considerations, refer to the Bank Sweep Products Terms of Use.

*Bank Sweep program balances are held at one or more Program Banks, earn a variable rate of interest, and are not covered by SIPC. See the list of participating Program Banks (PDF). Bank Sweep deposits are covered by FDIC insurance up to $250,000 per insurable category of ownership at each Program Bank, when aggregated with all other deposits held by you at such bank and in the same insurable category. Vanguard Brokerage Services (VBS) will aggregate and allocate Bank Sweep deposits to Program Banks across Vanguard Cash Deposit and Vanguard Brokerage Accounts with like registrations to offer maximum FDIC coverage up to $1.25 million for individual accounts and $2.5 million for joint accounts when at least 5 program banks are utilized. VBS will aggregate and allocate Bank Sweep deposits for trust accounts at the account level and not at the beneficiary level. FDIC coverage may be decreased based on Program Bank limits and whether you’ve opted out of any Program Banks and is subject to applicable FDIC coverage limits. You are solely responsible for monitoring the aggregate amount that you have on deposit at each Program Bank in connection with FDIC limits, including through other accounts at VBS. See the Bank Sweep Products Terms of Use (PDF) for more information.

When you are enrolled in the Vanguard Cash Deposit program, Eligible Deposits that are swept to Program Banks are not securities, are not cash balances held by VBS, and are not covered by SIPC. Assets swept to Vanguard Federal Money Market Fund are held by VBS, are not covered by FDIC insurance, and are eligible for SIPC coverage. See the Bank Sweep Products Terms of Use (PDF) and Vanguard Brokerage Account Agreement (PDF) for more information.

Vanguard Federal Money Market Fund has an expense ratio of 0.11% as of December 21, 2022. Vanguard Cash Deposit's Program Banks pay a fee to VBS for Bank Sweep deposits that is retained by VBS as revenue and reduces the amount of interest paid to depositors.

There may be other material differences between these products that must be considered prior to investing.

For more information about Vanguard mutual funds and ETFs, visit Vanguard mutual fund prospectuses or Vanguard ETF prospectuses to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.

All investing is subject to risk, including the possible loss of the money you invest.