How Do Cash Sweep Programs Work?Ī cash sweep account can be looked at like a bank account linked to an investment account. It can be a great option for people who are new to investing, don't have the time or expertise to confidently participate in retail investing and want to potentially increase their profits with lower risk. They do this by allowing a person to earn interest while they wait for the right time to invest. These types of programs share some of the low-risk advantages of HYSA while allowing someone to potentially take advantage of the benefits of traditional investment opportunities in the stock market. The negatives? The growth opportunity is limited to the interest rate, and while your account will grow at a steady rate, the amount is small in comparison to other potential investment opportunities.Īn alternative, in terms of investment is called a cash sweep program. With an HYSA, you deposit money, and each month your account accrues interest and grows. In contrast, an HYSA is typically around 0.9 to 1.2%. An HYSA is a savings account that has an interest rate 15 to 20 times higher than a traditional savings account, which typically is around 0.06%. One of the safest options outside of a traditional savings account is known as a high-yield savings account (HYSA).

If you were to break investing down into three tiers you could have the following: low risk and low reward, low-medium risk and medium reward, and high risk and high reward. In the world of investing, there are a lot of different options at your disposal with different rewards and risks.

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