Cash and Interactive Brokers

I recently opened a small Interactive Brokers account but given current market conditions, I have a lot just sitting in cash at the moment. The challenge is that, as far as I can tell, IB doesn’t have a sweep account for cash, so it’s just sitting there, earning 0%. As the market trends downwards, that’s better than nothing (pun intended), but since IB doesn’t have access to mutual funds for cash, I’m wondering what other people do in a situation like this. It seems silly to leave cash idle when it could be earning at least percent or two. I’ve been thinking of maybe a TIPS ETF, which is part of my short term strategy anyway, but that still looks like it might have interest rate risk so I don’t think this is sensible as the only solution? What do others do? Any suggestions?

  1. iShares Lehman Short Treasury Bond Fund (SHV) seems a pretty decent proxy for cash. 2) If you are feeling really creative, pull the money out and put it in an interest bearing account! 3) If you require interest on cash/access to money market funds, look for a different broker.

My optionsxpress account earns very little on cash so I move money back and forth between a high yield checking account that gets ~4%. The only downfall to this is that it takes 24 - 48 hours to get funds into the account. However, I’m not trying to time the market and I’m not jumping in and out of positions rapidly so it hasn’t been a problem.

Sounds like you are shy, so buy SHY.

Consider Long 100 INTC 20.76x100 = 2076 Short 1 INTC SSF June 20.79x100 = 2079 Collect 1 dividend payment before SSF expiry = 0.1275x100 = 12.75 96 days until June 20th expiry. ((2079-2076)+12.75)/2076 / 96 x 365 = 2.88% / an