Cash Management
For families with high incomes, large balances, or a retirement to fund.
Cash has a job. A few jobs, actually. Here’s how we decide how much of it you need, where it should sit, and how much of its interest you keep after taxes.
Cash is one part of the plan
Cash is the foundation of a financial plan. Ask anyone who has lived through a few serious downturns: cash is what lets you hold on to your investments through them. It’s the money you can spend in good markets and bad, it’s ready when an opportunity comes along, and it earns interest while it waits. It doesn’t get talked about enough. So we size it to what you’ll actually need, and put the rest to work.
Start with the job
The point of cash is liquidity and safety. Yield comes second. Keep the point in mind and it tells you which tools to use; taking real risk with cash defeats its purpose. Then we get exact about taxes, so you keep as much of the interest as possible. That’s the part of the job we enjoy.
Twelve places for cash, and what each is for
The same seven questions for every option. A green check means yes, a yellow check means sometimes, and a red X means no. Yields are typical for each category, not any one product, and they change with rates. Yields shown as of October 30, 2026.
Checking accounts
Its job: Everyday spending
Typical yield: 0.07%
- ◆Usually right for: About a month or two of spending
- ✓FDIC-insured
- ✓Reach it the same day
- ✗Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✗No California income tax
- ✓No cost to get out early
Savings and bank money market accounts
Its job: A cushion at the bank you already use
Typical yield: 0.38%
- ◆Usually right for: A small cushion, a few months of spending
- ✓FDIC-insured
- ✓Reach it the same day
- ✗Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✗No California income tax
- ✓No cost to get out early
A bank “money market account” is a deposit. It is not the same thing as a money market fund.
High-yield savings accounts
Its job: A short-term cushion with a little safe yield
Typical yield: 3.20%
- ◆Usually right for: An emergency fund, up to $250,000 per bank
- ✓FDIC-insured
- ✓Reach it the same day
- ✓Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✗No California income tax
- ✓No cost to get out early
Offered by online banks and credit-card companies. FDIC coverage stops at $250,000 per depositor, per bank, per ownership category.
High-yield cash accounts
Its job: Very large cash balances, kept insured
Typical yield: 3.50%
- ◆Usually right for: Large reserves, from hundreds of thousands to several million dollars
- ✓FDIC-insured
- ✓Reach it the same day
- ✓Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✗No California income tax
- ✓No cost to get out early
Offered through registered investment advisers and some brokerage firms. Cash is spread across many partner banks, so FDIC coverage can reach several million dollars per account. Money usually arrives the same day, sometimes the next. Coverage depends on the program and its banks.
CDs, bank and brokered
Its job: Money with a known date
Typical yield: 4.15% to 5.00%, depending on the term
- ◆Usually right for: Money you won’t need before a known date
- ✓FDIC-insured
- ✗Reach it the same day
- ✓Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✗No California income tax
- ✗No cost to get out early
Bank CDs charge a penalty to leave early. Brokered CDs can be sold before maturity, at whatever the market pays.
Treasury bills
Its job: Larger reserves, and money set aside for taxes
Typical yield: 4.08%
- ◆Usually right for: Large reserves of any size, with no insurance cap to work around
- ✗FDIC-insured
- ✓Same day sometimes (usually the next business day)
- ✓Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✓No California income tax
- ✗No cost to get out early
Backed by the U.S. government rather than the FDIC. A sale usually settles the next business day, and before maturity the price can move slightly.
Government money market funds
Its job: A reserve you can reach any business day
Typical yield: 3.62%
- ◆Usually right for: Reserves of any size you may need within weeks
- ✗FDIC-insured
- ✓Same day sometimes (usually the next business day)
- ✓Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✗No California income tax
- ✓No cost to get out early
Not FDIC-insured. They hold government debt and aim to keep a steady $1 a share. Used as an account’s cash balance, money is often available the same day; sold as a fund, it can take a business day.
Premium money market funds
Its job: The same reserve, at a lower cost
Typical yield: 3.77%
- ◆Usually right for: Larger balances that meet the higher minimum
- ✗FDIC-insured
- ✓Same day sometimes (usually the next business day)
- ✓Higher yield
- ✗Low minimum to start
- ✗No federal income tax
- ✗No California income tax
- ✓No cost to get out early
Lower-cost share classes of the same kinds of funds. The yield is a little higher because the expenses are lower, and the minimums are higher.
Treasury money market funds
Its job: A large reserve for California taxpayers
Typical yield: 3.65%
- ◆Usually right for: Large reserves for California taxpayers
- ✗FDIC-insured
- ✓Same day sometimes (usually the next business day)
- ✓Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✓No California income tax
- ✓No cost to get out early
California’s exemption passes through only when at least half the fund qualifies at every quarter-end.
Prime money market funds
Its job: A little more yield, a little more risk
Typical yield: 3.69%
- ◆Usually right for: Part of a large reserve, if a little credit risk fits
- ✗FDIC-insured
- ✓Same day sometimes (usually the next business day)
- ✓Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✗No California income tax
- ✓Usually no cost to get out (a fee is possible on days of heavy selling)
They hold short-term corporate debt as well as government debt. Like other non-government money market funds, they can charge a fee to leave on days of heavy selling.
California municipal money market funds
Its job: Cash for top-bracket Californians
Typical yield: 1.84%
- ◆Usually right for: Large reserves for top-bracket Californians
- ✗FDIC-insured
- ✓Same day sometimes (usually the next business day)
- ✗Higher yield
- ✓Low minimum to start
- ✓No federal income tax
- ✓No California income tax
- ✓Usually no cost to get out (a fee is possible on days of heavy selling)
The stated yield is lower but free of federal and California income tax. In the top brackets it can keep more than fully taxed options; Treasury bills, which skip California’s tax, may still keep more. In lower brackets it usually keeps less. Some hold bonds subject to the alternative minimum tax, and like other non-government money market funds, they can charge a fee to leave on days of heavy selling.
Treasury bill ETFs and ultra-short funds
Its job: Cash-like, traded like a stock
Typical yield: 3.80%
- ◆Usually right for: Reserves you can leave alone for months
- ✗FDIC-insured
- ✓Same day sometimes (usually the next business day)
- ✓Higher yield
- ✓Low minimum to start
- ✗No federal income tax
- ✓No California income tax
- ✗No cost to get out early
Not cash. You can sell any time the market is open, and the sale settles the next business day. The price moves a little day to day, and you pay a small spread to trade. California’s exemption applies to Treasury-only funds.
Also worth knowing: I Bonds, which are limited to $10,000 a person each year and locked for the first year. And a securities-backed line of credit, which can raise cash without selling; it’s a loan against your investments, with its own risks. Each has its own job.
Three families, three ways to hold cash
Same tools, different jobs. Here’s how the cash part of the plan might be split, depending on income and stage of life.
- Modest income: taxes on interest are lower, so higher-yield taxable options can win. Treasury bills still skip California tax.
- Top-bracket income: the reserve sits in options that skip California’s income tax: Treasury bills, and a California municipal money market fund for part of it. Which one keeps more changes as rates move, so we check each time we review the plan.
- Retired: this month’s money in checking, the next year’s paychecks in high-yield cash, and year two in Treasury bills. The rest stays invested.
In the upper brackets, taxes pick the winner
Once your income reaches the upper tax brackets, the highest yield on your cash isn’t always the one that pays you the most. It’s your taxable income that matters here, not your net worth.
In financial planning we use a simple equation to compare a tax-free yield with a taxable one, the tax-equivalent yield: tax-free yield ÷ (1 − your tax rate). For a top-bracket Californian, a 1.84% California municipal money market fund works out to about a 4.01% taxable yield. A few brackets lower, the higher taxable yield can come out ahead, as the chart shows.
What protects your cash
Bank deposits: checking, savings, CDs, and high-yield accounts. $250,000 per depositor, per bank, per ownership category. Multi-bank programs spread cash so more of it is covered.
Brokerage accounts, if the firm itself fails: up to $500,000, including $250,000 of cash. It does not cover a drop in value.
Treasury bills are backed by the U.S. government.
Prime and municipal money market funds depend on the companies and the state and local governments they lend to. They are not insured.
How we handle cash for clients
- Size the reserve.Your next year or two of spending, the taxes you know are coming, and anything due soon.
- Give each dollar a job.Spending money goes where you can reach it today. Larger reserves go where they earn more, safely.
- Run the after-tax math.For your bracket and your state, so you keep the most.
- Revisit it.When rates, income, or plans change. Everything beyond the reserve stays invested for the long run.
It’s all about what you keep.
Cash management is part of the financial planning that comes with investment management here.
Begin a conversation →Educational content only. This article is for informational and educational purposes and does not constitute personalized investment, tax, or legal advice. It does not create an advisory relationship. Nothing here is a recommendation to buy, sell, or hold any security or to adopt any investment strategy. Your circumstances are unique; coordinate with your CPA and a qualified professional who knows your full situation before acting. The firm does not provide tax preparation or legal services.
Yields, tax rates, and allocations shown are illustrative and hypothetical, not projections; rates change frequently. Money market funds are not FDIC-insured, are not guaranteed, and can lose value. FDIC coverage depends on ownership category and bank; multi-bank programs are subject to program terms and bank capacity. A fund passes California's exemption on U.S. obligation income through only if at least half its assets qualify at each quarter-end. Some municipal funds hold bonds subject to the alternative minimum tax. We may hold short-term cash options in a brokerage account where our wrap fee for investment management is charged. Yields above are before investment management fees. All investing involves risk, including the possible loss of principal. The firm and its related persons may or may not hold any security, fund, or asset class mentioned, and any such position may change at any time.
TenBroeck Wealth Management, LLC is an investment adviser registered with the State of California (DFPI). Registration does not imply a certain level of skill or training. The firm is affiliated through common ownership with TenBroeck Insurance Services, a licensed insurance agency; the firm or its representatives may receive commissions on insurance products implemented for clients — compensation separate from advisory fees that creates a conflict of interest. Clients are under no obligation to purchase insurance through the affiliate. This and other material conflicts are described in the firm's Form ADV Part 2A, available upon request.
Written by Schad TenBroeck, CFP®. CFP Board owns the marks CFP® and CERTIFIED FINANCIAL PLANNER® in the United States.
Look up the firm (CRD #304388) and Schad TenBroeck (CRD #7164172) on Investment Adviser Public Disclosure.