Key Features of Cash Management Account
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Cash management accounts (CMAs) are innovative financial tools that merge the features of savings, checking, and investment accounts into one product. Often offered by brokerage firms and other financial institutions, these CMA offers a simple and low risk way to grow your uninvested cash.
However, getting a good Cash Management Account does more than just that, and here are some features you may want to know about CMA.
Key Takeaways
- CMAs blend various banking services enabling efficient management of cash assets.
- Users enjoy higher interest rates and convenient fund access with CMAs.
- CMAs provide essential financial services and may include insured funds up to certain limits.
Understanding The Basics of Cash Management Accounts
Cash management account (CMA) combine convenience and efficiency by offering valuable features that cater to both your banking and investment needs.
What Is a Cash Management Account?
CMA is a hybrid financial tool that combines low-risk cash investment, checking and savings accounts into one account. CMA are typically offered by online banks and brokerage firms that blends the functionality of these accounts with investment opportunities.
With a CMA, it allows you to do things like:
- Manage daily financial transactions
- Earn interest at competitive rates
- Access low-risk investment options
They leverage the convenience of online banking with the growth potential of an investment account.
What Makes CMA’s Features Attractive to Investors and Savers?
CMAs offer you a one-stop solution for managing your funds with ease and efficiency. Here’s a quick look at what sets a CMA apart:
- Interest: Unlike regular checking accounts, a CMA can offer interest rates akin to high-yield savings accounts, boosting your uninvested cash.
- Investment Avenue: You can directly invest into stocks or other low-risk instruments, without needing multiple accounts.
- Accessibility: At its core, a CMA provides the same level of access as a traditional bank account, allowing you to withdraw and deposit funds as needed.
- Online Banking: These accounts are primarily digital, leaning on the robust infrastructure of online banks for easy management.
Feature | Cash Management Account | Traditional Savings Account |
---|---|---|
Interest | High-yield options available | Typically lower rates |
Investment Access | Direct stock purchase option | Not available |
Online Banking | Primary mode of operation | Possible but not guaranteed |
Banking Services | Similar to a checking account | Limited |
As an investor, you can use CMA to serve as a strategic component in your financial portfolio, potentially optimizing the growth of your assets through low-risk investments.
I personally use my CMA account as a “war-chest” to park my uninvested cash while waiting for an investment opportunity.
Cash Management Account Features: Services
Getting a good cash management accounts can help to improve your financial health.
Many of the available CMA offer a blend of visibility, optimization, and control on how your money flow, these accounts facilitate informed, agile, and efficient financial operations (in other words, “liquidity“).
Checking and Savings Integration
Your cash management account integrate both the main features of your checking account and savings accounts. This means you have the convenience of day-to-day operations through a debit card and bill paying facilities, alongside the interest-earning opportunity of savings accounts.
- Checking Account: Daily transactions, direct debit facilities
- Savings Account: Interest accumulation, reserve funds
Investment Account Integration
Offering ease of transfer to and from your cash management account into investment accounts. Oftentimes, there will be no fees involved for the transfer, making it easy and simple to make use of your uninvested cash when opportunity knocks on your door.
For many of the top CMA provider, it automates the growth of your idle funds into cash investment that can yield higher returns than regular savings.
- Cash Management Account: Ready liquidity for daily needs
- Investment Accounts: Potential for higher returns on idle cash
Online Banking Capabilities
Online banking is the backbone of cash management, streamlining transactions across your financial landscape.
A CMA let you gain access to your account balances, transfer funds, pay bills, and take command of your financial operations with a few clicks or taps from any internet-enabled device.
Many of the CMA provides also comes with a mobile App making it even more convenient for all your banking needs.
Cash Management Account Features: Financial Advantages
Cash management accounts offer unique financial benefits that combine the flexibility of a checking account with the earnings of a savings account.
Earn Interest Rates and APYs
Your cash management account not only safeguards your funds but also works hard for you by earning interest.
Statistically, CMA offers slightly higher interest rates when compared to a traditional savings account, you’ll get to benefit from competitive Annual Percentage Yields (APYs).
- Traditional Bank: Historical 10 years APYs for deposit interest rate in Singapore is Approx. 0.12% to 0.53% (not including the current unrealistic interest rate of 3.5% in 2023 and 2024 due to high interest rate environment)
- Cash Management Account: Historical 5 years APYs for CMA is Approx. 0.4% to 3.5% (not including the current unrealistic interest rate of 5.5% in 2023 and 2024 due to high interest rate environment)
While the actual earnings are subject to the APY offered by your cash management provider, and these rates are variable, meaning they can change over time, it is comparatively higher than a normal saving account.
Automatic Investment
Opportunity doesn’t wait, and neither should your money. With your cash management account, you can automatically
- Redirect funds into investment opportunities,
- Set up recurring investments to maximize potential growth.
This feature keeps you nimble, allowing you to take advantage of favorable market conditions efficiently.
Fees and Charges
Understanding fees is crucial for maintaining a cost-effective account:
Feature | Traditional Bank Account | Cash Management Account |
---|---|---|
Monthly maintenance fee | May apply | Often none |
ATM fees | Commonly applied | Often waived |
Overdraft fees | Usually charged | Varies by provider |
Minimum balance fee | Possible | Rare |
Cash management accounts generally offer a more lenient fee structure, including minimal monthly fees (if that is any at all, the CMA account I use is totally free to use). Plus, with possible exemptions from various service fees, you’ll keep more of your earned interest.
Always check the account’s terms for any minimum balance requirements to avoid unexpected charges.
Cash Management Account Features: Security and Protections
When considering cash management accounts in Singapore, key considerations should focus on the regulatory environment, insurance coverage, and advanced digital protections that safeguard your funds.
Monetary Authority of Singapore (MAS) Regulated in Singapore
The Monetary Authority of Singapore (MAS) strictly supervises your investments in cash management accounts. This ensures that all financial practices align with high regulatory standards, providing a secure environment for your money.
Many of the top brokerage that offers CMA are MAS registered, you can actually check their status directly from MAS website.
Digital Security Features
Cash management accounts feature robust digital security measures. These include two-factor authentication (2FA), encryption, and fraud monitoring systems. They create a strong defense against unauthorized access to your funds.
Security Feature | Description |
---|---|
MAS Regulation | Ensures compliance with Singapore’s financial laws |
FDIC Insurance Coverage | Protects funds up to $250,000 per account |
Digital Security Protections | Includes encryption, 2FA, and continuous monitoring |
This multi-tiered approach to protection means that your cash management account is not just a place to maximize savings. It’s also a fortress for your financial assets.
What Will Income Buddies Do?
Cash management accounts offers a relatively safe way for my to grow my uninvested cash while allowing me liquidity to withdraw the cash for stock purchase.
But before I put money into any Cash Management Account, there are a few things I will consider:
- Make sure the cash management account is offered by reputable brokerage or financial institute, and if it is regulated by MAS then it will be perfect.
- Check if there is any withdrawal fees or withdrawal limit when moving cash in and out of the CMA.
- Check on the options where I can park my cash in the CMA account. The current more common cash funds are; Fullerton SGD Cash Fund and CSOP USD Money Market Fund.
When putting your cash to work with the different money market funds, it is important to consider the holdings of the fund, the yield, and the expense ratio.
In fact, you should check out the full article on choosing the best CMA account in Singapore next.
Having said that you should always strike a balance when choosing an account that offer stable returns and convenience for your overall financial strategy.
Personally, I uses CMA to park my uninvested cash, and the CMA I use is Moomoo Cash Plus by Moomoo Singapore (and MoneyBull by Webull is pretty good as well).
If you are interested, you can sign-up to Moomoo for your Cash Management Account, as of now, they are offering pretty good deal for all new users.
The reason why I really like it is because Moomoo Singapore is a brokerage dealer regulated by Monetary Authority of Singapore (MAS), have no hidden fees, offers low cost trading (in SG, US, HK), and most of all easy-to-use making it perfect for beginners and lazy investors like myself.
(Yup, I admit I am lazy and I don’t like to kill my brain cells using some complex trading platform.)
You can check out some of the top CMA in Singapore you may want to consider below. What’s more many of them offers you exclusive promotion when you signup using our link.
5.32%
p.a. (Approx.)
$1,330
Est. earning over 1 year at $25,000
- $1 Min.
- No Lock-in
- No Redemption Fee
- No Subscription Fee
5.30%
p.a. (Approx.)
$1,325
Est. earning over 1 year at $25,000
- $1 Min.
- No Lock-in
- No Redemption Fee
- No Subscription Fee
Note: The information is accurate at the time of writing.
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Disclaimer: All views expressed in the article are independent opinion of the author, based on my own trading and investing experience. Neither the companies mentioned or its affiliates shall be liable for the content of the information provided. The information was accurate to the best knowledge of the author. This advertisement has not been reviewed by the Monetary Authority of Singapore. * T&C Applies
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- How to Use Webull Singapore to Trade, Buy and Sell Stocks? (Beginner’s Guide)
- How to Use Moomoo to Trade, Buy and Sell Stocks? (Beginner’s Guide)
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Antony C. is a dividend investor with over 15+ years of investing experience. He’s also the book author of “Start Small, Dream Big“, certified PMP® holder and founder of IncomeBuddies.com (IB). At IB, he share his personal journey and expertise on growing passive income through dividend investing and building online business. Antony has been featured in global news outlet including Yahoo Finance, Nasdaq and Non Fiction Author Association (NFAA).