The Hidden Cost of Idle Cash: How We Maximize Every Dollar for Clients

Cash is often the most overlooked part of an investment portfolio, but it shouldn’t be. At Ark Royal Wealth Management, we treat cash with the same discipline we apply to the rest of your portfolio.

Here’s why that matters.

Cost of "The Spread"

When you hold cash in an investment account, there are two common places it can sit:

1. Idle cash (or “sweep” cash): This is the default cash position in your brokerage account. It earns a low yield — often just a fraction of what’s available elsewhere.
2. Money market funds: These are short-term, high-quality investments that currently pay much higher yields, typically in line with short-term Treasury rates.

The difference between the two (called the spread) is how custodians like Schwab/ Fidelity/ Etc. make a portion of their profit.

In simple terms, Schwab may earn 4-5% on your idle cash while crediting you only a fraction of that. That’s not inherently bad, it’s just part of how the custodial system works. But it does mean that clients who let cash sit idle for too long are leaving real dollars on the table.

What Some Advisors Miss

• Idle cash accumulates quietly. Dividends, distributions, or partial sales often sit uninvested.
• It’s easy to ignore. Cash balances can appear small at first but compound over time.
• The “cash drag” is real. Each uninvested dollar earns less than it could in a money market fund.
• The client pays the price. The custodian earns the spread, and the portfolio earns less than it should.

Our Process

We take a proactive, disciplined approach:

• Monthly Review: Once a month, we review every client account for idle cash balances.
• Identify Sources: Most often, this cash comes from dividends or distributions that haven’t yet been reinvested.
• Reallocate Thoughtfully: We move that idle cash into a higher-yielding money market fund or invest it according to your long-term plan.

The goal is simple: make sure every dollar is working efficiently for you. This isn’t about chasing yield or adding complexity. It’s about attention to detail and discipline- two things that compound just like returns do.

Whenever you're ready, we’re here to help:

Managing your own finances can be overwhelming. If you’d like to experience the benefits of working with a trusted advisor we invite you to schedule a no-obligation phone call to explore how working with Ark Royal might enhance your wealth and peace of mind.

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2700 Wycliff Road Suite 360

Raleigh, NC 27607

Tel. 919-710-8665
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