Everyone needs a safe place for uninvested cash. Here I’ll provide an overview of a popular high-yield cash account from M1 to earn interest on your extra money in 2025.
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Whether it’s for an emergency fund or short-term goals, everyone needs a safe place to park unused cash.
Appropriately, we’d usually want to put that cash in what we call “cash-equivalent” investments or vehicles. These include things like US Treasury Bills (T-bills), money market funds, Certificates of Deposit (CD’s), and savings accounts.
But your typical savings account at your big bank is almost certainly paying a negligible interest rate on your cash. There are almost always objectively superior alternatives.
One such alternative is the high-yield cash account from M1 Finance, located under the Earn tab in your M1 account. It is an FDIC-insured cash reserve that earns an attractive interest rate based on the Federal Funds Rate and integrates seamlessly with your investment accounts also housed at M1.
Right now this account is paying 4% APY, making it considerably more attractive than a big bank. That means your money is going to grow much faster than it otherwise would with the low APY of a typical savings account.
The Federal Funds Rate is currently higher than it has been since 2001. For $1,000 deposited, 4% APY would earn $40 per year, or a little over $3 per month.
Anyone who signs up using my link below before January 31 will get a 0.50% APY boost for 15 months, so 4.50%.
High-interest accounts like this usually have tradeoffs like withdrawal limits, transfer limits, hidden fees, and a high minimum balance requirement. This account has none of those things.
You can even set up automation rules called Smart Transfers to automatically move money to your investments if your cash account reaches a specified threshold.
For example, you could set a threshold of $10k and have anything in excess of that – from interest earned – automatically transferred to your Invest account. Conversely, you can choose to have dividends from your investments automatically transferred to your high-yield cash account to earn interest before you spend them. I discussed this Smart Transfers feature in more detail in a separate post here.
You can also open a joint account with up to 4 co-owners, where each individual person can make separate contributions to the same account.
An M1 Invest brokerage account is required to open an M1 Earn account. If you go to open a High-Yield Cash Account first, an Invest brokerage account will automatically be opened for you. I actually think this is a good thing, because again you can automatically transfer your excess cash to longer-term investments like stocks and bonds with greater expected returns than a cash-equivalent investment.
M1 High-Yield Cash Account deposits are swept to partner banks to allow for FDIC insurance up to $3.75 million.
M1 High-Yield Cash Account(s) is an investment product offered by M1 Finance, LLC, an SEC registered broker-dealer, Member FINRA / SIPC. M1 is not a bank and M1 High-Yield Cash Accounts are not a checking or savings account. The purpose of this account is to invest in securities, and an open M1 Investment account is required to participate in the M1 High-Yield Cash Account. All investing involves risk, including the risk of losing the money you invest.
Stated APY (annual percentage yield) with the M1 High-Yield Cash Account is accrued on account balance. Obtaining stated APY requires a minimum initial deposit of $100. APY is solely determined by M1 Finance LLC and its partner banks, and will include administrative and account fees that may reduce earnings. Rates are subject to change without notice. M1 High-Yield Cash Account is a separate offering from, and not linked to, the M1 High Yield Savings Accounts offered by M1 Spend LLC’s banking partner. M1 is not a bank.
The cash balance in your Cash Account is eligible for FDIC Insurance once it is swept to our partner banks and out of your brokerage account. Until the cash balance is swept to partner banks, the funds are held in a brokerage account and protected by SIPC insurance. Once funds are swept to a partner bank, they are no longer held in your brokerage account and are not protected by SIPC insurance. FDIC insurance is not provided until the funds participating in the sweep program leave your brokerage account and into the sweep program. FDIC insurance is applied at the customer profile level. Customers are responsible for monitoring their total assets at each of the sweep program banks. A complete list of participating program banks can be found here.
Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a research report. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. Hypothetical examples used, such as historical backtests, do not reflect any specific investments, are for illustrative purposes only, and should not be considered an offer to buy or sell any products. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.
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