Where to Park Cash After a Business Sale [2025 Guide]
Quick Answer
After selling your business, park proceeds in safe, liquid vehicles like money market funds, U.S. Treasury bills, or high-yield savings accounts while developing a long-term investment plan. Spread funds across multiple institutions to maximize FDIC/SIPC protection, and keep 6-12 months of expenses accessible while investing the remainder strategically within 3-6 months.
Key Takeaways
- •Money market funds, treasury bills, and high-yield savings offer safety and liquidity for large cash positions
- •FDIC and SIPC insurance limits require spreading funds across multiple institutions
- •Short-term treasuries (3-6 months) provide safety, liquidity, and competitive yields
- •Brokerage sweep accounts and treasury ladders balance access with yield optimization
- •Keep 6-12 months of expenses liquid while developing long-term investment strategy
Best Options for Parking Cash
1. Money Market Funds
Money market funds invest in short-term, high-quality debt and offer competitive yields with daily liquidity.
Pros:
- Daily liquidity with no withdrawal penalties
- Competitive yields (3-5% depending on rates)
- No FDIC insurance limits for government funds
- Easy to access through brokerage accounts
Cons:
- Not FDIC insured (though highly safe)
- Yields fluctuate with interest rates
- May have minimum investment requirements
2. U.S. Treasury Bills
Short-term government securities (4 weeks to 52 weeks) backed by the full faith and credit of the U.S. government.
Pros:
- Safest investment available (U.S. government backed)
- No FDIC insurance limits needed
- State tax-exempt interest income
- Competitive yields close to money market rates
Cons:
- Locked in until maturity (though secondary market exists)
- Slightly more complex to purchase and manage
- Interest rate risk if rates rise after purchase
3. High-Yield Savings Accounts
FDIC-insured bank savings accounts offering competitive interest rates with complete liquidity.
Pros:
- FDIC insured up to $250,000 per account
- Immediate liquidity with no penalties
- Easy to set up and manage online
- No minimum balance requirements at many banks
Cons:
- FDIC limits require multiple accounts for large amounts
- Yields may be lower than money market funds
- Rates can change at bank's discretion
4. Brokerage Sweep Accounts
Automatically sweep uninvested cash into FDIC-insured bank accounts or money market funds.
Pros:
- Automatic management of uninvested cash
- Immediate availability for trading
- Some programs offer multi-million dollar FDIC coverage
- Convenient for transitioning to investments
Cons:
- May offer lower yields than direct money market investments
- Fees can erode returns
- Varies significantly by brokerage
Recommended Strategy
For most business owners post-exit, a combination approach works best:
- Keep 3-6 months expenses in high-yield savings for immediate access
- Park the bulk of proceeds in treasury money market funds for safety and yield
- Build a 3-6 month treasury ladder for guaranteed rates and staged liquidity
- Use a brokerage sweep account for funds you plan to invest soon
- Work with advisors to transition funds into your long-term investment plan within 3-6 months
Frequently Asked Questions
FDIC insurance covers up to $250,000 per depositor, per insured bank, per ownership category. To protect larger amounts, spread funds across multiple banks or use FDIC-insured network programs like CDARS or ICS that provide multi-million dollar coverage through a single institution.
No, money market funds are not FDIC insured. However, they are highly regulated and invest in short-term, high-quality debt. While not guaranteed, they have historically maintained stable $1.00 net asset values. Treasury money market funds that invest only in U.S. government securities offer additional safety.
Money market accounts are FDIC-insured bank deposit accounts with variable interest rates. Money market funds are investment products that invest in short-term debt and are not FDIC insured. Money market funds typically offer higher yields but lack deposit insurance protection.
Keep sufficient cash for 6-12 months of expenses plus any major planned expenditures. The remainder should be invested according to a comprehensive financial plan, typically within 3-6 months of the sale. Holding too much cash creates opportunity cost and inflation risk.
Brokerage sweep accounts automatically transfer uninvested cash into money market funds, providing immediate liquidity for trading and competitive yields. They are convenient for large accounts but may offer lower yields than direct money market investments. Compare options and fees carefully.
Yes, U.S. Treasury bills are backed by the full faith and credit of the U.S. government, making them one of the safest investments. They have no FDIC insurance limits, offer competitive yields, and can be purchased in large quantities through TreasuryDirect or brokerage accounts.