myICLUB Blog

Most brokerage firms automatically invest customer cash into securities known as money market funds.  Money markets are a type of mutual fund that invest in low-risk, short-term debt securities such as Treasury bills or commercial paper (short-term, unsecured debt instruments issued by corporations). Money market funds are designed to provide a safe and stable option for cash that is being collected.

In myICLUB, money markets may be tracked in either of two ways. The first is simply to record money market "purchases" as cash transactions, with the money market "dividends" recorded as interest. For state and federal tax purposes, this is perfectly fine, as the tax ramifications are exactly the same for these cash transactions as if they were handled as "security" transactions.

The second method of recording money market transactions is to handle them as security transactions using the money market's ticker symbol. Cash going into the brokerage account is used to purchase shares of the money market fund (at a constant $1.00 per share price) and money market dividends are record as reinvested distributions. This is more complicated than the first method since it involves more transactions, but it may make it easier to reconcile the club's books each month to the brokerage statement since the money market shares and values will be listed similarly in both places.

In the past, using the second method meant that the money market funds appeared in the Securities section of myICLUB reports and valuation statements, not in the cash section. As a result, the cash position of the club appeared to be lower than it was in actuality, and the securities positions appeared to be higher.

In our recent round of enhancements, we have added the ability to identify securities that are money market funds as "Money Markets" in the Securities Settings of myICLUB, and also added some smart rules to identify securities with five character ticker symbols ending with "XX" as money market funds. In the myICLUB portfolio diversifcation reports and heatmaps, we now group money markets as part of the club's cash balance.

This change makes it easier for clubs that track money markets as securities. One downside is that treasurers need to be more careful in creating the club's monthly security valuations since the price of a money market share remains constant at $1.00, but money market ticker symbols are not included in our pricing database. We have developed some rules to identify money markets held by the club and populate the $1 per share value when a valuation is created, but we recommend that treasurers take care to verify that the prices of money markets are properly updated each month.

In our June 2025 investment club webinar, we will review these changes to myICLUB and present how money markets are now displayed and reported in the application. You can register for the webinar series or watch the replay here, as well as on our YouTube channel.