In the world of investing, there are a lot of different options at your disposal with different rewards and risks. If you were to break investing down into three tiers you could have the following: low risk and low reward, low-medium risk and medium reward, and high risk and high reward.

One of the safest options outside of a traditional savings account is known as a high-yield savings account (HYSA). An HYSA is a savings account that has an interest rate 15 to 20 times higher than a traditional savings account, which typically is around 0.06%. In contrast, an HYSA is typically around 0.9 to 1.2%.

With an HYSA, you deposit money, and each month your account accrues interest and grows. The benefit? There is virtually no risk. The negatives? The growth opportunity is limited to the interest rate, and while your account will grow at a steady rate, the amount is small in comparison to other potential investment opportunities.

An alternative, in terms of investment is called a cash sweep program . These types of programs share some of the low-risk advantages of HYSA while allowing someone to potentially take advantage of the benefits of traditional investment opportunities in the stock market. They do this by allowing a person to earn interest while they wait for the right time to invest. It can be a great option for people who are new to investing, don't have the time or expertise to confidently participate in retail investing and want to potentially increase their profits with lower risk. How Do Cash Sweep Programs Work?

A cash sweep account can be looked at like a bank account linked to an investment account. A preset amount determined by the user is transferred into a network of FDIC insured program banks which allows your uninvested cash to earn money. The uninvested cash is held by the program banks and invested. This ensures that money is consistently earning interest rather than sitting in a low-interest bank account.

This contrasts with day trading where you may need to sit at your desktop consistently watching the market to make a successful trade or HYSA accounts where your money is generally held long term and the rates may be lower. Robinhood Released Its Own Cash Sweep Program Robinhood Gold

Robinhood recently introduced a new interest rate for Robinhood Gold members enrolled in the brokerage cash sweep program. Robinhood Gold members will have access to 3.75% interest on brokerage cash sweep, which is more than 23 times in interest* than the national average for a traditional savings account.

The program works similarly to other cash sweep accounts. Gold members will have their uninvested brokerage account cash automatically swept into deposit accounts at a network of six program banks. The partnered banks are Goldman Sachs Bank USA, HSBC Bank USA, Wells Fargo Bank, Citibank, Bank of Baroda and U.S. Bank. The interest is compounded daily and then paid out monthly by the program banks.

In addition to a higher interest rate for cash sweep, Robinhood Gold boasts a suite of powerful tools, data and investment features. Gold members have access to professional research from Morningstar Inc. MORN , Level II market data from the Nasdaq Stock Exchange, access to margin investing at 6.5%** and bigger instant deposits. Without the Gold membership margin investing is at 10.5%. A Robinhood Gold membership costs $5/month.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice. All investments risk and loss of principle is possible. Cash Sweep is an additional feature offered as part of your Robinhood Financial LLC brokerage account. Neither Robinhood Financial LLC, nor any of its affiliates, are banks. The Annual Percentage Yield (APY) paid by program banks is subject to change at any time at the program banks discretion. Margin investing involves the risk of greater investment losses and is subject to eligibility requirements. Customers using margin would not earn the 3.75% cash sweep interest rate.

*Bankrate statistic as of 10/19/22. Rates are subject to change. **To earn interest, a cash balance is needed. If you have a margin balance, there is no cash balance to earn interest. Interest rates for cash sweep and margin investing can change at any time.

Featured photo by Ayadi Ghaith on Unsplash