The point is they're not zero risk. You are safer investing your money into an index fund ETF.
And if you consider them safe, then accept my challenge to find a bank which discloses what HYSA is invested in.
Or better yet, do the research yourself and prepare to be amazed and disgusted to see how the proverbial sausage is made.
And to the person clamoring on about FDIC insurance, I also invite to look up how many deposits it actually covers, while reiterating that they still have not yet found a single bank which discloses what HYSA investments are in.
The Wealthfront reply is on to something, by finding an article which alludes to mysterious "banks" your money is lent to. Do more research about those "banks" are, though. It's not at all what you think.
> Because we broker our deposits, we’re able to offer you access to wholesale interest rates — the interest rates that banks offer to broker-dealers like Wealthfront for deposits, which can be higher than the rates banks offer individual customers. When our partner banks pay a high rate on your deposits, we pass along a high rate to you.
TLDR: Wealthfront gives your money to other banks who pay Wealthfront interest which is passed on to you. All FDIC insured.
