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Follower ○○○

Cash

For anyone who's interested, just spoke to Schwab and it seems that their "cash" is in a bank sweep and is FDIC insured.  I didn't know that.   They can't guarantee that their money market funds, even the government or treasury ones, won't break the buck.  I know it's possible to lose money in equities, but hate to do so in money market funds.  

Fidelity also has a sweep account which is FDIC insured.  

Obviously you don't make any money in cash, but it's there if you need. it.

Gina

 

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Valued Contributor

Re: Cash

Schwab gov m-mkt funds SNVXX or SNSXX should be fine for safety without worrying about gates and redemption fees.

Fido gov m-mkt funds SPAXX [core/settlement], FZFXX [core/settlement] or FZCXX should similarly be fine too. It seems that only Fido IRA has bank sweep option,   https://www.fidelity.com/trading/faqs-about-account-c?version=v2&s_tnt=123583:2:0

YBB
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Explorer ○○○

Re: Cash


@yogibearbull wrote:

Schwab gov m-mkt funds SNCXX or SNSXX should be fine for safety without worrying about gates and redemption fees.

Fido gov m-mkt funds SPAXX [core/settlement], FZFXX [core/settlement] or FZCXX should similarly be fine too. It seems that only Fido IRA has bank sweep option,   https://www.fidelity.com/trading/faqs-about-account-c?version=v2&s_tnt=123583:2:0


@yogibearbull:  I think you meant SNVXX  (govt mm) as SNCXX does not exist.  Probably just typo as C & V are next to each other on keyboard.

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Valued Contributor

Re: Cash

@perrywinkle , thanks. Fixed.

YBB
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Explorer ○

Re: Cash


@yogibearbull wrote:

Schwab gov m-mkt funds SNVXX or SNSXX should be fine for safety without worrying about gates and redemption fees.

Fido gov m-mkt funds SPAXX [core/settlement], FZFXX [core/settlement] or FZCXX should similarly be fine too. It seems that only Fido IRA has bank sweep option,   https://www.fidelity.com/trading/faqs-about-account-c?version=v2&s_tnt=123583:2:0


Yogi,

The other day you posted this link showing that the Fed is now supporting municipal money market funds.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20200320b.htm

I see that Schwab Municipal Money Fund SWTXX has a 7-day yield of 2.80%. This seems awfully rich! Would you have a concern being in SWTXX during these times?

On the related, I would appreciate your thoughts on Schwab Value Advantage SWVXX.

Hootz

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Valued Contributor

Re: Cash


@Hootz wrote:

@yogibearbull wrote:

Schwab gov m-mkt funds SNVXX or SNSXX should be fine for safety without worrying about gates and redemption fees.

Fido gov m-mkt funds SPAXX [core/settlement], FZFXX [core/settlement] or FZCXX should similarly be fine too. It seems that only Fido IRA has bank sweep option,   https://www.fidelity.com/trading/faqs-about-account-c?version=v2&s_tnt=123583:2:0


Yogi,

The other day you posted this link showing that the Fed is now supporting municipal money market funds.

https://www.federalreserve.gov/newsevents/pressreleases/monetary20200320b.htm

I see that Schwab Municipal Money Fund SWTXX has a 7-day yield of 2.80%. This seems awfully rich! Would you have a concern being in SWTXX during these times?

On the related, I would appreciate your thoughts on Schwab Value Advantage SWVXX.

Hootz


SWVXX is prime m-mkt fund subject to potential 2% redemption fee and/or 10-day gate(s).

I haven't been watching muni m-mkt fund but 7-day yield of 2.80% for SWTXX looks very out of character and not in line with what it has been, so it may have to do something with disruption going on in the short-term muni market that prompted the Fed to support it. BTW, muni m-mkt funds are also subject to potential 2% redemption fee and/or 10-day gate(s).   https://www.schwabfunds.com/public/csim/home/products/mutual_funds/summary.html?symbol=SWTXX

Anyway, I am not into m-mkt funds to make huge amounts of money. Safety and access/liquidity is more important to me. So, now I am mostly into SNVXX at Schwab, SPAXX [taxable] and FZCXX [403b] at Fido, VMFXX at Vanguard.

YBB
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Explorer ○

Re: Cash

Yogi,

As always, much appreciated.

I see that Vanguard Treasury Money Market VUSXX is paying 1.19% vs 1.02% for Vanguard Federal Money Market VMFXX. Wouldn't VUSXX be a good alternative to VMFXX for safety and access/liquidity?

Hootz

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Participant ○○

Re: Cash

Wow!!

I just looked at Vanguards' Municpal money market VMSXX and the 7day SEC yld is 2.10% tax free as of 3/20/2020 per Vanguard. That's like 2.8% taxable equivalent.

I wonder how long this will last. I am tempted. I may just take a stake.

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Participant ○○

Re: Cash


@gina123 wrote:

For anyone who's interested, just spoke to Schwab and it seems that their "cash" is in a bank sweep and is FDIC insured.  I didn't know that.   They can't guarantee that their money market funds, even the government or treasury ones, won't break the buck.  I know it's possible to lose money in equities, but hate to do so in money market funds.  

Fidelity also has a sweep account which is FDIC insured.  

Obviously you don't make any money in cash, but it's there if you need. it.

Gina

 


Thanks for the info, Gina.  If Schwab's brokerage cash is FDIC insured, I don't have to worry about transferring money to my Schwab Bank account or buying a Treasury Money Market fund.  Though for a better yield I might do the Treasury MMF at some point.  But all rates are headed to zero in the near future it would seem.

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Contributor ○○

Re: Cash

I will probably sweep some cash in my online money market savings account this week. I would like 100 grand of worry free money for the time being.

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Contributor ○○

Re: Cash

YBB ....  For a Trust, Fidelity has 2 zero minimum funds, SPAXX and FZFXX.  Do you know why Fidelity offers a choice to investors?  What differential purpose do they serve?  FZFXX used to yield a couple basis points more, but now they seem to be identical.  

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Participant ○○

Re: Cash

I just finished trying to verify the idea that Schwab's cash sweep is automatically FDIC insured.  It was very cumbersome, but I came to the conclusion I couldn't verify whether my status was the Bank Sweep or not, and Schwab indicated that it was my responsibility to do so (this was all online).  So rather than call them up, I just switched my cash into SNSXX (Schwab Treasury Money Fund) as recommended by Yogi.  I even should get a teeny bit of interest for a while.  Though there is a one day delay for transfers, I'm relatively satisfied.

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Explorer ○

Re: Cash


@FatKat wrote:

I will probably sweep some cash in my online money market savings account this week. I would like 100 grand of worry free money for the time being.


FatKat,

I had money in Schwab Municipal Money Fund SWTXX where the current 7-Day yield is an extraordinary 2.80%. Last night on went online and switched to Schwab Government Money SNVXX where the current 7-Day Yield is 0.59%.

I also have money in Vanguard Municipal Money Market Fund where the current 7-Day yield is an extraordinary 2.10%. Today, I will switch to Vanguard Federal Money Market Fund where the current 7-Day yield is 1.02%.

The temptation to stay in both municipal money markets is great. However, I have enough risk is the monies I have invested in the market. In these very uncertain times, I do not need to subject myself to a potential 2% redemption fee and/or 10-day gate(s).

Hootz

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Follower ○○○

Re: Cash

A little more info from what a Schwab rep told me - chatted on Sunday when there was no wait time. 

It seems that cash in all IRAs and Roths use the FDIC bank sweep.  But non-qualified accounts, ie Schwab One accounts, have two options: one is the bank sweep and the other is Schwab One interest, which is not FDIC insured.  One of my accounts didn't have the sweep and the rep changed it for me - don't know how to do it online.  

As always, verify your own.

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Follower ○○

Re: Cash

I am also thinking about going into Muni Money Market Fund through Schwab.  Here is a link

https://www.schwabfunds.com/public/csim/home/products/mutual_funds/summary.html?symbol=SWTXX

If you look at the daily distribution you can multiply it by 365 to get the prior day's distribution(be sure to use 3 days over the weekend).  It appears that the Muni yields are starting to normalize.  This may come back down relatively quickly.  Also check out the daily NAV carried out to 4 decimal places and observe how it gets closer to $.01.  Also look at the daily funds flow to see that assets are moving into this space to take advantage of this arbitrage.  Just don't think it will last much longer.

Maybe someone could track the daily yield if interested.

 

 

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