(new)Schwab Brokerage / (old)Vanguard Brokerage

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(new)Schwab Brokerage / (old)Vanguard Brokerage

Postby xram » Thu Apr 04, 2013 7:27 pm

At my old Vanguard brokerage account my money sits in a MM account paying ER 0.16% before I buy ETFs

At my new Schwab (new PCRA 401k :happy ) brokerage account my cash just sits as "cash" paying nothing.

How come Vanguard charges and Schwab does not?

just curious
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Re: (new)Schwab Brokerage / (old)Vanguard Brokerage

Postby EmergDoc » Thu Apr 04, 2013 7:53 pm

Vanguard doesn't charge, it pays you. Likewise, Schwab. I think Schwab yields 0.01% and Vanguard yields 0.01% right now. Yields/returns are AFTER the expense ratio.

Vanguard Prime VMMXX has an ER of 0.16%

Schwab Cash Reserves SWSXX has an ER of 0.23%.
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Re: (new)Schwab Brokerage / (old)Vanguard Brokerage

Postby xram » Thu Apr 04, 2013 8:03 pm

EmergDoc wrote:Vanguard doesn't charge, it pays you. Likewise, Schwab. I think Schwab yields 0.01% and Vanguard yields 0.01% right now. Yields/returns are AFTER the expense ratio.

Vanguard Prime VMMXX has an ER of 0.16%

Schwab Cash Reserves SWSXX has an ER of 0.23%.


Thanks
Good to know.
My bad.
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Re: (new)Schwab Brokerage / (old)Vanguard Brokerage

Postby Default User BR » Fri Apr 05, 2013 1:52 am

One that surprises me is ShareBuilder. Their FDIC insured sweep option is paying 0.50% APY.


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Re: (new)Schwab Brokerage / (old)Vanguard Brokerage

Postby Doc » Fri Apr 05, 2013 11:55 am

Default User BR wrote:One that surprises me is ShareBuilder. Their FDIC insured sweep option is paying 0.50% APY.


Brian


That's the difference. For accounts less than $500,000 Schwab forces you into a Schwab Bank FDIC "cash" account which at present is paying more than most MM accounts. That may change in the future when interest rates "normalize".

For those of us who are old enough to remember and can also still remember, this FDIC/FSLIC/MM trichotomy is what led to the Savings and Loan Crisis in the 1980's. http://www.fdic.gov/bank/historical/s&l/
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Re: (new)Schwab Brokerage / (old)Vanguard Brokerage

Postby Default User BR » Fri Apr 05, 2013 12:42 pm

Doc wrote:
Default User BR wrote:One that surprises me is ShareBuilder. Their FDIC insured sweep option is paying 0.50% APY.

That's the difference. For accounts less than $500,000 Schwab forces you into a Schwab Bank FDIC "cash" account which at present is paying more than most MM accounts. That may change in the future when interest rates "normalize".

ShareBuilder is owned by CapitalOne, so I suspect the FDIC accounts are tied in with the banking side, but I don't know. They do offer a money-market option for sweep accounts, but its yield is .01% so I'd think few would use that. The .5% rate is not bad at all these days, way better than most brick-and-mortar bank accounts and up near the online banks. In fact it's the same as my American Bank e-checking and Emigrant savings accounts are paying.


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