Core position in Fidelity

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
max384
Posts: 5
Joined: Sat Aug 12, 2017 11:30 am

Core position in Fidelity

Post by max384 » Sat Aug 12, 2017 11:52 am

I made the decision to switch my online brokerage from Scottrade to Fidelity. This is a stock trading account only; not an IRA or investment acount or anything. While signing up for Fidelity, I read something about their core position, which says:
Your core position is where your money is held until you invest it. Fidelity Investments automatically places your uninvested money into a money market mutual fund. You may instead select a money market fund either now or after your account is open. View other options.
My two option are Fidelity Government Money Market Fund (SPAXX) or Fidelity Treasury Fund (FZFXX), neither of which is FDIC insured.

If I am to understand this correctly, my available cash balance in Fidelity could be subject to losing money??? I want my cash balance to be just that. Cash. I don't care about it gaining money, as I only have it there for short periods between purchases. But I DEFINITELY do not want it to lose money, not a penny. I went back to check Scottrade, and I can't find anything listed about any type of core position.

Is Fidelity the only who does this? Or are they just the most transparent about it?

stlutz
Posts: 4024
Joined: Fri Jan 02, 2009 1:08 am

Re: Core position in Fidelity

Post by stlutz » Sat Aug 12, 2017 12:04 pm

It's a feature, not a bug. SPAXX is a money-market fund that invests only in US government securities with an average maturity of about a month. It earns a small amount of interest (.63% right now).

"Cash" at other brokerages simply pays 0.

Fidelity also has an option of FDIC insured bank deposits as your core position as well. Currently that yields about 0.

The money market option is the way to go.

livesoft
Posts: 57202
Joined: Thu Mar 01, 2007 8:00 pm

Re: Core position in Fidelity

Post by livesoft » Sat Aug 12, 2017 12:54 pm

Welcome to the forum.

Presumably one reason you switched to Fidelity is because of their outstanding customer service which means telephone, online chat, walk-in office, etc.

Aren't all of these available on a Saturday, unlike the V place? What do the Fidelity reps answer about this?
This signature message sponsored by sscritic: Learn to fish.

MotoTrojan
Posts: 859
Joined: Wed Feb 01, 2017 8:39 pm

Re: Core position in Fidelity

Post by MotoTrojan » Sat Aug 12, 2017 12:59 pm

Money Market funds are not insured, but are designed to maintain a value of $1, with small interest growth. For your purpose of just keeping money there for transfers, it is perfectly fine. Many people maintain balances in them as well.

Vanguard has the same sort of settlement account.

max384
Posts: 5
Joined: Sat Aug 12, 2017 11:30 am

Re: Core position in Fidelity

Post by max384 » Sat Aug 12, 2017 1:04 pm

Thanks for your reply.

Is there a chance of ever losing money in these? I truly don't care about interest accrual in my "core position," since I rarely short sell, and my money is invested in stocks at any given period. Not having a chance of loss is much more important to me than gaining this tiny interest rate.

I didn't see the option to use FDIC bank deposits as my core position when signing up. Is that subverting I need to take care of over the phone maybe?

stlutz
Posts: 4024
Joined: Fri Jan 02, 2009 1:08 am

Re: Core position in Fidelity

Post by stlutz » Sat Aug 12, 2017 1:13 pm

Is there a chance of ever losing money in these?
Depends on your view of the likelihood of a government default.

Yes, I vaguely recall that you might need to call them to switch to the bank deposit option. I actually went the opposite way--started with the bank deposits and switched to the money market fund. :happy

User avatar
welderwannabe
Posts: 357
Joined: Fri Jun 16, 2017 8:32 am

Re: Core position in Fidelity

Post by welderwannabe » Sat Aug 12, 2017 1:27 pm

max384 wrote:
Sat Aug 12, 2017 11:52 am
I made the decision to switch my online brokerage from Scottrade to Fidelity. This is a stock trading account only; not an IRA or investment acount or anything. While signing up for Fidelity, I read something about their core position, which says:
Your core position is where your money is held until you invest it. Fidelity Investments automatically places your uninvested money into a money market mutual fund. You may instead select a money market fund either now or after your account is open. View other options.
My two option are Fidelity Government Money Market Fund (SPAXX) or Fidelity Treasury Fund (FZFXX), neither of which is FDIC insured.

If I am to understand this correctly, my available cash balance in Fidelity could be subject to losing money??? I want my cash balance to be just that. Cash. I don't care about it gaining money, as I only have it there for short periods between purchases. But I DEFINITELY do not want it to lose money, not a penny. I went back to check Scottrade, and I can't find anything listed about any type of core position.

Is Fidelity the only who does this? Or are they just the most transparent about it?
Put it in the treasury fund if you are worried about it. Treasuries are backed by the full faith and credit of the US Govt. If that fund loses money we are in deep crap, and take a guess who insures bank accounts anyways? The US Govt. In my mind there is very little different between the two, except that FDIC is limited to $250K of insurance and Treasuries are basically unlimited regarding insurance.

When it comes to investing risk, this is an area I would not concern myself with much.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

CppCoder
Posts: 556
Joined: Sat Jan 23, 2016 9:16 pm

Re: Core position in Fidelity

Post by CppCoder » Sat Aug 12, 2017 1:40 pm

max384 wrote:
Sat Aug 12, 2017 1:04 pm
Thanks for your reply.

Is there a chance of ever losing money in these? I truly don't care about interest accrual in my "core position," since I rarely short sell, and my money is invested in stocks at any given period. Not having a chance of loss is much more important to me than gaining this tiny interest rate.

I didn't see the option to use FDIC bank deposits as my core position when signing up. Is that subverting I need to take care of over the phone maybe?
If this is true, the issue is kind of moot because you're not keeping cash there anyway. I transfer money to Fidelity via EFT. They let me purchase securities before the money even arrives from the bank. I initiate a transfer, and Fidelity tells me the money is immediately available. I then purchase a mutual fund, and the money arrives whenever it arrives. I guess maybe it bounces through my core account along the way, but I'm not worried about it. I also occasionally have a few hundred to a few thousand dollars in there when my funds pay dividends. I'm comfortable leaving it there until my next batch purchase.

The above all said, as welderwannabe indicated, switch your core position to the treasury fund if you're concerned. If we're defaulting on treasuries, I'm pretty sure FDIC insurance isn't worth much either...

chinto
Posts: 297
Joined: Wed Jan 04, 2017 7:39 pm

Re: Core position in Fidelity

Post by chinto » Sat Aug 12, 2017 4:36 pm

Based on my experience, I am very pro-Fidelity. That being said, Schwab has a deal that if you transfer from Scottrade to them they will give you free trades for every year you were at Scottrade. I also suspect most people would say Schwab slightly edges Fidelity out on customer service. Something for you to consider.

NEInvestor
Posts: 8
Joined: Sun Feb 05, 2017 3:45 pm

Re: Core position in Fidelity

Post by NEInvestor » Sat Aug 12, 2017 5:03 pm

You can open a cash manager account at Fidelity with no minimum balance. It is a bank account with a cool feature that puts your money at numerous banks so people with large balances can have FDIC insurance beyond the standard guarantee. Fidelity does all the work under the hood, but you should check the list of participating banks to ensure you don't have a large balance outside of Fidelity with that bank. FDIC views the insurance by bank and not by your Fidelity account and another account at that bank.

You can transfer money easily between the two if they are linked.

I am fine with the sweep though because it is investing in short term treasuries and highly rated short terms. If the govt defaulted on the short term bills, they would probably default on FDIC as well. Both scenarios are highly unlikely.

Hope this helps.

edge
Posts: 3255
Joined: Mon Feb 19, 2007 7:44 pm
Location: Great Falls VA

Re: Core position in Fidelity

Post by edge » Sat Aug 12, 2017 5:04 pm

Worrying about this is a waste of tine

Helo80
Posts: 437
Joined: Sat Apr 29, 2017 8:47 pm

Re: Core position in Fidelity

Post by Helo80 » Sat Aug 12, 2017 6:37 pm

As somebody else mentioned, worrying about this is a bit much.

The US dollar is a fiat currency backed by the United States dollars. If the government collapses, our dollars, and investments would be worthless. That's why some would prefer if our currency was backed by a commodity like gold or silver since gold and silver cannot be printed into oblivion.

User avatar
welderwannabe
Posts: 357
Joined: Fri Jun 16, 2017 8:32 am

Re: Core position in Fidelity

Post by welderwannabe » Sat Aug 12, 2017 7:01 pm

edge wrote:
Sat Aug 12, 2017 5:04 pm
Worrying about this is a waste of tine
+1
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

User avatar
whodidntante
Posts: 2319
Joined: Thu Jan 21, 2016 11:11 pm

Re: Core position in Fidelity

Post by whodidntante » Sat Aug 12, 2017 7:48 pm

Treasuries are just as iron-clad as the FDIC.

CppCoder
Posts: 556
Joined: Sat Jan 23, 2016 9:16 pm

Re: Core position in Fidelity

Post by CppCoder » Sat Aug 12, 2017 8:31 pm

Helo80 wrote:
Sat Aug 12, 2017 6:37 pm
As somebody else mentioned, worrying about this is a bit much.

The US dollar is a fiat currency backed by the United States dollars. If the government collapses, our dollars, and investments would be worthless. That's why some would prefer if our currency was backed by a commodity like gold or silver since gold and silver cannot be printed into oblivion.
I've personally never understood why gold and silver are worth so much to people. If the government were to ever collapse, I think I'd rather have a store of potable water, canned food, and toilet paper. If you eat the gold and silver, you're just going to get heavy metal poisoning :).

Iliketoridemybike
Posts: 335
Joined: Wed Jun 28, 2017 11:03 am

Re: Core position in Fidelity

Post by Iliketoridemybike » Sat Aug 12, 2017 8:43 pm

Classic overthinking.

max384
Posts: 5
Joined: Sat Aug 12, 2017 11:30 am

Re: Core position in Fidelity

Post by max384 » Sun Aug 13, 2017 10:27 am

Thanks for the advice everybody. I think I'll put it into the treasury fund.

I'd rather overthink than underthink things.

TBillT
Posts: 286
Joined: Sat Sep 17, 2011 1:43 pm

Re: Core position in Fidelity

Post by TBillT » Sun Aug 13, 2017 11:25 am

I have recently changed to my Fidelity core accounts to money market funds to get more interest.
I am willing to take more risk than the gov't money market fund.
I ended up with a variety of money market fund tickers, depending on balance size and sometimes they let you have certain funds if you historically had it, but they may not allow new accounts. In one case I negotiated for approval for a preferred fund, that I had in some accounts, but not in others.
I have a variety of accounts for IRAs, etc., both me and my spouse.

EDIT- Looks like we now have either SPAXX or FDRXX which are both gov't money market.

max384
Posts: 5
Joined: Sat Aug 12, 2017 11:30 am

Re: Core position in Fidelity

Post by max384 » Tue Aug 15, 2017 10:23 am

Well, this was a short experiment. Unfortunately they don't have a cash core position for a brokerage account; only for their money management accout. Disappointing, but fine, I've come to conclude after this thread and some more research.

HOWEVER, their mobile app is completely unusable. It crashes every couple of minutes, if I'm lucky. I must have logged in about twenty times in the past half hour, no exaggeration. Now, I don't do mobile trading; I save that for while I'm on the laptop. However, I like to be able to have a quick view of my positions and sometimes do quick research on my phone, but this is impossible with this app. I honestly have never been more disappointed with an app than this one. I have two phones, both different models, one work, one personal, and the app behaves identically on both. I went back to the Play Store, and see that other users have been complaining about the same thing for over a month now.

I then called fidelity directly to speak with them about it, and they just told me it was a known problem they've been working on. No estimate on when it would be fixed, and no solution other than that I could trade over the phone or on the laptop. Customer service, while adequate, was nowhere near as good as Scottrade. Hold times were much longer, and the automatic phone system was more frustrating, and much harder to talk to someone in person. Although Scottsdale isn't perfect, I think this was a classic example of finding that the grass isn't always greener on the other side. I wish I hadn't opened my account with a balance transfer, but I'm just glad I pulled a smaller amount out of savings instead of transferring my Scottrade balance until after I tested the waters at Fidelity.

So I closed my account and decided to just stick with Scottrade.

mega317
Posts: 1228
Joined: Tue Apr 19, 2016 10:55 am

Re: Core position in Fidelity

Post by mega317 » Tue Aug 15, 2017 12:11 pm

For others reading this thread: just go to fidelity.com on your phone's browser. No need for an app.

Iliketoridemybike
Posts: 335
Joined: Wed Jun 28, 2017 11:03 am

Re: Core position in Fidelity

Post by Iliketoridemybike » Tue Aug 15, 2017 12:39 pm

mega317 wrote:
Tue Aug 15, 2017 12:11 pm
For others reading this thread: just go to fidelity.com on your phone's browser. No need for an app.
Exactly. That is how I access it on my phone. The app is only good for doing remote check deposits.

User avatar
aj76er
Posts: 366
Joined: Tue Dec 01, 2015 11:34 pm
Location: Portland, OR

Re: Core position in Fidelity

Post by aj76er » Tue Aug 15, 2017 1:34 pm

My brokerage was originally FCASH, but I recently switched it to FZFXX because short-term rates are rising. For me, the sweep account is only where I temporarily pool money to make large-ish ETF purchases a few times a year. It's not really long term storage. For longer term, you could consider a short-term bond fund, CD's, and/or I-Bonds.

In the end, it's not worth worrying about. MM funds that have a healthy dose of treasury bills are quite safe. In fact, treasuries by themselves are considered safer than FDIC insured bank accounts.

Either of the Fidelity core options look relatively safe to me (based on their holdings). I picked FZFXX because it has slightly lower E/R (and, as a result, a bit more yield) than the other option.
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle

max384
Posts: 5
Joined: Sat Aug 12, 2017 11:30 am

Re: Core position in Fidelity

Post by max384 » Tue Aug 15, 2017 2:09 pm

mega317 wrote:
Tue Aug 15, 2017 12:11 pm
For others reading this thread: just go to fidelity.com on your phone's browser. No need for an app.
While true, the mobile version of the website is subpar at best. Dedicated apps are nearly always a better interface than a mobile version of the webpage. No exception here (other than the constant crashing, of course).

Cash
Posts: 1232
Joined: Wed Mar 10, 2010 10:52 am

Re: Core position in Fidelity

Post by Cash » Wed Aug 16, 2017 8:29 pm

I use their iPhone app pretty frequently. It's never crashed or frozen...

bh
Posts: 222
Joined: Thu Jul 08, 2010 7:44 pm

Re: Core position in Fidelity

Post by bh » Wed Aug 16, 2017 8:38 pm

max384 wrote:
Tue Aug 15, 2017 10:23 am
Well, this was a short experiment. Unfortunately they don't have a cash core position for a brokerage account; only for their money management accout. Disappointing, but fine, I've come to conclude after this thread and some more research.

HOWEVER, their mobile app is completely unusable. It crashes every couple of minutes, if I'm lucky. I must have logged in about twenty times in the past half hour, no exaggeration. Now, I don't do mobile trading; I save that for while I'm on the laptop. However, I like to be able to have a quick view of my positions and sometimes do quick research on my phone, but this is impossible with this app. I honestly have never been more disappointed with an app than this one. I have two phones, both different models, one work, one personal, and the app behaves identically on both. I went back to the Play Store, and see that other users have been complaining about the same thing for over a month now.

I then called fidelity directly to speak with them about it, and they just told me it was a known problem they've been working on. No estimate on when it would be fixed, and no solution other than that I could trade over the phone or on the laptop. Customer service, while adequate, was nowhere near as good as Scottrade. Hold times were much longer, and the automatic phone system was more frustrating, and much harder to talk to someone in person. Although Scottsdale isn't perfect, I think this was a classic example of finding that the grass isn't always greener on the other side. I wish I hadn't opened my account with a balance transfer, but I'm just glad I pulled a smaller amount out of savings instead of transferring my Scottrade balance until after I tested the waters at Fidelity.

So I closed my account and decided to just stick with Scottrade.


i like scottrade also but remember that they are short-term due to merger with tda

Post Reply