brokerage sweep accounts

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westrichj312
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brokerage sweep accounts

Post by westrichj312 » Sat Feb 03, 2018 11:32 am

does anybody check there brokerage sweep options. I have noticed MM rates over 1 % lately but have found that ETRADE and many others limit your choices to a few that are clearly not the best rates out there with the lowest cost options. For example vanguard and fidelity have nice low cost MM yielding around 1.3% but I can not use them in sweep accounts. I guess thats the cost of a discount broker as they have to make money some how? any thoughts?

livesoft
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Re: brokerage sweep accounts

Post by livesoft » Sat Feb 03, 2018 11:34 am

I don't keep more than a few dollars in any of my brokerage sweep accounts. Their purpose is not to earn interest. Their purpose is to hold money for fractions of a second while I move between shares of ETFs.
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CyberBob
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Re: brokerage sweep accounts

Post by CyberBob » Sat Feb 03, 2018 11:55 am

The default options at Fidelity and Vanguard aren’t designed to hose the individual. They are in response to the new rules regarding money-market funds. For example, a ‘prime’ money-market is subject to possible holds during times of distress, whereas a treasury fund is not, which is the reason for the current brokerage defaults. You can always buy another fund manually if you wish.

dbr
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Re: brokerage sweep accounts

Post by dbr » Sat Feb 03, 2018 12:02 pm

Don't keep money in sweep accounts. Invest it in something better or spend it.

jebmke
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Re: brokerage sweep accounts

Post by jebmke » Sat Feb 03, 2018 12:21 pm

I clear mine out monthly and typically convert it to food.
When you discover that you are riding a dead horse, the best strategy is to dismount.

westrichj312
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Re: brokerage sweep accounts

Post by westrichj312 » Sun Feb 04, 2018 8:47 am

I guess its more for active traders as I keep roughly 500K in the sweep for trading purposes.

livesoft
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Re: brokerage sweep accounts

Post by livesoft » Sun Feb 04, 2018 8:52 am

That's very odd unless you are going in and out with $500K often. That is, I don't understand why your sweep account even with trading is not close to zero most of the time. You could at least move it to a money market fund paying more than that 1% when you are not thinking about it (say the weekends). Your broker should give you a deal deal with that kind of money sitting there doing nothing. And a deal deal is not free trades because everybody gives free trades when one keeps zero in their cash sweep account.
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aristotelian
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Re: brokerage sweep accounts

Post by aristotelian » Sun Feb 04, 2018 8:57 am

Vanguard and Schwab are the same way. I reinvest mine any time it hits $1k or so.

dbr
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Re: brokerage sweep accounts

Post by dbr » Sun Feb 04, 2018 9:11 am

westrichj312 wrote:
Sun Feb 04, 2018 8:47 am
I guess its more for active traders as I keep roughly 500K in the sweep for trading purposes.
It might be there is a more effective trading strategy than one that holds $500K in a sweep account ever. The issue would be with being out of the market rather than in it.

CppCoder
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Re: brokerage sweep accounts

Post by CppCoder » Sun Feb 04, 2018 9:47 am

Unless $500k is simply the dividend on your $25 million taxable account, I don't understand your strategy, trader or not. I just did my taxes. I had $0.10 in interest from my sweep account. I think this was because I left a dividend payment there for a week to lump it with a contribution to avoid an unnecessary tax lot.

westrichj312
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Re: brokerage sweep accounts

Post by westrichj312 » Mon Feb 05, 2018 9:51 am

You guys must not trade stocks much. For example on tuesday last week I bought 1500 shares of Qcom and it cost around 90 grand. Sold it on thursday. If there is not 90K in sweep account I could not purchase stock. If you have $1,000 in your sweep account you are a buy and hold investor which is very different from trading stocks. I actually do both buy and hold and frequently trade stocks maybe 5 per week on average and must have money in sweep to make a quick buy.

livesoft
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Re: brokerage sweep accounts

Post by livesoft » Mon Feb 05, 2018 9:53 am

If I need money for an enormous quick buy, then I sell 5000 shares of a bond ETF. I have my $500,000 in a couple of seconds without having any money in a sweep account.
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dbr
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Re: brokerage sweep accounts

Post by dbr » Mon Feb 05, 2018 9:59 am

westrichj312 wrote:
Mon Feb 05, 2018 9:51 am
You guys must not trade stocks much. For example on tuesday last week I bought 1500 shares of Qcom and it cost around 90 grand. Sold it on thursday. If there is not 90K in sweep account I could not purchase stock. If you have $1,000 in your sweep account you are a buy and hold investor which is very different from trading stocks. I actually do both buy and hold and frequently trade stocks maybe 5 per week on average and must have money in sweep to make a quick buy.
That is correct. Most of the people posting here trade very infrequently other than making periodic contributions to retirement plans or long held investments. There are not a lot of people here (but some people) who even hold individual stocks let alone trade them with any frequency. For most of us the only money in sweep accounts are distributions that have been deposited there or the occasion sell in order to withdraw some money.

It might be the discussion on this forum would get more responses to your question: http://socialize.morningstar.com/NewSoc ... F100000005

I am not aware of a way to earn more interest on money in a sweep account coming from and going to trades. I guess the best thing is to redeploy money as quickly as possible to reduce the average holding in cash as much as possible.

jebmke
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Re: brokerage sweep accounts

Post by jebmke » Mon Feb 05, 2018 10:01 am

westrichj312 wrote:
Mon Feb 05, 2018 9:51 am
You guys must not trade stocks much.
Never.
When you discover that you are riding a dead horse, the best strategy is to dismount.

UpperNwGuy
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Re: brokerage sweep accounts

Post by UpperNwGuy » Mon Feb 05, 2018 10:07 am

jebmke wrote:
Mon Feb 05, 2018 10:01 am
westrichj312 wrote:
Mon Feb 05, 2018 9:51 am
You guys must not trade stocks much.
Never.
Me neither.

westrichj312
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Joined: Wed Jul 05, 2017 4:25 pm

Re: brokerage sweep accounts

Post by westrichj312 » Mon Feb 05, 2018 2:12 pm

You just can't sell 5000 shares of a bond fund and have your money seconds later to place a equity trade. There is a thing called settlement time!

westrichj312
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Re: brokerage sweep accounts

Post by westrichj312 » Mon Feb 05, 2018 6:36 pm

livesoft wrote:
Sun Feb 04, 2018 8:52 am
That's very odd unless you are going in and out with $500K often. That is, I don't understand why your sweep account even with trading is not close to zero most of the time. You could at least move it to a money market fund paying more than that 1% when you are not thinking about it (say the weekends). Your broker should give you a deal deal with that kind of money sitting there doing nothing. And a deal deal is not free trades because everybody gives free trades when one keeps zero in their cash sweep account.
A sweep account is a MM account!

livesoft
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Re: brokerage sweep accounts

Post by livesoft » Mon Feb 05, 2018 7:06 pm

westrichj312 wrote:
Mon Feb 05, 2018 6:36 pm
A sweep account is a MM account!
Yes, but a MM fund or MM account paying 0.01% is not the same as one paying 1.4%.
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livesoft
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Re: brokerage sweep accounts

Post by livesoft » Mon Feb 05, 2018 7:07 pm

westrichj312 wrote:
Mon Feb 05, 2018 2:12 pm
You just can't sell 5000 shares of a bond fund and have your money seconds later to place a equity trade. There is a thing called settlement time!
I must say that you do not understand how trades and settlement times work. Please talk to your broker.

Bottom line: Yes, I can do that. And I did it today.
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