transfers and funds available to trade in brokerage account

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stocknoob4111
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Joined: Sun Jan 07, 2018 12:52 pm

transfers and funds available to trade in brokerage account

Post by stocknoob4111 » Thu Feb 22, 2018 9:25 pm

I have some funds that I want to use to invest if a market buying opportunity comes along again, I have a feeling it will be sometime soon... however, what is the best way to be ready for this? I have money in my high yield savings account which is linked to my brokerage account. In the past i've noticed that after I have initiated a transfer the funds are immediately available to trade without it having to clear. A few questions on this aspect:

- Is there a limit on the amount of funds immediately available to trade?

- How does Vanguard protect itself if there is a situation that the funds don't clear? Is the amount immediately available have a maximum based on the amount of assets you have in your brokerage account (for instance if it does not clear they can sell those assets)?

- Is the funds immediately available to trade decision based on some other criteria?

harmony
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Re: transfers and funds available to trade in brokerage account

Post by harmony » Thu Feb 22, 2018 10:15 pm

I have wondered that too. Trades seem to be settling a lot faster lately. Maybe it's time to review their regulations:
https://investor.vanguard.com/investing ... -penalties

Yesterday I transferred $10K from my bank to VG. This morning it was available to trade though I also saw a note about a pending transaction. I bought an ETF around noon. Tonight it has already been added to my account and is showing the new balance. The same had happened in January. Back then I called VG and asked what was going on. They said go ahead, so I did. Today I didn't call.

stocknoob4111
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Re: transfers and funds available to trade in brokerage account

Post by stocknoob4111 » Fri Feb 23, 2018 1:36 pm

This has been inconsistent for me. A few weeks ago I moved $15,000 from my savings to my brokerage and it wasn't immediately available although when I called Vanguard they called my bank to verify (took about 10 minutes) and then he had to turn on a switch which made it available. At the time I had 6 figures of assets in my brokerage account so not sure why it works sometimes. In another case when I moved $20,000 it showed up immediately in the "Funds available to trade"

informal guide
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Re: transfers and funds available to trade in brokerage account

Post by informal guide » Fri Feb 23, 2018 1:48 pm

I believe there is a difference in using newly added funds to settle trades vs. using them to pay checks, ACH transfers out, etc. Vanguard will allow one to immediately use the newly added funds to settle a brokerage or Vanguard fund purchase.

Occasionally I would move funds to Vanguard and then immediately use them to pay a check or wire transfer out; once or twice I stumbled upon the issue of the funds not being available to disburse for 5 or so business days.

I discovered a simple solution - -set up margin capability on the brokerage account - -you need to complete an application for this. Then there is no problem because the stocks and Vanguard funds (after a 30 day holding period - -SEC regulations) I hold provide collateral to support the uncollected purchases (the funds one moves into Vanguard by ACH or check).

stocknoob4111
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Re: transfers and funds available to trade in brokerage account

Post by stocknoob4111 » Fri Feb 23, 2018 2:15 pm

thanks, does margin capability require a credit check? I have frozen all my credit reports due to the Equifax breach and it's going to be a real pain to unfreeze/re-freeze etc. I just don't want to bother with that.

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Tyler Aspect
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Re: transfers and funds available to trade in brokerage account

Post by Tyler Aspect » Fri Feb 23, 2018 3:36 pm

You can transfer your money ahead of time to Vanguard Prime Market fund. That way you can exchange to a mutual fund on the same day, or purchase an ETF on the next day.

Margin accounts are bad fit for persons who are prone to short term speculation.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

stocknoob4111
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Re: transfers and funds available to trade in brokerage account

Post by stocknoob4111 » Fri Feb 23, 2018 5:11 pm

Tyler Aspect wrote:
Fri Feb 23, 2018 3:36 pm
Margin accounts are bad fit for persons who are prone to short term speculation.
Not a short term speculator but just waiting for a better opportunity to get into the market at a discount. It's like buying anything else, would you wait for a sale that you know is very likely to come or would you pay full retail + markup which is what the price of the stock market is right now.

informal guide
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Re: transfers and funds available to trade in brokerage account

Post by informal guide » Sat Feb 24, 2018 10:15 am

stocknoob4111 wrote:
Fri Feb 23, 2018 2:15 pm
thanks, does margin capability require a credit check? I have frozen all my credit reports due to the Equifax breach and it's going to be a real pain to unfreeze/re-freeze etc. I just don't want to bother with that.
I don't believe they do a traditional credit check. Rather, they ask you about your income, assets, and number of dependents (i.e., they may not approve you if you have $10,000 annual income, $2,000 in liquid assets, and three dependents!). If my long ago dated recollection is correct, there may be a "bad guy" industry data base that your info is run against.

The form itself is extremely simple and can easily be completed online. There is, however, four pages of fine print lawyer boilerplate, dealing with things like folks who actively trade securities up to their amount of margin credit available or whose account values plummet (think someone who holds one individual stock with a margin borrowing and then that stock drops 40% overnight). Here is a link to the form:

https://personal.vanguard.com/us/ElfPDF ... 9484151247

Using margin borrowing to significantly leverage your investments is definitely risky! On the other hand, shorter term margin borrowing is convenient and cost-effective - -the rate for $50,000 is 8% per year, much less than a credit card! I have used it several times for a few weeks, such as when I was buying and selling a house and the buy settlement was two weeks before the sell settlement or when I had a large, unexpected tax bill to pay.

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