Merrill Edge "Money Account" Question

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
FootballFan5548
Posts: 159
Joined: Mon May 01, 2017 2:20 pm

Merrill Edge "Money Account" Question

Post by FootballFan5548 » Thu Apr 19, 2018 1:52 pm

I'm new to Merrill Edge after transferring from Capital One Brokerage which is closing later this year. I just transferred all of my taxable into Merrill, and after one trade, I had a small cash balance left over. I'm not familiar with Merrill Edge at all yet, but noticed there is a "cash balance" line item on the bottom of my screen, but just today the money was shown in a separate area called "Money Account". I have no clue what that is, or if it is the same as the "cash balance" line item.

Basically I've got a box of ETFs/Stocks, a box of Mutual Funds, and then this new box which is called "Money Accounts"

Does anyone have any insight on this? Is that the same as the cash balance amount which is all of a sudden $0.50 where the money account is $1,200?

stlutz
Posts: 4738
Joined: Fri Jan 02, 2009 1:08 am

Re: Merrill Edge "Money Account" Question

Post by stlutz » Fri Apr 20, 2018 2:55 am

The "money account" is also known as a sweep account. At ME, they have a collection of banks that they deposit your cash with so the that money is FDIC insured. If the money hasn't yet been deposited by them, it will simply be shown as a "cash balance".

I don't actually have an account with them, but those who do may be able to fill in any details I have missing/wrong.

FootballFan5548
Posts: 159
Joined: Mon May 01, 2017 2:20 pm

Re: Merrill Edge "Money Account" Question

Post by FootballFan5548 » Fri Apr 20, 2018 8:56 am

Thanks for your reply. It's just weird, I had $1,280 in the "Money Account". I made a small purchase of VB, for $1,000. So now my cash balance is showing as -1,000 and my money account is still showing $1,280.

I'm wondering instead, why it's not just the net of $280.

Who knows, I just want to make sure it doesn't think I bought the shares on a margin

totoroto
Posts: 2
Joined: Mon Feb 26, 2018 8:50 pm

Re: Merrill Edge "Money Account" Question

Post by totoroto » Fri Apr 20, 2018 10:48 am

The purchase for VB hasn't settled even though you own the shares. It take up to 3 business days or so. So until then, the order is still in process. Once the it clears, you will the the normal $280 left instead of a -$1000.

User avatar
triceratop
Moderator
Posts: 5644
Joined: Tue Aug 04, 2015 8:20 pm
Location: la la land

Re: Merrill Edge "Money Account" Question

Post by triceratop » Fri Apr 20, 2018 10:50 am

stlutz wrote:
Fri Apr 20, 2018 2:55 am
The "money account" is also known as a sweep account. At ME, they have a collection of banks that they deposit your cash with so the that money is FDIC insured. If the money hasn't yet been deposited by them, it will simply be shown as a "cash balance".

I don't actually have an account with them, but those who do may be able to fill in any details I have missing/wrong.
I'll add this: you have a choice of what money fund to use (to choose, you have to call ME). None of them are particularly good, ME is not a great place to hold cash (just use a ETF for this). I personally use the blackrock money account. You have fewer choices in IRAs.

Expect the $1280 vs $280 issue to disappear on T+2 (2 days after trade date) due to settlement of ETFs.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

NoHeat
Posts: 186
Joined: Sun Sep 18, 2016 10:13 am

Re: Merrill Edge "Money Account" Question

Post by NoHeat » Fri Apr 20, 2018 5:21 pm

ME is not a great place to hold cash (just use a ETF for this).
Triceratop, I did not know that an ETF money market fund was even a thing. Do you mean something like BIL?

User avatar
triceratop
Moderator
Posts: 5644
Joined: Tue Aug 04, 2015 8:20 pm
Location: la la land

Re: Merrill Edge "Money Account" Question

Post by triceratop » Fri Apr 20, 2018 6:08 pm

NoHeat wrote:
Fri Apr 20, 2018 5:21 pm
ME is not a great place to hold cash (just use a ETF for this).
Triceratop, I did not know that an ETF money market fund was even a thing. Do you mean something like BIL?
BIL should be fine. I would take a bit more term and credit risk I guess but BIL gives good exposure to T-Bills. Up to you, just don’t settle for less than you’re due, whether due to low yielding MMF or high ERs.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

User avatar
indexfundfan
Posts: 2205
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: Merrill Edge "Money Account" Question

Post by indexfundfan » Fri Apr 20, 2018 6:25 pm

You can request to use the BIF Money Fund as sweep. This is a government/treasury MMF. Current yield 1.17%.

https://www.blackrock.com/cash/en-us/products/282856/
My signature has been deleted.

User avatar
triceratop
Moderator
Posts: 5644
Joined: Tue Aug 04, 2015 8:20 pm
Location: la la land

Re: Merrill Edge "Money Account" Question

Post by triceratop » Fri Apr 20, 2018 7:30 pm

indexfundfan wrote:
Fri Apr 20, 2018 6:25 pm
You can request to use the BIF Money Fund as sweep. This is a government/treasury MMF. Current yield 1.17%.

https://www.blackrock.com/cash/en-us/products/282856/
Right, so it earns .49% less than the equivalent Vanguard Treasury Money Market Fund. Not a bad deal for Blackrock!!
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

ShadowRegent
Posts: 51
Joined: Sun Jan 04, 2015 12:52 pm

Re: Merrill Edge "Money Account" Question

Post by ShadowRegent » Sat Apr 21, 2018 12:43 pm

triceratop wrote:
Fri Apr 20, 2018 7:30 pm
indexfundfan wrote:
Fri Apr 20, 2018 6:25 pm
You can request to use the BIF Money Fund as sweep. This is a government/treasury MMF. Current yield 1.17%.

https://www.blackrock.com/cash/en-us/products/282856/
Right, so it earns .49% less than the equivalent Vanguard Treasury Money Market Fund. Not a bad deal for Blackrock!!
Or for Merrill:
Benefits of money market mutual funds to Merrill Lynch - Assets held in the BIF money market mutual funds are financially beneficial to Merrill Lynch and its affiliates. Merrill Lynch provides the platform infrastructure related to the use of these money market mutual funds as the automatic cash sweep option in accounts at Merrill Lynch as well as distribution, marketing support and other services with respect to the money market mutual funds. In consideration of the provision of the infrastructure, marketing support and/or other services, Merrill Lynch receives compensation of up to 0.441% annually of the value of money market mutual fund shares held in Merrill Lynch accounts.

Longtermgrowth
Posts: 553
Joined: Thu Nov 26, 2015 1:59 pm

Re: Merrill Edge "Money Account" Question

Post by Longtermgrowth » Sat Apr 21, 2018 5:03 pm

When I joined the brokerage, the default account didn't pay anything in interest. I sent them a secure message inquiring about the bank sweep option that paid, at the time, 1 tiny basis point like their checking account.
They replied telling me the change had been made.

Edited: Just checked my last statement, and the direct deposit program is currently only paying 14 basis points in interest. That is still nothing compared to other options (like trying not to hold cash there).
Last edited by Longtermgrowth on Sun Apr 22, 2018 12:50 am, edited 1 time in total.

User avatar
indexfundfan
Posts: 2205
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: Merrill Edge "Money Account" Question

Post by indexfundfan » Sat Apr 21, 2018 9:30 pm

The BIF money fund can't be compared to VG's. It's only good for if you received dividends and forgot to invest the money. I try to keep the cash balance in the taxable account zero at Merrill Edge at all times.
My signature has been deleted.

ShadowRegent
Posts: 51
Joined: Sun Jan 04, 2015 12:52 pm

Re: Merrill Edge "Money Account" Question

Post by ShadowRegent » Sun Apr 22, 2018 6:10 am

indexfundfan wrote:
Sat Apr 21, 2018 9:30 pm
The BIF money fund can't be compared to VG's. It's only good for if you received dividends and forgot to invest the money. I try to keep the cash balance in the taxable account zero at Merrill Edge at all times.
I've thought about turning the CMA account into my checking account and using the BIF fund to essentially get a 1.17% checking account. Better than most options, but it seems like VanguardAdvantage would be better from a yield perspective-- does it work the same way where funds are swept into/out from your settlement fund?

User avatar
indexfundfan
Posts: 2205
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: Merrill Edge "Money Account" Question

Post by indexfundfan » Sun Apr 22, 2018 6:24 am

ShadowRegent wrote:
Sun Apr 22, 2018 6:10 am
indexfundfan wrote:
Sat Apr 21, 2018 9:30 pm
The BIF money fund can't be compared to VG's. It's only good for if you received dividends and forgot to invest the money. I try to keep the cash balance in the taxable account zero at Merrill Edge at all times.
I've thought about turning the CMA account into my checking account and using the BIF fund to essentially get a 1.17% checking account. Better than most options, but it seems like VanguardAdvantage would be better from a yield perspective-- does it work the same way where funds are swept into/out from your settlement fund?
Interesting idea. The VAA requires Flagship status to be free, CMA has no minimal requirement. As far as I know, funds are swept automatically in both accounts.

The drawback I can think of is that the brokerage account could have substantial assets and there is not a whole lot of security tied to the ABA/Acc numbers. This may allow a fraudster to drain money from the account, especially if margin is enabled. For this reason, many people prefer to separate daily checking from the brokerage account.
My signature has been deleted.

ShadowRegent
Posts: 51
Joined: Sun Jan 04, 2015 12:52 pm

Re: Merrill Edge "Money Account" Question

Post by ShadowRegent » Sun Apr 22, 2018 6:41 am

indexfundfan wrote:
Sun Apr 22, 2018 6:24 am
ShadowRegent wrote:
Sun Apr 22, 2018 6:10 am
indexfundfan wrote:
Sat Apr 21, 2018 9:30 pm
The BIF money fund can't be compared to VG's. It's only good for if you received dividends and forgot to invest the money. I try to keep the cash balance in the taxable account zero at Merrill Edge at all times.
I've thought about turning the CMA account into my checking account and using the BIF fund to essentially get a 1.17% checking account. Better than most options, but it seems like VanguardAdvantage would be better from a yield perspective-- does it work the same way where funds are swept into/out from your settlement fund?
Interesting idea. The VAA requires Flagship status to be free, CMA has no minimal requirement. As far as I know, funds are swept automatically in both accounts.

The drawback I can think of is that the brokerage account could have substantial assets and there is not a whole lot of security tied to the ABA/Acc numbers. This may allow a fraudster to drain money from the account, especially if margin is enabled. For this reason, many people prefer to separate daily checking from the brokerage account.
On a margin account I'd definitely see far too many things that can go wrong for my comfort. On a cash account, I'd like to think it shouldn't be much worse than a bank account as I'd like to assume they wouldn't honor a transaction over the cash/sweep balance. I should probably re-read the account agreement though-- if they had the right to liquidate positions to fulfill an ACH transaction that they decided to honor, that seems like a potential trainwreck in the case of fraud.

I've tried a few ACH transactions on the CMA account and the only quirk I've noticed is that deposits don't show a name until the following day, so if you had an unknown deposit source you'd be left scratching your head for a day. Check deposits are also held for several days even though you could deposit them to a BofA account and have them available next business day and can transfer the funds realtime to the CMA account after that.

User avatar
indexfundfan
Posts: 2205
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: Merrill Edge "Money Account" Question

Post by indexfundfan » Sun Apr 22, 2018 6:52 am

Yes, that's my experience too. The ACH transactions only show up very late in the day.
My signature has been deleted.

NoHeat
Posts: 186
Joined: Sun Sep 18, 2016 10:13 am

Re: Merrill Edge "Money Account" Question

Post by NoHeat » Mon Apr 23, 2018 11:41 am

It seems that a $100k minimum cash balance is required for a Premium Elite customer, for a cash sweep fund that earns a yield greater than the default bank rates.

The ME Preferred money fund, now yielding 1.41%, is used by many of my ME account rep’s customers, he says, but like all the Blackrock money funds, it is unavailable to me because I don’t allocate $100k into cash.

ETFs, with an ultrashort duration for their holdings, seem like the only cash-like option available to me for a yield higher than the ME bank sweep, according to the rep. He pointed out that least I pay no commissions on trading them, as a Premium Elite customer.

ShadowRegent
Posts: 51
Joined: Sun Jan 04, 2015 12:52 pm

Re: Merrill Edge "Money Account" Question

Post by ShadowRegent » Mon Apr 23, 2018 9:24 pm

NoHeat wrote:
Mon Apr 23, 2018 11:41 am
It seems that a $100k minimum cash balance is required for a Premium Elite customer, for a cash sweep fund that earns a yield greater than the default bank rates.

The ME Preferred money fund, now yielding 1.41%, is used by many of my ME account rep’s customers, he says, but like all the Blackrock money funds, it is unavailable to me because I don’t allocate $100k into cash.

ETFs, with an ultrashort duration for their holdings, seem like the only cash-like option available to me for a yield higher than the ME bank sweep, according to the rep. He pointed out that least I pay no commissions on trading them, as a Premium Elite customer.
My rep told me the same, but I called the regular service center and was swapped into BIF money fund with no minimums. It did take several days to show up in my account.

student
Posts: 2530
Joined: Fri Apr 03, 2015 6:58 am

Re: Merrill Edge "Money Account" Question

Post by student » Fri Aug 17, 2018 8:15 pm

I was wondering about the sweep option and saw this thread. Thanks for the info.

Culbretd
Posts: 61
Joined: Sat Mar 24, 2018 4:06 am

Re: Merrill Edge "Money Account" Question

Post by Culbretd » Sat Aug 18, 2018 5:22 am

Sorry to hijack this thread but if I coud piggy back off of this thread I have a question about Merrill Edge. We are thinking of switching our brokerage account to ME to simply have all our finances under one roof since we are Bank of America customers.

I know we could trade ETF’s for free there but I like the ease of using mutual funds and automatic investments. For example if we purchased VTWSX (Vanguard Total Word) I know there is a $20 purchase fee but once purchased if we set up automatic reinvestment of say $500 a month would there be a $20 purchase fee every month for the automatic reinvestment?

I’ve called and asked them and have gotten both responses yes there would still be the $20 fee for automatic investments and no just the initial purchase is the $20 fee and automatic investment would be no cost.

If anyone uses ME and they buy mutual funds what are you experiences with automatic reinvestment?

Post Reply