Schwab user. Where should I put my Emergency Fund?

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ldav07
Posts: 5
Joined: Sun Feb 25, 2018 10:02 pm

Schwab user. Where should I put my Emergency Fund?

Post by ldav07 » Tue Dec 04, 2018 10:05 pm

Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!

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fortfun
Posts: 1232
Joined: Tue Apr 19, 2016 7:31 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by fortfun » Tue Dec 04, 2018 10:11 pm

ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
Consider opening an account at Ally. 2% Savings 2.25% no risk CD.

radiowave
Posts: 1880
Joined: Thu Apr 30, 2015 5:01 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by radiowave » Tue Dec 04, 2018 10:15 pm

Also agree with Ally. Of note, 1 year CD is 2.65% right now.

Be careful about transferring money out of BoA, e.g. push $ from BoA to Ally as they hit you with a fee.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

trueblueky
Posts: 1378
Joined: Tue May 27, 2014 3:50 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by trueblueky » Tue Dec 04, 2018 10:31 pm

ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
Depending on your state tax situation, look into opening a Schwab checking account linked to a Schwab brokerage account. Use the brokerage account to buy Treasuries for some of your emergency fund. You also get a debit card with no foreign transaction fees.

NoHeat
Posts: 224
Joined: Sun Sep 18, 2016 10:13 am

Re: Schwab user. Where should I put my Emergency Fund?

Post by NoHeat » Tue Dec 04, 2018 10:34 pm

If the sweep account pays too little, then T bills.

Alternatively BIL or SHV (whichever is on the no-commission ETF list). These are ETFs that now pay 2.07% and 2.25% respectively, which you can just buy once and forget about. BIL holds T-bills, SHV holds short-term Treasury notes; durations are about 0.2 and 0.4 years, respectively.

These short-term treasury securities will give you the greatest comfort in a worst-case emergency, when you are afraid of losing a job at the same time the economy is cratering and credit markets freezing up, as nearly happened in 2008.

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Taylor Larimore
Advisory Board
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Location: Miami FL

Re: Schwab user. Where should I put my Emergency Fund?

Post by Taylor Larimore » Tue Dec 04, 2018 10:51 pm

ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
ldav07:

I do not have a separate, low-yielding, "emergency fund." I know that in an "emergency" (I've never had one) I can obtain money from my bank account, my credit card, or my portfolio.

Keep investing simple with as few funds as possible. Read my "Simplicity" link below.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

ofckrupke
Posts: 555
Joined: Mon Jan 10, 2011 2:26 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by ofckrupke » Tue Dec 04, 2018 10:53 pm

trueblueky wrote:
Tue Dec 04, 2018 10:31 pm
ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
Depending on your state tax situation, look into opening a Schwab checking account linked to a Schwab brokerage account. Use the brokerage account to buy Treasuries for some of your emergency fund. You also get a debit card with no foreign transaction fees.
As an alternative to buying individual treasuries, at least for someone starting out, let me add - for Schwab specifically: SCHO (short term treasury ETF, duration 1.9y) and/or SWSBX (short term bond index fund, duration 2.8y, basically no minimum to start, add, or subtract, and divs settable to reinvest)...both er=0.06% and transaction-fee free. The bit of term risk is, to me at least, easier to bear than rewarding Schwab for setting up even the purchased money market funds as modest profit centers (@ er=0.35% or more). My checking account balance at Schwab bank and sweep balance in brokerage are both ~zero presently.

retiredflyboy
Posts: 23
Joined: Sun Dec 02, 2018 10:02 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by retiredflyboy » Tue Dec 04, 2018 11:53 pm

I use Ally savings for emergency and also keep small balance in Ally checking. One day transfer from savings to checking. Checks and debit card tied to checking with $1000 atm limit. I keep $1000 in checking and the bulk of it in savings. I also have some in Vanguard Prime MM with $250 minimum check writing.
Facts are stubborn things. Everything works until it doesn’t.

isira
Posts: 2
Joined: Fri Nov 16, 2018 10:15 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by isira » Wed Dec 05, 2018 1:24 am

If you want to keep everything at Schwab, one of the money market funds would be fine. SWVXX is currently 2.14%.

acanthurus
Posts: 380
Joined: Sun Aug 04, 2013 8:02 am

Re: Schwab user. Where should I put my Emergency Fund?

Post by acanthurus » Wed Dec 05, 2018 10:26 am

I would lump sum the EF into treasury bills, then use one of their purchased MM funds for the spare change (<1K).

BogleMelon
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Joined: Mon Feb 01, 2016 11:49 am

Re: Schwab user. Where should I put my Emergency Fund?

Post by BogleMelon » Wed Dec 05, 2018 10:48 am

retiredflyboy wrote:
Tue Dec 04, 2018 11:53 pm
I use Ally savings for emergency and also keep small balance in Ally checking. One day transfer from savings to checking. Checks and debit card tied to checking with $1000 atm limit. I keep $1000 in checking and the bulk of it in savings. I also have some in Vanguard Prime MM with $250 minimum check writing.
Transferring between Ally saving to checking or the opposite, is instant.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

Nate79
Posts: 3733
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Location: Delaware

Re: Schwab user. Where should I put my Emergency Fund?

Post by Nate79 » Wed Dec 05, 2018 11:08 am

isira wrote:
Wed Dec 05, 2018 1:24 am
If you want to keep everything at Schwab, one of the money market funds would be fine. SWVXX is currently 2.14%.
+1 This is what I use.

MisterMister
Posts: 60
Joined: Thu Nov 01, 2018 9:50 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by MisterMister » Wed Dec 05, 2018 11:16 am

ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
Agree with Ally. 11-month no-penalty CD is 2.25%, a good choice if you think you will need to tap into the money. Of course 1-year 2.65% is better if you're over 90% certain you won't need to do that. Ally's EWP's are generally good, although they will tap into principal to cover the EWP if you take the money out too soon.

Ally is an excellent online bank, good customer service 24/7, the Web site is quite good, and the offerings are as well.

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Just sayin...
Posts: 214
Joined: Tue Oct 09, 2007 10:12 am

Re: Schwab user. Where should I put my Emergency Fund?

Post by Just sayin... » Wed Dec 05, 2018 11:59 am

I am with Schwab and keep my emergency funds in SWVXX:

https://www.schwabfunds.com/public/csim ... mbol=SWVXX

Bhairston2018
Posts: 81
Joined: Wed Feb 21, 2018 3:23 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by Bhairston2018 » Wed Dec 05, 2018 2:25 pm

isira wrote:
Wed Dec 05, 2018 1:24 am
If you want to keep everything at Schwab, one of the money market funds would be fine. SWVXX is currently 2.14%.
+1

michaeljmroger
Posts: 72
Joined: Fri Sep 21, 2018 10:54 am

Re: Schwab user. Where should I put my Emergency Fund?

Post by michaeljmroger » Wed Dec 05, 2018 2:34 pm

If you live in a high income tax state like CA you’d be better off with SNSXX: it’s safer and the after-tax yield will be slightly higher.

Joe_[Investor]
Posts: 4
Joined: Wed Dec 05, 2018 2:10 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by Joe_[Investor] » Wed Dec 05, 2018 3:14 pm

I'm a Schwab fanboy (and a Boglehead... weird.) and use them for all of my brokerage and banking services. Schwab offers Investor savings and checking accounts linked to an existing Schwab One brokerage account, which makes creating a tiered EF fund quite easy (at least it did for me). I use a separate Schwab brokerage account for general investing outside of this tiered setup.

Tiered EF using Schwab One Brokerage account with linked Investor Savings & Investor Checking accounts:
Schwab One Brokerage:
-CD Ladder
-Tax-Exempt Municipal Money Market Funds (SWTXX)

Investor Savingss:
-2-3 Mo. Household Expenses

Investor Checking:
-Everyday Cash (direct deposit goes in here)
-Debit Card (Schwab offers great features on their checking accounts & debit cards)

MnD
Posts: 3805
Joined: Mon Jan 14, 2008 12:41 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by MnD » Wed Dec 05, 2018 6:34 pm

Nate79 wrote:
Wed Dec 05, 2018 11:08 am
isira wrote:
Wed Dec 05, 2018 1:24 am
If you want to keep everything at Schwab, one of the money market funds would be fine. SWVXX is currently 2.14%.
+1 This is what I use.
SWVXX and T-bills of desired duration. I have 25% in SWVXX and 75% in a 13-week T-bill ladder at 2.5% TEY (75%). but that's mainly for soon upcoming spending. If I had a long term emergency fund I'd go out farther on the yield curve with a 26 week or 1 year T-bill ladder. If you already have Schwab accounts I don't see the point of having yet another financial institution for checking and/or emergency savings.

retiredflyboy
Posts: 23
Joined: Sun Dec 02, 2018 10:02 pm

Re: Schwab user. Where should I put my Emergency Fund?

Post by retiredflyboy » Tue Dec 11, 2018 12:01 am

BogleMelon wrote:
Wed Dec 05, 2018 10:48 am
retiredflyboy wrote:
Tue Dec 04, 2018 11:53 pm
I use Ally savings for emergency and also keep small balance in Ally checking. One day transfer from savings to checking. Checks and debit card tied to checking with $1000 atm limit. I keep $1000 in checking and the bulk of it in savings. I also have some in Vanguard Prime MM with $250 minimum check writing.
Transferring between Ally saving to checking or the opposite, is instant.
Thank you, I should have stated same day.
Facts are stubborn things. Everything works until it doesn’t.

drk
Posts: 865
Joined: Mon Jul 24, 2017 10:33 pm
Location: Seattle

Re: Schwab user. Where should I put my Emergency Fund?

Post by drk » Tue Dec 11, 2018 1:14 am

Joe_[Investor] wrote:
Wed Dec 05, 2018 3:14 pm
I'm a Schwab fanboy (and a Boglehead... weird.)
That's not weird. That's the Vanguard Effect. Many of us are happy Schwab customers.

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