Schwab auto invest

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Lxw3
Posts: 25
Joined: Wed Oct 23, 2013 10:49 pm

Schwab auto invest

Post by Lxw3 »

Hi i am struggling with auto invest in achwab. Right now I have a good amount of cash in their Money market fund with good APY and wants to auto invest their S&P500 mutual fund over the next 24 months. But for auto invest, It seems that I have to put the money in cash position which earns very little interest. Not only that, if there is not enough money In cash, the auto invest will start to use margin which charges so high interest. How did you go about it to auto-invest? Appreciate the sharing!
toddthebod
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Re: Schwab auto invest

Post by toddthebod »

Lxw3 wrote: Tue Jan 24, 2023 7:11 pm Hi i am struggling with auto invest in achwab. Right now I have a good amount of cash in their Money market fund with good APY and wants to auto invest their S&P500 mutual fund over the next 24 months. But for auto invest, It seems that I have to put the money in cash position which earns very little interest. Not only that, if there is not enough money In cash, the auto invest will start to use margin which charges so high interest. How did you go about it to auto-invest? Appreciate the sharing!
Sorry, this is something Schwab does to make money. They make it intentionally difficult to manage cash and money market funds because a large share of their profits comes from lending out people's uninvested cash. Their cash sweeps pay low interest, none of their money market funds are eligible for automatic investment, and you cannot buy shares with money invested in their money market funds. You should set up the automatic investment in the stock fund you want, then set reminders for yourself in your calendar app to sell shares of the money market fund the day before every month.
Backtests without cash flows are meaningless. Returns without dividends are lies.
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indexfundfan
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Re: Schwab auto invest

Post by indexfundfan »

You probably have to move your business elsewhere, maybe to Fidelity or Vanguard, where the excess cash pending investment can sit in a money market fund, earning meaningful interest.
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secondopinion
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Re: Schwab auto invest

Post by secondopinion »

Or do the investing yourself and stay with Schwab. I mean, there are options.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
toddthebod
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Re: Schwab auto invest

Post by toddthebod »

If you really want to do something automatic, buy 24 separate CDs or Treasuries that mature each month. You'll earn a similar return to the Money Market (potentially better), and you won't need to touch anything once you set it all up (which will be tedious, I concede!)
Backtests without cash flows are meaningless. Returns without dividends are lies.
Topic Author
Lxw3
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Joined: Wed Oct 23, 2013 10:49 pm

Re: Schwab auto invest

Post by Lxw3 »

Thank you all for the reply. It confirmed my understanding and it seems no easy way around. I have fidelity too and i May move this amount to fidelity and auto invest there. I keep both of them because I like their service. Thanks again!
Spearfoot
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Re: Schwab auto invest

Post by Spearfoot »

We don't have a money market fund, but we do have bank, IRA, and brokerage accounts at Schwab, and we use their AIP (automatic investment program).

I'm pretty sure you can set up recurring transfers between your money market account and your brokerage account to fund your automatic investments. Perhaps you could schedule these the day before or even the day of your AIP purchases. I know that transfers between Schwab accounts take place immediately, so the latter approach should work.
toddthebod
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Re: Schwab auto invest

Post by toddthebod »

Spearfoot wrote: Wed Jan 25, 2023 8:33 am We don't have a money market fund, but we do have bank, IRA, and brokerage accounts at Schwab, and we use their AIP (automatic investment program).

I'm pretty sure you can set up recurring transfers between your money market account and your brokerage account to fund your automatic investments. Perhaps you could schedule these the day before or even the day of your AIP purchases. I know that transfers between Schwab accounts take place immediately, so the latter approach should work.
Schwab does not have a money market account. He is asking about money market funds that you buy and sell into like a mutual fund, and those funds are not eligible for automatic investment.

Although you do bring up an interesting option: I believe you cash set up automatic transfers from external accounts, so there's no reason he has to leave his cash in a Schwab account even if he wants to continue investing there.
Backtests without cash flows are meaningless. Returns without dividends are lies.
Topic Author
Lxw3
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Joined: Wed Oct 23, 2013 10:49 pm

Re: Schwab auto invest

Post by Lxw3 »

That’s interesting to use transfer from external bank for auto investment. I wonder if you can use any bank such as ally or it has to be Schwab bank? Does Schwab bank offe good rate on money market or savings account?
Bear906
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Re: Schwab auto invest

Post by Bear906 »

Myself, I've set up an automatic Schwab MoneyLink transfer from an external account into my cash sweeps account a day before I have the Automatic Investment Plan transfer it into mutual funds. That way, incoming funds only sit in cash sweeps for, at most, four days due to markets being closed on the Monday or Friday immediately following the MoneyLink transfer.
Eschew obfuscation.
UpperNwGuy
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Re: Schwab auto invest

Post by UpperNwGuy »

Lxw3 wrote: Fri Jan 27, 2023 1:53 am Does Schwab bank offe good rate on money market or savings account?
Schwab does not have a money market account. The interest rate on their savings account is not competitive.
Spearfoot
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Re: Schwab auto invest

Post by Spearfoot »

UpperNwGuy wrote: Fri Jan 27, 2023 6:02 am
Lxw3 wrote: Fri Jan 27, 2023 1:53 am Does Schwab bank offe good rate on money market or savings account?
Schwab does not have a money market account. The interest rate on their savings account is not competitive.
According to their website, they have several money market funds:
https://www.schwab.com/money-market-funds
UpperNwGuy
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Re: Schwab auto invest

Post by UpperNwGuy »

Spearfoot wrote: Fri Jan 27, 2023 7:36 am
UpperNwGuy wrote: Fri Jan 27, 2023 6:02 am
Lxw3 wrote: Fri Jan 27, 2023 1:53 am Does Schwab bank offe good rate on money market or savings account?
Schwab does not have a money market account. The interest rate on their savings account is not competitive.
According to their website, they have several money market funds:
https://www.schwab.com/money-market-funds
Correct. But OP is already invested in those money market funds, and OP is frustrated by not being able to use them a source for automatic investing into Schwab's S&P 500 mutual fund.

OP has asked twice if Schwab has a "money market account" on the banking side of their operation. The answer is no.
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