Cash at Fidelity

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Da5id
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Cash at Fidelity

Post by Da5id »

I've recently moved my accounts to Fidelity and was pondering what to do with my cash holdings. I usually have roughly a years expenses in money market accounts. The two default Fidelity core money markets accounts, FZFXX and SPAXX, are OK, with a current yield of 4.98%. But I do find the expense ratio of 0.42% a bit on the high side even if the absolute dollar amount involved won't change my life. For comparison VMFXX at Vanguard is 0.12% ER and 5.28% yield.

Where do people park ~cash at Fidelity? Any thoughts on choices other than those two?

[edit oops fixed VMFXX yield]
Last edited by Da5id on Mon Oct 16, 2023 12:09 pm, edited 1 time in total.
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Squirrel208
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Re: Cash at Fidelity

Post by Squirrel208 »

The yield is reported after expenses, not before.
metalworking
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Re: Cash at Fidelity

Post by metalworking »

VMFXX yield is 5.28. I buy treasuries and SPRXX.
jaMichael
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Re: Cash at Fidelity

Post by jaMichael »

My approach:
Smaller sums: held in FDLXX.
Larger sums: held in Treasury Bills (set to auto roll) or transferred to Vanguard for better money market fund rates.
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Da5id
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Re: Cash at Fidelity

Post by Da5id »

metalworking wrote: Mon Oct 16, 2023 11:48 am VMFXX yield is 5.28. I buy treasuries and SPRXX.
Thanks, and oops fixed yield.
cspitzer
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Re: Cash at Fidelity

Post by cspitzer »

jaMichael wrote: Mon Oct 16, 2023 11:53 am My approach:
Smaller sums: held in FDLXX.
Larger sums: held in Treasury Bills (set to auto roll) or transferred to Vanguard for better money market fund rates.
My approach is fairly similar. I hold amounts for which I need immediate liquidity (e.g., bill paying, check writing, ATM, etc.) in FZCXX (Fidelity Government Money Market Fund Premium Class) inside my cash management account. I keep the vast majority our cash holdings in SGOV (SGOV ETF - 0-3 Month Treasury Bond ETF), which as a .07% expense ratio and 5.31% 30 day SEC yield, in our Fidelity brokerage accounts.
nalor511
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Re: Cash at Fidelity

Post by nalor511 »

I keep the next 1mo expenses in MMF, the next 1mo of expenses in a tbill expiring in a month, and so on up to a year. Just buy tbill of the appropriate amount that matures on the appropriate date for you, monthly. If I need funds sooner, I'll sell some (I've done it before, takes 30 seconds)
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LilyFleur
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Re: Cash at Fidelity

Post by LilyFleur »

FZDXX at Fidelity. 5.17%.
$100,000 minimum
zie
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Re: Cash at Fidelity

Post by zie »

When I was trying to optimize and maximize, I would go look up the MMF's @ Fidelity, compare with the other Fixed Income options and buy the highest yield. Now I have embraced laziness and don't bother, my cash holdings are a rounding error on my portfolio, so even if they returned 100% for years, it wouldn't move the needle much.

That said, others have pretty much covered the options:

* Let convenience be your friend and don't worry about it(my approach now)
* Optimize by buying the highest yield MMF Fidelity offers at the time.
* Move into the cash-wanna be ETF's, like ICSH, SGOV, USFR, etc.
* Roll your own fund with rolling t-bill ladder of some reasonable duration(probably short for cash like stuff).
* Go shopping across all the various fixed income options for yield(CD's, MMF's, HYSA's, etc).

Or of course a combination of the above approaches, like say a month or three in the default/core position(say SPAXX) and then the rest in various higher earning yields depending on your level of risk tolerance.

I'll just add, let's say you find a .5% yield difference, for every $10k invested, that's only $50/yr, so it's not like you are going to win the lottery here by maximizing your return a lot, so you have to ask yourself, how much hassle is it worth?

There is no right answer, but there is an answer that works for you, the trick is figuring out what that is. Good luck!
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mamster
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Re: Cash at Fidelity

Post by mamster »

I try to keep two things in mind when making this kind of decision:

1. Someone is always making more interest than me. I'm never going to be number one.
2. When thinking about a delta in interest, compare it to the zero rate.

In other words: Let's saying I'm comparing the SEC yield of SPAXX (4.98%) with SGOV (5.31%). SGOV's yield is 33bp higher.

Now imagine we're in a low rate environment or I have a 0% checking account. My bank says, "How would you like to open a savings account with us that yields 0.33%, but has a bit of interest rate risk?"

Well, it's the same question. For me, it's not worth the trouble. For you, it may be, and that's fine—I think framing it this way gets you away from the feeling of "5.31% is a high number!" It feels like it is, but it's only a high number compared to zero, which is not the right comparison.
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Da5id
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Re: Cash at Fidelity

Post by Da5id »

mamster wrote: Mon Oct 16, 2023 1:13 pm I try to keep two things in mind when making this kind of decision:

1. Someone is always making more interest than me. I'm never going to be number one.
2. When thinking about a delta in interest, compare it to the zero rate.

In other words: Let's saying I'm comparing the SEC yield of SPAXX (4.98%) with SGOV (5.31%). SGOV's yield is 33bp higher.

Now imagine we're in a low rate environment or I have a 0% checking account. My bank says, "How would you like to open a savings account with us that yields 0.33%, but has a bit of interest rate risk?"

Well, it's the same question. For me, it's not worth the trouble. For you, it may be, and that's fine—I think framing it this way gets you away from the feeling of "5.31% is a high number!" It feels like it is, but it's only a high number compared to zero, which is not the right comparison.
I did say in the OP that it was not actually a material difference to me.

I do frame it a bit differently, in that the 0.33% may be a much bigger part of the real yield (after taxes and inflation). But considering it as an absolute value is also OK.
Chuckles960
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Re: Cash at Fidelity

Post by Chuckles960 »

mamster wrote: Mon Oct 16, 2023 1:13 pm I try to keep two things in mind when making this kind of decision:

1. Someone is always making more interest than me. I'm never going to be number one.
2. When thinking about a delta in interest, compare it to the zero rate.

In other words: Let's saying I'm comparing the SEC yield of SPAXX (4.98%) with SGOV (5.31%). SGOV's yield is 33bp higher.

Now imagine we're in a low rate environment or I have a 0% checking account. My bank says, "How would you like to open a savings account with us that yields 0.33%, but has a bit of interest rate risk?"

Well, it's the same question. For me, it's not worth the trouble...
I am not sure of the relevance of this. The OP was comparing apples to apples, VMFXX is paying 0.3% more. The OP was not comparing a money market fund to a bond fund.

Yes, the amounts involved are small, and keeping money at multiple brokerages is a hassle if you are not doing it anyway for some other reason. But if wholly at Fidelity, putting it in FZDXX as mentioned above (if minimum can be met) is no hassle.
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Da5id
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Re: Cash at Fidelity

Post by Da5id »

cspitzer wrote: Mon Oct 16, 2023 12:15 pm
jaMichael wrote: Mon Oct 16, 2023 11:53 am My approach:
Smaller sums: held in FDLXX.
Larger sums: held in Treasury Bills (set to auto roll) or transferred to Vanguard for better money market fund rates.
My approach is fairly similar. I hold amounts for which I need immediate liquidity (e.g., bill paying, check writing, ATM, etc.) in FZCXX (Fidelity Government Money Market Fund Premium Class) inside my cash management account. I keep the vast majority our cash holdings in SGOV (SGOV ETF - 0-3 Month Treasury Bond ETF), which as a .07% expense ratio and 5.31% 30 day SEC yield, in our Fidelity brokerage accounts.
SGOV is interesting, though they do have temporary expense waiver that makes me think of their costs as (longer term) as slightly higher than the stated cost.

Peoples points that "it doesn't matter" are perfectly reasonable and I may go that way. Simplicity is worth something.
Last edited by Da5id on Mon Oct 16, 2023 3:16 pm, edited 1 time in total.
protagonist
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Re: Cash at Fidelity

Post by protagonist »

mamster wrote: Mon Oct 16, 2023 1:13 pm I try to keep two things in mind when making this kind of decision:

1. Someone is always making more interest than me. I'm never going to be number one.
2. When thinking about a delta in interest, compare it to the zero rate.

In other words: Let's saying I'm comparing the SEC yield of SPAXX (4.98%) with SGOV (5.31%). SGOV's yield is 33bp higher.

Now imagine we're in a low rate environment or I have a 0% checking account. My bank says, "How would you like to open a savings account with us that yields 0.33%, but has a bit of interest rate risk?"

Well, it's the same question. For me, it's not worth the trouble. For you, it may be, and that's fine—I think framing it this way gets you away from the feeling of "5.31% is a high number!" It feels like it is, but it's only a high number compared to zero, which is not the right comparison.
Agreed. For a $10K investment that is a $33/year difference between the lowest and highest. All else being equal between them, I would choose the higher of the two, but when the difference is that small I would consider other factors (taxes, convenience, risk). In the long term, unless investing a significant chunk of your portfolio for a long period of time it probably isn't going to have any notable impact on your bottom line, and those rates constantly change anyway. I use FZDXX.
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dogagility
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Re: Cash at Fidelity

Post by dogagility »

SPRXX if the amount is less than 100K. FZDXX if over 100K.
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cspitzer
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Re: Cash at Fidelity

Post by cspitzer »

Da5id wrote: Mon Oct 16, 2023 2:15 pm
cspitzer wrote: Mon Oct 16, 2023 12:15 pm
jaMichael wrote: Mon Oct 16, 2023 11:53 am My approach:
Smaller sums: held in FDLXX.
Larger sums: held in Treasury Bills (set to auto roll) or transferred to Vanguard for better money market fund rates.
My approach is fairly similar. I hold amounts for which I need immediate liquidity (e.g., bill paying, check writing, ATM, etc.) in FZCXX (Fidelity Government Money Market Fund Premium Class) inside my cash management account. I keep the vast majority our cash holdings in SGOV (SGOV ETF - 0-3 Month Treasury Bond ETF), which as a .07% expense ratio and 5.31% 30 day SEC yield, in our Fidelity brokerage accounts.
SGOV is interesting, though they do have temporary expense waiver that makes me think of their costs as (longer term) as higher.

Peoples points that "it doesn't matter" are perfectly reasonable and I may go that way. Simplicity is worth something.
The temporary expense ratio waiver for SGOV is .06%. The normal expense ratio is .13%, which is pretty close to what Vanguard charges to manage its taxable money market funds, and is way lower than the .42% charged by Fidelity for FZFXX, SPAXX, or FDLXX. There is also competition from other similar ETFS, namely SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) at .1354% and Global X 1-3 Month T-Bill ETF (CLIP) at .07%, that will hopefully help keep the expense ratio for SGOV low.

I definitely understand the sentiment to keep things as simple as possible and avoid the additional complications of using an ETF rather than a money market fund for cash savings at Fidelity, including the additional 2 business day settlement at the present time. I was using a single Fidelity money market fund (either FZCXX or FZDXX) for all of our cash holdings after moving from Vanguard to Fidelity earlier this year for that exact reason. I have gotten more comfortable using ETFs since that time. In addition, the difference in the after-tax yields between SGOV versus the best Fidelity money market fund alternative for us is meaningful enough to use SGOV for most of our cash savings based on the amount of cash we presently have saved. If we had a lot smaller amount saved in cash, I would probably simplify matters and go back to using a single Fidelity money market fund.
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Kevin M
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Re: Cash at Fidelity

Post by Kevin M »

I keep enough in FZDXX to feel comfortable about being able to handle same-day unexpected expenses--at least when the market is open. I can do a same-day wire from Fido to a bank (including Schwab bank if I need it at Schwab, since everything except cash management money is there now) or move it to a family member's account who can then wire it to their bank. Although you need $100K to open it initially, you don't need to keep $100K in it, and I don't.

I put anything above that in short-term Treasuries. I actually have Treasuries maturing every month, so extra cash is more likely to go into the long end of the ladder.

I used to keep cash in either VUSXX or VMFXX at Vanguard, but I can't do same day wires from there, so I might as well just keep whatever I'm OK with for T+1 needs in individual Treasuries.
If I make a calculation error, #Cruncher probably will let me know.
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Kevin M
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Re: Cash at Fidelity

Post by Kevin M »

Curious why someone would use SGOV rather than just use individual Treasuries on auto roll at Fido for cash not expected to be used in the next month or so. Personally I use a ladder with monthly rungs instead of auto roll, since it only takes a couple of minutes to roll a maturing Treasury into a new rung in the ladder.

For someone without enough tax-advantaged space, one might consider using TIPS for some of the rungs, like Jan, Apr, Jul and Oct. I do this for some family accounts I manage. Currently there are four TIPS maturities that mature in less than one year, with the 10/15/2024 being the longest maturity of the four.
If I make a calculation error, #Cruncher probably will let me know.
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Re: Cash at Fidelity

Post by ChrisC »

dogagility wrote: Mon Oct 16, 2023 3:28 pm SPRXX if the amount is less than 100K. FZDXX if over 100K.
FMPXX if over 1M; 7 day yield is 5.3%.
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Re: Cash at Fidelity

Post by Chv396 »

We use FSPXX in our taxable accounts at Fidelity.
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CuriousGeorgeTx
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Re: Cash at Fidelity

Post by CuriousGeorgeTx »

Kevin M wrote: Mon Oct 16, 2023 3:57 pm Curious why someone would use SGOV rather than just use individual Treasuries on auto roll at Fido for cash not expected to be used in the next month or so.
Liquidity for funds you probably won’t need but don’t’ want to tie up.
Lastrun
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Re: Cash at Fidelity

Post by Lastrun »

This assumes the date is after June 15:

1. Lazy investor-use SPAXX as it is the core fund, available for auto-liquidation, hands off no worries.

2. State tax worried, but still lazy-use FDLXX, it will also auto-liquidate but is a non-core fund so it needs to be purchased

3. Yield maximizer- use FZDXX, also non-core and will not auto-liquidate, need $100K to start, and last time I checked is not a government fund so is subject to gate and fees risk.

4. State tax worried optimizer but for some reason afraid for buying T-bills. Use SGOV

5. State tax worried, optimizer, true aficionado. Roll T-bills.
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Re: Cash at Fidelity

Post by VictorStarr »

Lastrun wrote: Sat Jun 08, 2024 6:22 pm
3. Yield maximizer- use FZDXX, also non-core and will not auto-liquidate, need $100K to start, and last time I checked is not a government fund so is subject to gate and fees risk.
If worried about gate and fees risk, use FZCXX, need $100K to start. Unfortunately there is no Treasury Only MMF (with $100K minimum). Ironically, one can buy FSIXX without purchase limits at Merrill Edge.
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Re: Cash at Fidelity

Post by johnegonpdx »

FZDXX + a short term treasury ladder (monthly rungs now extending out 22 months).
I'm basically following the yield curve.
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Kevin M
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Re: Cash at Fidelity

Post by Kevin M »

CuriousGeorgeTx wrote: Sat Jun 08, 2024 6:01 pm
Kevin M wrote: Mon Oct 16, 2023 3:57 pm Curious why someone would use SGOV rather than just use individual Treasuries on auto roll at Fido for cash not expected to be used in the next month or so.
Liquidity for funds you probably won’t need but don’t’ want to tie up.
Nothing is tied up in Treasuries, whether on auto roll or not. You can sell them anytime at a very low cost. You can stay very short term, and in the current inverted yield curve environment, earn a higher yield than on longer term Treasuries. With very short term, the downside is limited, so even with a yield increase, you won't lose much relative to a MM fund, and probably the same or less as SGOV.

Image
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muffins14
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Re: Cash at Fidelity

Post by muffins14 »

Use the money market optimizer for your tax brackets.

At fidelity I use about half Tbills in a ladder of 3 month bills and half in FSNXX, because I’m in New York.

I get about 3.3% after-tax yield
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CuriousGeorgeTx
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Re: Cash at Fidelity

Post by CuriousGeorgeTx »

Kevin M wrote: Sat Jun 08, 2024 7:27 pm Nothing is tied up in Treasuries, whether on auto roll or not. You can sell them anytime at a very low cost.
Good point. I started with short term treasuries with Treasury Direct and they are not as liquid there. But it makes sense that in a Fidelity account one could sell such a highly liquid instrument at low cost at any time. And I used SGOV in my Schwab IRA because of their silly auto roll on treasuries that has you out of the market for a week in between.
bople
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Re: Cash at Fidelity

Post by bople »

Lastrun wrote: Sat Jun 08, 2024 6:22 pm 3. Yield maximizer- use FZDXX, also non-core and will not auto-liquidate, need $100K to start, and last time I checked is not a government fund so is subject to gate and fees risk.
Why do you think it will not auto-liquidate? Here is an official Fidelity response on reddit on this topic very topic: https://www.reddit.com/r/fidelityinvest ... _to_fdlxx/

Code: Select all

Auto-liquidating non-core money market requirements are:
• Fidelity Investments Money Market (FIMM), non-FIMM government, retail prime, and retail municipal funds
• Maintains a stable net asset value
• A liquidity fee has not been imposed
Have you tried it and it didn't?
rbd789
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Re: Cash at Fidelity

Post by rbd789 »

bople wrote: Sun Jun 09, 2024 1:21 pm
Lastrun wrote: Sat Jun 08, 2024 6:22 pm 3. Yield maximizer- use FZDXX, also non-core and will not auto-liquidate, need $100K to start, and last time I checked is not a government fund so is subject to gate and fees risk.
Why do you think it will not auto-liquidate? Here is an official Fidelity response on reddit on this topic very topic: https://www.reddit.com/r/fidelityinvest ... _to_fdlxx/

Code: Select all

Auto-liquidating non-core money market requirements are:
• Fidelity Investments Money Market (FIMM), non-FIMM government, retail prime, and retail municipal funds
• Maintains a stable net asset value
• A liquidity fee has not been imposed
Have you tried it and it didn't?
I am not Lastrun, but I can say from experience that FZDXX absolutely does auto liquidate in either a brokerage or CMA account.
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Kevin M
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Re: Cash at Fidelity

Post by Kevin M »

CuriousGeorgeTx wrote: Sun Jun 09, 2024 1:03 pm
Kevin M wrote: Sat Jun 08, 2024 7:27 pm Nothing is tied up in Treasuries, whether on auto roll or not. You can sell them anytime at a very low cost.
Good point. I started with short term treasuries with Treasury Direct and they are not as liquid there. But it makes sense that in a Fidelity account one could sell such a highly liquid instrument at low cost at any time. And I used SGOV in my Schwab IRA because of their silly auto roll on treasuries that has you out of the market for a week in between.
Right, I'd never buy marketable Treasuries at TD, and they're easy and cheap to trade at the big three. Schwab is the best for non-institutional investors, because they have the best small-quantity pricing. Schwab also is better than Fidelity because they count Ts maturing on T+1 toward available balance for T purchases on T; i.e., you can use the proceeds of a Ts maturing Tuesday to by Ts maturing the day before, which is what I usually do. I buy all on secondary.

I don't use auto roll at Scwhab for exactly the reason you state, but if I wanted to simulate it, I could place the required trades in about 5 minutes the day before the maturing Ts matured. Since I usually target specific maturities depending on the yield curve, it takes me a few more minutes to figure out which ones to buy.

For example, I had some bills mature last week in my Roth, and I wanted to use the proceeds to buy bills with the highest yield, which happened to be the 9/5/2024 at 3.40%, so I bought those. In other cases I might buy the longest maturity for which I can get 5.0%.
If I make a calculation error, #Cruncher probably will let me know.
Lastrun
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Re: Cash at Fidelity

Post by Lastrun »

rbd789 wrote: Sun Jun 09, 2024 1:42 pm
bople wrote: Sun Jun 09, 2024 1:21 pm
Lastrun wrote: Sat Jun 08, 2024 6:22 pm 3. Yield maximizer- use FZDXX, also non-core and will not auto-liquidate, need $100K to start, and last time I checked is not a government fund so is subject to gate and fees risk.
Why do you think it will not auto-liquidate? Here is an official Fidelity response on reddit on this topic very topic: https://www.reddit.com/r/fidelityinvest ... _to_fdlxx/

Code: Select all

Auto-liquidating non-core money market requirements are:
• Fidelity Investments Money Market (FIMM), non-FIMM government, retail prime, and retail municipal funds
• Maintains a stable net asset value
• A liquidity fee has not been imposed
Have you tried it and it didn't?
I am not Lastrun, but I can say from experience that FZDXX absolutely does auto liquidate in either a brokerage or CMA account.
Could I change my post to “may” not auto-liquidate. :twisted: :oops: Sorry I had it in my personal notes wrong. But it will not liquidate if there is a gate or a fee (incredibly rare but possible).
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Re: Cash at Fidelity

Post by zero_coupon »

Kevin M wrote: Sun Jun 09, 2024 1:53 pm Schwab also is better than Fidelity because they count Ts maturing on T+1 toward available balance for T purchases on T; i.e., you can use the proceeds of a Ts maturing Tuesday to by Ts maturing the day before...
Maturing the day before? Don't you have to match the maturity date of the old Treasury with the settlement date of the new one?
VictorStarr wrote: Sat Jun 08, 2024 6:56 pm If worried about gate and fees risk, use FZCXX, need $100K to start. Unfortunately there is no Treasury Only MMF (with $100K minimum).
Are there any $100K minimum funds besides FZCXX (gov't), FZDXX (prime), and FZEXX (tax-exempt)?
bople
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Re: Cash at Fidelity

Post by bople »

zero_coupon wrote: Sun Jun 09, 2024 3:12 pm
VictorStarr wrote: Sat Jun 08, 2024 6:56 pm If worried about gate and fees risk, use FZCXX, need $100K to start. Unfortunately there is no Treasury Only MMF (with $100K minimum).
Are there any $100K minimum funds besides FZCXX (gov't), FZDXX (prime), and FZEXX (tax-exempt)?
No, FZCXX and FZDXX are the only two $100K minimum MMFs. FZEXX is $25,000 minimum and there are a bunch of others at that tier.

This is a list of all Fidelity MMFs and you can set the filters on the left for what you are interested in: https://institutional.fidelity.com/app/ ... ersisted=F
Ferdinand2014
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Re: Cash at Fidelity

Post by Ferdinand2014 »

Kevin M wrote: Mon Oct 16, 2023 3:57 pm Curious why someone would use SGOV rather than just use individual Treasuries on auto roll at Fido for cash not expected to be used in the next month or so. Personally I use a ladder with monthly rungs instead of auto roll, since it only takes a couple of minutes to roll a maturing Treasury into a new rung in the ladder.

For someone without enough tax-advantaged space, one might consider using TIPS for some of the rungs, like Jan, Apr, Jul and Oct. I do this for some family accounts I manage. Currently there are four TIPS maturities that mature in less than one year, with the 10/15/2024 being the longest maturity of the four.
The interest earned doesn't auto roll, correct? That means the cash you accumulate needs to be used to buy additional Treasuries thereby creating an additional step and cash not earning the higher yield until it can be completed likely the next week? Additionally minimum lots divisible by 1,000 also creates left over cash not earning the yield for a time.
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bongo
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Re: Cash at Fidelity

Post by bongo »

Kevin M wrote: Mon Oct 16, 2023 3:57 pm Curious why someone would use SGOV rather than just use individual Treasuries on auto roll at Fido for cash not expected to be used in the next month or so. Personally I use a ladder with monthly rungs instead of auto roll, since it only takes a couple of minutes to roll a maturing Treasury into a new rung in the ladder.
I bought some SGOV and USFR last year and just recently checked how they did. After about 300 days since purchase with divs reinvested, the annualized yield was 5.435% and 5.451% which was very competitive with buying individual treasuries with much less work (even better, in fact, than some of the tbills I did buy - I somehow had bad timing or chose suboptimal maturities)
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Kevin M
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Re: Cash at Fidelity

Post by Kevin M »

zero_coupon wrote: Sun Jun 09, 2024 3:12 pm
Kevin M wrote: Sun Jun 09, 2024 1:53 pm Schwab also is better than Fidelity because they count Ts maturing on T+1 toward available balance for T purchases on T; i.e., you can use the proceeds of a Ts maturing Tuesday to by Ts maturing the day before...
Maturing the day before? Don't you have to match the maturity date of the old Treasury with the settlement date of the new one?
I didn't word that well. I place the buy order on T, using proceeds of Ts that mature on T+1, so everything settles on T+1.

At Fido I had to call to do this, and I don't want to call every time I do a trade.

I think Vanguard operates like Schwab in this respect, at least that's what I recall from when I still had or was managing assets there.
If I make a calculation error, #Cruncher probably will let me know.
RetiredAL
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Re: Cash at Fidelity

Post by RetiredAL »

Lastrun wrote: Sun Jun 09, 2024 2:45 pm
rbd789 wrote: Sun Jun 09, 2024 1:42 pm
bople wrote: Sun Jun 09, 2024 1:21 pm
Lastrun wrote: Sat Jun 08, 2024 6:22 pm 3. Yield maximizer- use FZDXX, also non-core and will not auto-liquidate, need $100K to start, and last time I checked is not a government fund so is subject to gate and fees risk.
Why do you think it will not auto-liquidate? Here is an official Fidelity response on reddit on this topic very topic: https://www.reddit.com/r/fidelityinvest ... _to_fdlxx/

Code: Select all

Auto-liquidating non-core money market requirements are:
• Fidelity Investments Money Market (FIMM), non-FIMM government, retail prime, and retail municipal funds
• Maintains a stable net asset value
• A liquidity fee has not been imposed
Have you tried it and it didn't?
I am not Lastrun, but I can say from experience that FZDXX absolutely does auto liquidate in either a brokerage or CMA account.
Could I change my post to “may” not auto-liquidate. :twisted: :oops: Sorry I had it in my personal notes wrong. But it will not liquidate if there is a gate or a fee (incredibly rare but possible).
This is a possibility with any Mutual Fund, not just Money Market Funds.
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Kevin M
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Re: Cash at Fidelity

Post by Kevin M »

Ferdinand2014 wrote: Sun Jun 09, 2024 5:15 pm
Kevin M wrote: Mon Oct 16, 2023 3:57 pm Curious why someone would use SGOV rather than just use individual Treasuries on auto roll at Fido for cash not expected to be used in the next month or so. Personally I use a ladder with monthly rungs instead of auto roll, since it only takes a couple of minutes to roll a maturing Treasury into a new rung in the ladder.

For someone without enough tax-advantaged space, one might consider using TIPS for some of the rungs, like Jan, Apr, Jul and Oct. I do this for some family accounts I manage. Currently there are four TIPS maturities that mature in less than one year, with the 10/15/2024 being the longest maturity of the four.
The interest earned doesn't auto roll, correct? That means the cash you accumulate needs to be used to buy additional Treasuries thereby creating an additional step and cash not earning the higher yield until it can be completed likely the next week? Additionally minimum lots divisible by 1,000 also creates left over cash not earning the yield for a time.
Good points, but this is not much of an issue, since MM funds pay only a little less than short-term Ts. At Schwab, in taxable I use SNSXX (Treasury MM) currently at 5.03%, and in IRAs I use SWVXX at 5.16%.

Whenever I buy an sort of Treasury (nominal or TIPS), I buy as many as I can with proceeds from the disposition (matured or sold) plus cash available in the MM fund, or I deposit extra cash in the MM fund. So the MM fund never has much more than $1K in it--less for bills, but possibly more for TIPS. Currently I have about $660 in SWVXX in my IRA, and $540 in SNSXX in taxable at Schwab.

The other thing that can be done with the interest that is to allocate it toward spending needs. I have much more in FDLXX (Fido Treasury only fund) at Fido because I use Fido for cash management (Fido is superior to Schwab for cash management). I sacrifice some yield for same-day liquidity; i.e., I can wire to Ally and Zelle someone same-day, where with Ts I'd need to wait for next trading day.
If I make a calculation error, #Cruncher probably will let me know.
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Kevin M
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Re: Cash at Fidelity

Post by Kevin M »

bongo wrote: Sun Jun 09, 2024 6:27 pm
Kevin M wrote: Mon Oct 16, 2023 3:57 pm Curious why someone would use SGOV rather than just use individual Treasuries on auto roll at Fido for cash not expected to be used in the next month or so. Personally I use a ladder with monthly rungs instead of auto roll, since it only takes a couple of minutes to roll a maturing Treasury into a new rung in the ladder.
I bought some SGOV and USFR last year and just recently checked how they did. After about 300 days since purchase with divs reinvested, the annualized yield was 5.435% and 5.451% which was very competitive with buying individual treasuries with much less work (even better, in fact, than some of the tbills I did buy - I somehow had bad timing or chose suboptimal maturities)
Thanks for sharing.

It would be interesting too look at the internal rate of return where these are used the way I use my rolling ladders: whenever an issue matures, I move whatever cash I want to allocate to spending to my cash management MM fund, then reinvest the rest. This doesn't take much more time than it would to place an order to sell shares of the ETF.
If I make a calculation error, #Cruncher probably will let me know.
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Re: Cash at Fidelity

Post by techbud »

Kevin M wrote: Mon Jun 10, 2024 8:13 am
zero_coupon wrote: Sun Jun 09, 2024 3:12 pm
Kevin M wrote: Sun Jun 09, 2024 1:53 pm Schwab also is better than Fidelity because they count Ts maturing on T+1 toward available balance for T purchases on T; i.e., you can use the proceeds of a Ts maturing Tuesday to by Ts maturing the day before...
Maturing the day before? Don't you have to match the maturity date of the old Treasury with the settlement date of the new one?
I didn't word that well. I place the buy order on T, using proceeds of Ts that mature on T+1, so everything settles on T+1.

At Fido I had to call to do this, and I don't want to call every time I do a trade.

I think Vanguard operates like Schwab in this respect, at least that's what I recall from when I still had or was managing assets there.
I believe you can overcome this limitation if you have margin enabled on your Fidelity account. It will book the buy order against your margin, but you won’t be charged any margin interest since everything settles T+1.
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Kevin M
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Re: Cash at Fidelity

Post by Kevin M »

techbud wrote: Mon Jun 10, 2024 8:38 am
Kevin M wrote: Mon Jun 10, 2024 8:13 am
zero_coupon wrote: Sun Jun 09, 2024 3:12 pm
Kevin M wrote: Sun Jun 09, 2024 1:53 pm Schwab also is better than Fidelity because they count Ts maturing on T+1 toward available balance for T purchases on T; i.e., you can use the proceeds of a Ts maturing Tuesday to by Ts maturing the day before...
Maturing the day before? Don't you have to match the maturity date of the old Treasury with the settlement date of the new one?
I didn't word that well. I place the buy order on T, using proceeds of Ts that mature on T+1, so everything settles on T+1.

At Fido I had to call to do this, and I don't want to call every time I do a trade.

I think Vanguard operates like Schwab in this respect, at least that's what I recall from when I still had or was managing assets there.
I believe you can overcome this limitation if you have margin enabled on your Fidelity account. It will book the buy order against your margin, but you won’t be charged any margin interest since everything settles T+1.
Correct, and I've taken advantage of this. However, typically one doesn't have margin on IRAs, and most family accounts I manage don't have margin.

Also, margin accounts can be a two-edged sword. Schwab once charged my margin interest when I don't think they should have. Even though the first level support rep couldn't provide me with the exact date and balances that the margin interest was based on, he insisted that it must be right because that's what their system calculated. I asked to speak to a supervisor, and he agreed to reverse the margin interest without us having to wade through all the details.
If I make a calculation error, #Cruncher probably will let me know.
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Re: Cash at Fidelity

Post by techbud »

Kevin M wrote: Mon Jun 10, 2024 8:46 am Correct, and I've taken advantage of this. However, typically one doesn't have margin on IRAs, and most family accounts I manage don't have margin.
Good points and I don't disagree. Not to belabor the point, but I think limited margin in an IRA account would also solve this.
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Re: Cash at Fidelity

Post by Kevin M »

techbud wrote: Mon Jun 10, 2024 9:21 am
Kevin M wrote: Mon Jun 10, 2024 8:46 am Correct, and I've taken advantage of this. However, typically one doesn't have margin on IRAs, and most family accounts I manage don't have margin.
Good points and I don't disagree. Not to belabor the point, but I think limited margin in an IRA account would also solve this.
Sure. I got limited margin in my Fido IRA at one point so I could buy box spreads, on which I was getting 30-40 bps over Treasuries of same maturities at the time.
If I make a calculation error, #Cruncher probably will let me know.
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Re: Cash at Fidelity

Post by jeffyscott »

techbud wrote: Mon Jun 10, 2024 9:21 am
Kevin M wrote: Mon Jun 10, 2024 8:46 am Correct, and I've taken advantage of this. However, typically one doesn't have margin on IRAs, and most family accounts I manage don't have margin.
Good points and I don't disagree. Not to belabor the point, but I think limited margin in an IRA account would also solve this.
I'm not sure if that would do it? The link says that "Limited margin means you can use unsettled cash proceeds in your IRA to trade stocks and options actively without worrying about cash account trading restrictions or potential good faith violations".

Is a treasury that matures tomorrow going to count as "unsettled cash" today, enabling one to buy a secondary treasury with no other cash in the account?

But another solution would be to have a money market balance, right? If I had a $10,000 T-bill maturing tomorrow and $10,000 in, say, SPAXX, then a secondary treasury can be bought for $10,000 or less. The trade will settle tomorrow with the maturing T-bill covering the trade, SPAXX will not be liquidated.
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Re: Cash at Fidelity

Post by anon_investor »

jeffyscott wrote: Mon Jun 10, 2024 10:10 am
techbud wrote: Mon Jun 10, 2024 9:21 am
Kevin M wrote: Mon Jun 10, 2024 8:46 am Correct, and I've taken advantage of this. However, typically one doesn't have margin on IRAs, and most family accounts I manage don't have margin.
Good points and I don't disagree. Not to belabor the point, but I think limited margin in an IRA account would also solve this.
I'm not sure if that would do it? The link says that "Limited margin means you can use unsettled cash proceeds in your IRA to trade stocks and options actively without worrying about cash account trading restrictions or potential good faith violations".

Is a treasury that matures tomorrow going to count as "unsettled cash" today, enabling one to buy a secondary treasury with no other cash in the account?

But another solution would be to have a money market balance, right? If I had a $10,000 T-bill maturing tomorrow and $10,000 in, say, SPAXX, then a secondary treasury can be bought for $10,000 or less. The trade will settle tomorrow with the maturing T-bill covering the trade, SPAXX will not be liquidated.
The amount of interest lost being in FDLXX (or another Fidelity money market fund) for a week instead of in a t-bill is not going to end up being that much. One really nice thing about tbills is the interest is 100% exempt from state/local income taxes. FDLXX the Fidelity Treasury Only Money Market fund was between 90%-95% exempt from state/local income taxes last year. VUSXX was only around 80% exempt last year.

Personally, I use a Fidelity Cash Management account and hold a bunch of cash in FDLXX and use it like a checking account. For larger amounts of cash at Fidelity, I have it in a separate brokerage account and autoroll t-bills of various durations (anywhere from 4 weeks to 26 weeks).
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Re: Cash at Fidelity

Post by jeffyscott »

anon_investor wrote: Mon Jun 10, 2024 1:06 pm The amount of interest lost being in FDLXX (or another Fidelity money market fund) for a week instead of in a t-bill is not going to end up being that much.
Good point. And it'd actually only be a day (or maybe a few, if it's over a weekend) in the situation where one has a Treasury maturing tomorrow and has to wait until tomorrow to submit an order on the secondary market at Fidelity, rather than being able submit today with settlement tomorrow.
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Re: Cash at Fidelity

Post by welderwannabe »

anon_investor wrote: Mon Jun 10, 2024 1:06 pm FDLXX the Fidelity Treasury Only Money Market fund was between 90%-95% exempt from state/local income taxes last year.
Pre-covid it was close to 100%. I really wish the Treasury ONLY MM was truly only Treasurys, but alas the reverse repo market was just too attractive for the fund manager and they couldnt help themselves. Fidelity already has plenty of other blended government MM choices, wish they would keep this one pure.

Glad they didn't go as far into it as VUSXX.

Would love them to offer a premium class FDLXX with $100K buy-in, instead of just the institutional at $1M...little over my price range.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.
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Re: Cash at Fidelity

Post by jeffyscott »

welderwannabe wrote: Mon Jun 10, 2024 3:25 pm
anon_investor wrote: Mon Jun 10, 2024 1:06 pm FDLXX the Fidelity Treasury Only Money Market fund was between 90%-95% exempt from state/local income taxes last year.
Pre-covid it was close to 100%. I really wish the Treasury ONLY MM was truly only Treasurys, but alas the reverse repo market was just too attractive for the fund manager and they couldnt help themselves...
Wasn't Treasury MM funds moving into repos all about the threat that the debt ceiling might not be raised in time?

Schwab apparently did not go that route at all, for SNSXX 99.6% of income was US government obligations last year.
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Re: Cash at Fidelity

Post by protagonist »

LilyFleur wrote: Mon Oct 16, 2023 12:22 pm FZDXX at Fidelity. 5.17%.
$100,000 minimum

An important point:
You need $100K to GET INTO FZDXX.
Once in, it does not matter how much money you keep there.
I have had my FZDXX holdings down to a few thousand $....never had a problem...and I have been in FZDXX for many years. I have never held anywhere near $100K in FZDXX for very long, especially since TIPS became desirable in mid-2022.
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Re: Cash at Fidelity

Post by TimeRunner »

protagonist wrote: Mon Jun 10, 2024 5:01 pm I have had my FZDXX holdings down to a few thousand $....never had a problem...and I have been in FZDXX for many years. I have never held anywhere near $100K in FZDXX for very long, especially since TIPS became desirable in mid-2022.
My FZDXX in Roth is $15.90. Fidelity doesn't appear to care about mopping up these small amounts. Perhaps they figure you'll be using FZDXX again with more cash sometime in the future because you did it once already. Street Cred, heh.
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