Schwab sweep account. What fund?

[A440]

I'm new at Schwab, so please pardon my ignorance.
When dividends, capital gains and sales are distributed at Schwab and go to cash, where are they held? What type of fund?
At Vanguard it shows clearly the fund of the sweep account, but I can't figure this out at Schwab.
Thank you.

[cheesepep]

There is no sweep account at Schwab. You have to sweep it yourself. I choose SWVXX. This is the single biggest disadvantage of Schwab.

[Target2019]

Schwab does not have a money fund feature for the sweep account.

Periodically you'll need to buy SWVXX money fund, or one of the other choices. https://www.schwab.com/money-market-funds

[A440]

Bummer.

[radiowave]

I use the Schwab treasury fund SNSXX for cash holdings. But d/t reasons above, I don't use Schwab for cash management.

[PaunchyPirate]

Until YOU move the funds to some other investment (such as SWVXX, which is what I use), they sit in CASH. And that CASH holding earns a VERY small amount of interest. It is in your best interest to stay on top of that and quickly move the funds into an investment such as a money market fund. Earning money off your CASH is one of Schwab's ways to make money so they can offer lower cost things elsewhere for its customers.

[huskerblue]

Schwab cash holding pen pays 0.45%. Like another poster, I use the pure treasury money market and move my cash. This is our safe money and pure treasuries are the safest of the safe.

I do use this for cash management so I am moving cash fairly frequently as dividends post and whatnot. This works for me well. For someone who wants to be completely hands off and only look at their account once every six months or the like this is not ideal.

[increment]

Cash balances at brokerage accounts are held at Schwab Bank.

[Yesterdaysnews]

There is a small hack available at CS related to MMF.

If you are able to get together the $1M minimum, you can open a position in SNAXX and then freely drop the balance down to whatever you like above zero and they will not auto downgrade your MMF. SNAXX I believe gets you the highest interests rate available out there in a MMF for retail (non-institutional) investors.

[Rudedog]

As soon as my account at Schwab receives a dividend or interest, I move that amount from "cash" to SNSXX. I don't hold a lot of investments at Schwab, and in a year's time I generally accumulate enough in SNSXX to pay my property taxes.

[ruralavalon]

I'm new at Schwab, so please pardon my ignorance.
When dividends, capital gains and sales are distributed at Schwab and go to cash, where are they held? What type of fund?
At Vanguard it shows clearly the fund of the sweep account, but I can't figure this out at Schwab.
Thank you.

Schwab sweeps uninvested cash to the Schwab bank, which pays 0.45%.

You can elect to have fund distributions automatically reinvested in the fund doing the distributions. But you cannot have fund distributions automatically swept to a money market fund.

[beernutz]

Cash balances at brokerage accounts are held at Schwab Bank.

That's normally the case for my Schwab accounts but I have an unusual situation there. One of my brokerage accounts there used to be in the Managed Account program from 2005 to 2020 but is now under my complete control. The account was specially created to be managed by Schwab. Any cash in that account automatically gets invested in the SWGXX (SCHWAB GOVERNMENT MONEY) mutual fund.

The other brokerage account has only been managed by me and cash in it isn't automatically swept into a mutual fund but does earn the pitiful bank interest from Schwab Bank. I have to manually sweep it's cash into SWVXX which is pretty easily done and is only a problem when something matures when we're out of town and I'm away from my login token fob.

[Target2019]

Last week I transferred $$$ from sweep to linked checking. Then I wrote a check for RE taxes.

So a manual check every month or quarter is a good idea. I record totals of all accounts monthly, so this is not much extra effort.

[icarus18]

No sweep for cash balances held in brokerage (or for that matter in checking ala Fidelity) is by far my single biggest gripe about Schwab.

[increment]

One of my brokerage accounts there used to be in the Managed Account program from 2005 to 2020 but is now under my complete control. The account was specially created to be managed by Schwab. Any cash in that account automatically gets invested in the SWGXX (SCHWAB GOVERNMENT MONEY) mutual fund.

Note that SWGXX is used for sweeps and has somewhat higher expenses than their usual government MMF (SNVXX).

[123]

Fidelity is far more friendly to investors that have any cash in their account compared to Schwab. I used to be a strong advocate for Schwab and have had accounts there for over 25 years. But when they changed the default settlement account to an FDIC insured account (paying low interest) it became far more tedious to generate any significant interest. If you seldom trade and don't keep a significant cash balance in your account Schwab can be okay. I moved a large account from Schwab to Fidelity because I didn't like the way Schwab essentially skimmed interest from cash balances. We still have a couple of large accounts at Schwab but they are fully invested and don't have any trade activity, so they're okay for the time being. We would likely move those from Schwab to Fidelity when Fidelity again offers significant transfer bonuses.

[krafty81]

Agree with the frustration. I use SWVXX for cash balances but have to manually do it.

[Booogle]

There is a small hack available at CS related to MMF.

If you are able to get together the $1M minimum, you can open a position in SNAXX and then freely drop the balance down to whatever you like above zero and they will not auto downgrade your MMF. SNAXX I believe gets you the highest interests rate available out there in a MMF for retail (non-institutional) investors.

Are you sure about this?

[beernutz]

One of my brokerage accounts there used to be in the Managed Account program from 2005 to 2020 but is now under my complete control. The account was specially created to be managed by Schwab. Any cash in that account automatically gets invested in the SWGXX (SCHWAB GOVERNMENT MONEY) mutual fund.

Note that SWGXX is used for sweeps and has somewhat higher expenses than their usual government MMF (SNVXX).

SWGXX isn't used for sweeps in my brokerage account which was never managed. Only in the previously managed one.

[radiowave]

There is a small hack available at CS related to MMF.

If you are able to get together the $1M minimum, you can open a position in SNAXX and then freely drop the balance down to whatever you like above zero and they will not auto downgrade your MMF. SNAXX I believe gets you the highest interests rate available out there in a MMF for retail (non-institutional) investors.

Expected yields for 6 mo treasury bills is currently 5.415%. Just buy them, much safer than moving a bunch of funds around to basically get the same return.

[Yesterdaysnews]

There is a small hack available at CS related to MMF.

If you are able to get together the $1M minimum, you can open a position in SNAXX and then freely drop the balance down to whatever you like above zero and they will not auto downgrade your MMF. SNAXX I believe gets you the highest interests rate available out there in a MMF for retail (non-institutional) investors.

Are you sure about this?

Yes

[Monkeyseeanddo]

How liquid are funds like SNVXX and SWVXX if you have Schwab accounts? How quickly can you get funds in and out of them, and are they advisable for both traditional and Roth IRAs?

[toddthebod]

How liquid are funds like SNVXX and SWVXX if you have Schwab accounts? How quickly can you get funds in and out of them, and are they advisable for both traditional and Roth IRAs?

Overnight.

Most people do not invest in money market funds in their IRAs. If you want to consider it "bonds," it would be appropriate in your traditional IRA.

[Monkeyseeanddo]

How liquid are funds like SNVXX and SWVXX if you have Schwab accounts? How quickly can you get funds in and out of them, and are they advisable for both traditional and Roth IRAs?

Overnight.

Most people do not invest in money market funds in their IRAs. If you want to consider it "bonds," it would be appropriate in your traditional IRA.

I need to do something with cash sitting in a couple of Roth IRAs in Schwab (before I invest it), so I thought something like SNVXX would be good temporarily since it’s earning 5%. Is this thinking wrong?

[stupidkid]

There is a small hack available at CS related to MMF.

If you are able to get together the $1M minimum, you can open a position in SNAXX and then freely drop the balance down to whatever you like above zero and they will not auto downgrade your MMF. SNAXX I believe gets you the highest interests rate available out there in a MMF for retail (non-institutional) investors.

Are you sure about this?

Yes

And/or SUTXX if you live in a state with tax. I opened SNAXX and then SUTXX and have both with balances below $1M. I currently prefer SUTXX but have SNAXX should interest rates change.

[toddthebod]

How liquid are funds like SNVXX and SWVXX if you have Schwab accounts? How quickly can you get funds in and out of them, and are they advisable for both traditional and Roth IRAs?

Overnight.

Most people do not invest in money market funds in their IRAs. If you want to consider it "bonds," it would be appropriate in your traditional IRA.

I need to do something with cash sitting in a couple of Roth IRAs in Schwab (before I invest it), so I thought something like SNVXX would be good temporarily since it’s earning 5%. Is this thinking wrong?

Why are you waiting to invest it?

[Kagord]

I'll add, you need to be well versed in settlement timing when manually managing a "sweep". The money markets settle the next business day, stocks, 2 days...etc. For example, assume you start with a $0 cash balance, if you sell a stock, it will show as cash, and then you put it in a money market the same day, that doesn't work. Just something to be aware of. Having a margin account helps limit securities violations, if you mess up from time to time, a day's margin interest is better than racking up security violations, IMHO.