How to invest cash at Schwab?

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Topic Author
CFmartin
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How to invest cash at Schwab?

Post by CFmartin »

How to invest cash at Schwab?

In my Vanguard account the holding place for cash seems to be in a money marker fund which is getting around 5%

In my Schwab trading account, the cash holdings seems to be earning nothing and I have enough in there to matter.

Q: Does Schwab have a similar money market fund as VanGuard does where that cash is earning something?

The symbol of those fund someone might suggest would be helpful.

Another rookie question, MySchwab investments are not IRAa so they are taxable, if I move those funds to VG, or even if I were to sell off low performing things such as bond fund and move that to VG, is that a taxable event?
techbud
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Re: How to invest cash at Schwab?

Post by techbud »

CFmartin wrote: Mon Feb 05, 2024 11:25 am Q: Does Schwab have a similar money market fund as VanGuard does where that cash is earning something?
Take a look at SWVXX. Current 7 day yield is 5.22%. Note that this is not a sweep fund; you need to BUY shares to put money into it, and SELL shares to pull cash out. Note that selling takes 1 day. eg you sell on a Monday; you'll get the cash in your account on Tuesday.
increment
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Re: How to invest cash at Schwab?

Post by increment »

CFmartin wrote: Mon Feb 05, 2024 11:25 am Q: Does Schwab have a similar money market fund as Vanguard does where that cash is earning something?
Schwab has several money-market funds. Unlike at Vanguard, you have to buy and sell them manually.
Another rookie question, My Schwab investments are not IRAs so they are taxable, if I move those funds to VG, or even if I were to sell off low performing things such as bond fund and move that to VG, is that a taxable event?
If you sell something, that is a taxable event. (If the value of shares has gone down, the result probably lowers your current tax bill.)

For some investments, you can transfer them "in kind" to Vanguard (or elsewhere). Transferring in kind is not a taxable event. (Some items you can't hold at Vanguard. And for some items, Vanguard charges a fee to buy or sell or both.)
Vinny_in_NJ
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Re: How to invest cash at Schwab?

Post by Vinny_in_NJ »

Schwab's settlement fund is their bank. You have 2 options either their money market fund which you have to buy and sell or if you don't need it very liquid a 1,2 or 3 month T Bill. The MM you pay state taxes on the dividends and the T Bill you don't pay taxes on the interest.
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DaveTH
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Re: How to invest cash at Schwab?

Post by DaveTH »

Vinny_in_NJ wrote: Mon Feb 05, 2024 12:41 pm The MM you pay state taxes on the dividends and the T Bill you don't pay taxes on the interest.
Not all of the Schwab MM funds are taxable at the state level. If you purchase SNSXX (Schwab Treasury MM Fund), the distributions are mostly exempt from state income tax.
PaunchyPirate
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Re: How to invest cash at Schwab?

Post by PaunchyPirate »

I use SWVXX. And as mentioned, you need to buy/sell it manually from any cash proceeds put into or generated by your account -- a little less convenient than Vanguard's auto-sweep into the settlement fund. For me, it has just become part of my daily routine to monitor my cash balances and manually create buy transactions as needed to keep the cash balance at $0 (or very close to it).
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Cocoa Beach Bum
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Re: How to invest cash at Schwab?

Post by Cocoa Beach Bum »

Wouldn't a Schwab customer invest cash the same way people invest cash at any other brokerage? How else does one buy securities if not with cash?
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Vinny_in_NJ
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Re: How to invest cash at Schwab?

Post by Vinny_in_NJ »

Cocoa Beach Bum wrote: Mon Feb 05, 2024 1:23 pm Wouldn't a Schwab customer invest cash the same way people invest cash at any other brokerage? How else does one buy securities if not with cash?
If you keep the cash in the settlement account then it's just buy/sell but it earns very little money in interest. If you are looking to maximize the amount of money it is making while waiting for a time then you need to buy into a MM fund and sell it before you buy whatever. Everything starts and finishes from their bank settlement area.
Vinny_in_NJ
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Re: How to invest cash at Schwab?

Post by Vinny_in_NJ »

DaveTH wrote: Mon Feb 05, 2024 12:48 pm
Vinny_in_NJ wrote: Mon Feb 05, 2024 12:41 pm The MM you pay state taxes on the dividends and the T Bill you don't pay taxes on the interest.
Not all of the Schwab MM funds are taxable at the state level. If you purchase SNSXX (Schwab Treasury MM Fund), the distributions are mostly exempt from state income tax.
Wasn't sure if Schwab had a treasury fund, was being generic... good to know.
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jeffyscott
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Re: How to invest cash at Schwab?

Post by jeffyscott »

Vinny_in_NJ wrote: Mon Feb 05, 2024 12:41 pm Schwab's settlement fund is their bank. You have 2 options either their money market fund which you have to buy and sell or if you don't need it very liquid a 1,2 or 3 month T Bill.
A third option that some (not me) use would be the ETF SGOV.

T-bills are very liquid, it's just that the market value would fluctuate a bit. Same with SGOV, the price would fluctuate.
the_wiki
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Re: How to invest cash at Schwab?

Post by the_wiki »

jeffyscott wrote: Mon Feb 05, 2024 2:32 pm
Vinny_in_NJ wrote: Mon Feb 05, 2024 12:41 pm Schwab's settlement fund is their bank. You have 2 options either their money market fund which you have to buy and sell or if you don't need it very liquid a 1,2 or 3 month T Bill.
A third option that some (not me) use would be the ETF SGOV.

T-bills are very liquid, it's just that the market value would fluctuate a bit. Same with SGOV, the price would fluctuate.
Let's be honest about the fluctuations. They are effectively zero.

The max drawdown on SGOV since inception has been -0.02% which is probably less than the bid/ask spread. And this is during a time when intermediate bonds lost 20% and rates rose 4% or more.

The price does move throughout the month, but that is interest accruing. It slowly grows in value to the amount of the dividend, and then as it is paid out, the NAV drops by the price of the dividend, only to repeat again next month. But since you got paid that amount, you didn't lose anything. That's how MMF works behind the scenes, too.

These short term t-bills do not lose money because maturity is always just around the corner.
peterw
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Re: How to invest cash at Schwab?

Post by peterw »

Be aware that the Schwab Money Market fund expense ratio is 0.34%.
flarf
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Re: How to invest cash at Schwab?

Post by flarf »

peterw wrote: Mon Feb 05, 2024 2:53 pm Be aware that the Schwab Money Market fund expense ratio is 0.34%.
That's already included in the reported yield.

Full list is here: https://www.schwab.com/money-market-funds

Note the "Ultra" offerings only require the initial $1M purchase, and remain available to buy even after selling below that amount.
Wash.Invest
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Re: How to invest cash at Schwab?

Post by Wash.Invest »

Cocoa Beach Bum wrote: Mon Feb 05, 2024 1:23 pm Wouldn't a Schwab customer invest cash the same way people invest cash at any other brokerage? How else does one buy securities if not with cash?
As noted, Schwab does not have a HY 'settlement acct', so it is not like other brokerages that do.

You must phyiscally trade in and out of the Schwab HY MM / treasury accts

Yes, it's a pain, But I often initiate trades and later (within 24 hrs of execution) transfer my MM $$ into settlement fund. The problem is greater with pending buy and sell 'limit' orders. Especially for me (often traveling overseas or backcountry without access to email, phone ot internet)Thus my active trading accts are NOT at Schwab (Mosgt are at Fidelity) Where I have an automatic choice of high yield settlement accts / all automatic, no 2 device authentication required. )

Schwab gets the 'slow trade' stuff, and I prefer their international cash card. Which is ALL Scwab will hold (of my $$) after May 2024. ~$10k for intl trips.
peterw
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Re: How to invest cash at Schwab?

Post by peterw »

flarf wrote: Mon Feb 05, 2024 3:11 pm
peterw wrote: Mon Feb 05, 2024 2:53 pm Be aware that the Schwab Money Market fund expense ratio is 0.34%.
That's already included in the reported yield.

Full list is here: https://www.schwab.com/money-market-funds

Note the "Ultra" offerings only require the initial $1M purchase, and remain available to buy even after selling below that amount.
Thanks. This is good to know.
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CFmartin
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Re: How to invest cash at Schwab?

Post by CFmartin »

jeffyscott wrote: Mon Feb 05, 2024 2:32 pm
Vinny_in_NJ wrote: Mon Feb 05, 2024 12:41 pm Schwab's settlement fund is their bank. You have 2 options either their money market fund which you have to buy and sell or if you don't need it very liquid a 1,2 or 3 month T Bill.
A third option that some (not me) use would be the ETF SGOV.

T-bills are very liquid, it's just that the market value would fluctuate a bit. Same with SGOV, the price would fluctuate.
A year ago when T-bills seemed to be talked about, I looked into it a little and it seemed they were difficult to buy (the hassle of a bank) and when I looked up SGOV it seemed they were less than one percent, am I missing something?
https://finance.yahoo.com/quote/SGOV?p=SGOV
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Re: How to invest cash at Schwab?

Post by bradinsky »

flarf wrote: Mon Feb 05, 2024 3:11 pm
peterw wrote: Mon Feb 05, 2024 2:53 pm Be aware that the Schwab Money Market fund expense ratio is 0.34%.
That's already included in the reported yield.

Full list is here: https://www.schwab.com/money-market-funds

Note the "Ultra" offerings only require the initial $1M purchase, and remain available to buy even after selling below that amount.
It still yields 5.22% after the.34% ER, so no problem there!
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CFmartin
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Re: How to invest cash at Schwab?

Post by CFmartin »

To add clarity to my situation-
I felt I was getting too much in of my AA into stocks and with the bond market doing poorly and a mini wind fall of money that came my way

I was tryig to find a place to park cash, my bank pays almost nothing, so with Vanguard I just started parking this cash in the settlement fund

which was getting around 5%, which seemed to be better than bonds.

So after selling some under performers at Schwab, this dumped a sizable amount in my cash holding.

I had assumed this account would mirror what VG does,

I got a lot of good info so far and I am very thankful. I am always open to suggestions on were to park money that will have lower risk, with some return.
EHEngineer
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Re: How to invest cash at Schwab?

Post by EHEngineer »

CFmartin wrote: Mon Feb 05, 2024 7:02 pm To add clarity to my situation-
I felt I was getting too much in of my AA into stocks and with the bond market doing poorly and a mini wind fall of money that came my way

I was tryig to find a place to park cash, my bank pays almost nothing, so with Vanguard I just started parking this cash in the settlement fund

which was getting around 5%, which seemed to be better than bonds.

So after selling some under performers at Schwab, this dumped a sizable amount in my cash holding.

I had assumed this account would mirror what VG does,

I got a lot of good info so far and I am very thankful. I am always open to suggestions on were to park money that will have lower risk, with some return.
emphasis added.

Schwab earns a substantial portion of their revenue from people making that assumption. There are recent news that schwab investors are moving more money out of the settlement account. Schwab's revenue is down enough to be news-worthy.
Or, you can ... decline to let me, a stranger on the Internet, egg you on to an exercise in time-wasting, and you could say "I'm probably OK and I don't care about it that much." -Nisiprius
SlowMovingInvestor
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Re: How to invest cash at Schwab?

Post by SlowMovingInvestor »

Wash.Invest wrote: Mon Feb 05, 2024 3:28 pm
Cocoa Beach Bum wrote: Mon Feb 05, 2024 1:23 pm Wouldn't a Schwab customer invest cash the same way people invest cash at any other brokerage? How else does one buy securities if not with cash?
As noted, Schwab does not have a HY 'settlement acct', so it is not like other brokerages that do.

You must phyiscally trade in and out of the Schwab HY MM / treasury accts

Yes, it's a pain, But I often initiate trades and later (within 24 hrs of execution) transfer my MM $$ into settlement fund. The problem is greater with pending buy and sell 'limit' orders. Especially for me (often traveling overseas or backcountry without access to email, phone ot internet)Thus my active trading accts are NOT at Schwab (Mosgt are at Fidelity) Where I have an automatic choice of high yield settlement accts / all automatic, no 2 device authentication required. )
I wonder what happens if you have a balance in a Schwab MM fund (say SNOXX) and make a purchase that gives you a negative cash balance (they do allow that)?

Would Schwab automatically liquidate part of the MM or would they liquidate a random holding? And even if it's the MM they liquidate, would the consider it a violation of their trading policies?

If Schwab would liquidate part of the MM and not consider it a violation, one could just sell and assume Schwab will cover it from the MM fund.
urban
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Re: How to invest cash at Schwab?

Post by urban »

SlowMovingInvestor wrote: Mon Feb 05, 2024 7:43 pm I wonder what happens if you have a balance in a Schwab MM fund (say SNOXX) and make a purchase that gives you a negative cash balance (they do allow that)?
Schwab won't allow to buy without having cash ready - in the cash account. In the margin account your margin interest starts compounded if you do not have enough cash for the purchase.
Schwab won't auto liquidate a MMF to satisfice the cash requirements for the purchase.
Added: This is why some have a SGOV or BOXX or something like that instead of MMF at Schwab, so that they could sell it without waiting one day, and immediately use the resulting (even unsettled) cash to buy. Just do not sell what is bought until the transaction settles.
WeakOldGuy
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Re: How to invest cash at Schwab?

Post by WeakOldGuy »

SlowMovingInvestor wrote: Mon Feb 05, 2024 7:43 pm
Wash.Invest wrote: Mon Feb 05, 2024 3:28 pm
Cocoa Beach Bum wrote: Mon Feb 05, 2024 1:23 pm Wouldn't a Schwab customer invest cash the same way people invest cash at any other brokerage? How else does one buy securities if not with cash?
As noted, Schwab does not have a HY 'settlement acct', so it is not like other brokerages that do.

You must phyiscally trade in and out of the Schwab HY MM / treasury accts

Yes, it's a pain, But I often initiate trades and later (within 24 hrs of execution) transfer my MM $$ into settlement fund. The problem is greater with pending buy and sell 'limit' orders. Especially for me (often traveling overseas or backcountry without access to email, phone ot internet)Thus my active trading accts are NOT at Schwab (Mosgt are at Fidelity) Where I have an automatic choice of high yield settlement accts / all automatic, no 2 device authentication required. )
I wonder what happens if you have a balance in a Schwab MM fund (say SNOXX) and make a purchase that gives you a negative cash balance (they do allow that)?

Would Schwab automatically liquidate part of the MM or would they liquidate a random holding? And even if it's the MM they liquidate, would the consider it a violation of their trading policies?

If Schwab would liquidate part of the MM and not consider it a violation, one could just sell and assume Schwab will cover it from the MM fund.
I have only done it a couple times this last month but I have bought ETFs even though I didn't have the free cash in the trading account to cover the purchase. At the same time I made the trade, I initiated a sell order of enough MM funds to cover the trade. My cash account showed a negative amount (margin loan) until the next day when the MM funds were sold. Currently, I have about $16.5k in MM funds in that account and it shows that $12.5k of that is marginable. I have yet to see if I was actually charge margin interest for that 1 day of margin loan.
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
urban
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Re: How to invest cash at Schwab?

Post by urban »

WeakOldGuy wrote: Mon Feb 05, 2024 8:23 pm I have only done it a couple times this last month but I have bought ETFs even though I didn't have the free cash in the trading account to cover the purchase. At the same time I made the trade, I initiated a sell order of enough MM funds to cover the trade. My cash account showed a negative amount (margin loan) until the next day when the MM funds were sold. Currently, I have about $16.5k in MM funds in that account and it shows that $12.5k of that is marginable. I have yet to see if I was actually charge margin interest for that 1 day of margin loan.
If you had any margin loan, even for a day, it will show up in the next monthly statement.
Dmevsjd
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Re: How to invest cash at Schwab?

Post by Dmevsjd »

WeakOldGuy wrote: Mon Feb 05, 2024 8:23 pm
SlowMovingInvestor wrote: Mon Feb 05, 2024 7:43 pm
Wash.Invest wrote: Mon Feb 05, 2024 3:28 pm
Cocoa Beach Bum wrote: Mon Feb 05, 2024 1:23 pm Wouldn't a Schwab customer invest cash the same way people invest cash at any other brokerage? How else does one buy securities if not with cash?
As noted, Schwab does not have a HY 'settlement acct', so it is not like other brokerages that do.

You must phyiscally trade in and out of the Schwab HY MM / treasury accts

Yes, it's a pain, But I often initiate trades and later (within 24 hrs of execution) transfer my MM $$ into settlement fund. The problem is greater with pending buy and sell 'limit' orders. Especially for me (often traveling overseas or backcountry without access to email, phone ot internet)Thus my active trading accts are NOT at Schwab (Mosgt are at Fidelity) Where I have an automatic choice of high yield settlement accts / all automatic, no 2 device authentication required. )
I wonder what happens if you have a balance in a Schwab MM fund (say SNOXX) and make a purchase that gives you a negative cash balance (they do allow that)?

Would Schwab automatically liquidate part of the MM or would they liquidate a random holding? And even if it's the MM they liquidate, would the consider it a violation of their trading policies?

If Schwab would liquidate part of the MM and not consider it a violation, one could just sell and assume Schwab will cover it from the MM fund.
I have only done it a couple times this last month but I have bought ETFs even though I didn't have the free cash in the trading account to cover the purchase. At the same time I made the trade, I initiated a sell order of enough MM funds to cover the trade. My cash account showed a negative amount (margin loan) until the next day when the MM funds were sold. Currently, I have about $16.5k in MM funds in that account and it shows that $12.5k of that is marginable. I have yet to see if I was actually charge margin interest for that 1 day of margin loan.
Yes, I do this too. No margin account. The sticky part can be where you sell a T+2 asset and try to buy a T+1 asset (mutual fund or individual bond). You have to wait a day to make your T+1 purchase. Thus, there is some thought that needs to go into your process.
WeakOldGuy
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Re: How to invest cash at Schwab?

Post by WeakOldGuy »

urban wrote: Mon Feb 05, 2024 8:04 pm Added: This is why some have a SGOV or BOXX or something like that instead of MMF at Schwab, so that they could sell it without waiting one day, and immediately use the resulting (even unsettled) cash to buy. Just do not sell what is bought until the transaction settles.
I was just thinking about the idea of using an ETF instead of a MM fund. Until this thread, I didn't even realize they existed. I would assume there would be enough trading volume to make them very liquid. Am I right in assuming that an ultra-short bond fund would behave in ways that would be similar to that of a MM fund? I realize that an ETF isn't going to have a fixed NAV of $1, but I would assume that the NAV of these ETFs would be reasonable stable. ETFs would be more convenient than a MM at Schwab which has a very poor sweep account option.

Is this a reasonable option? Are dividend returns from these ultra-short bond funds close to that of MM funds? If so, what would some good options be. I gave a quick look at SGOV and BOXX and SGOV was a bit easier for me to wrap my head around than BOXX's options spread strategy.

How would I compare returns? The only measure that I can see in common between my MM fund (SVWXX) and SGOV is the Distribution Yield. However, with the MM having a constant $1 NAV compared to a NAV that changes, do they really compare? SGOV has a distribution yield of 4.87% and SVWXX is 4.93% Not a big difference if I'm just using them as a holding location for $20k of cash.

Thoughts?
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
urban
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Re: How to invest cash at Schwab?

Post by urban »

WeakOldGuy wrote: Mon Feb 05, 2024 10:34 pm
urban wrote: Mon Feb 05, 2024 8:04 pm Added: This is why some have a SGOV or BOXX or something like that instead of MMF at Schwab, so that they could sell it without waiting one day, and immediately use the resulting (even unsettled) cash to buy. Just do not sell what is bought until the transaction settles.
I was just thinking about the idea of using an ETF instead of a MM fund. Until this thread, I didn't even realize they existed. I would assume there would be enough trading volume to make them very liquid.
Not necessarily. Some of such funds have a very low trading volume. For example, in the beginning of this year I bought a few such finds to see how they do, and attempted to set them to reinvest dividends. The VG web site did not allow me to set DRIP for CLIP and BILZ. The customer service rep reviewed it and stated that those funds do not allow automatic dividend reinvestment because they have so low trading volume that automatic reinvestment will mess up their price. So you need to research any particular fund you consider to use.
WeakOldGuy
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Re: How to invest cash at Schwab?

Post by WeakOldGuy »

urban wrote: Mon Feb 05, 2024 11:04 pm
WeakOldGuy wrote: Mon Feb 05, 2024 10:34 pm
urban wrote: Mon Feb 05, 2024 8:04 pm Added: This is why some have a SGOV or BOXX or something like that instead of MMF at Schwab, so that they could sell it without waiting one day, and immediately use the resulting (even unsettled) cash to buy. Just do not sell what is bought until the transaction settles.
I was just thinking about the idea of using an ETF instead of a MM fund. Until this thread, I didn't even realize they existed. I would assume there would be enough trading volume to make them very liquid.
Not necessarily. Some of such funds have a very low trading volume. For example, in the beginning of this year I bought a few such finds to see how they do, and attempted to set them to reinvest dividends. The VG web site did not allow me to set DRIP for CLIP and BILZ. The customer service rep reviewed it and stated that those funds do not allow automatic dividend reinvestment because they have so low trading volume that automatic reinvestment will mess up their price. So you need to research any particular fund you consider to use.
Thanks urban.

I just looked at SGOVs volume today was greater than VTI. So at least for SGOV, it appears to have a high volume. I may give it a try with a small amount and see how it goes.
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
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jeffyscott
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Re: How to invest cash at Schwab?

Post by jeffyscott »

CFmartin wrote: Mon Feb 05, 2024 6:22 pm
jeffyscott wrote: Mon Feb 05, 2024 2:32 pm
Vinny_in_NJ wrote: Mon Feb 05, 2024 12:41 pm Schwab's settlement fund is their bank. You have 2 options either their money market fund which you have to buy and sell or if you don't need it very liquid a 1,2 or 3 month T Bill.
A third option that some (not me) use would be the ETF SGOV.

T-bills are very liquid, it's just that the market value would fluctuate a bit. Same with SGOV, the price would fluctuate.
A year ago when T-bills seemed to be talked about, I looked into it a little and it seemed they were difficult to buy (the hassle of a bank) and when I looked up SGOV it seemed they were less than one percent, am I missing something?
https://finance.yahoo.com/quote/SGOV?p=SGOV
T-bills are easy to buy in a brokerage account. "Hassle of a bank" makes me think maybe you only looked into doing it via treasury direct :?: as that would involve having a separate account somewhere, so would be like using a bank savings account in that regard.

A year ago 1-3 month T-bill yields were over 4.5%, that ETF would have been similar since the ER is small.

Even at your link it shows a yield of 4.87%, though I'd go directly to the iShares site to get that information as I am unsure what "yield" yahoo is showing.
https://www.ishares.com/us/products/314 ... y-bond-etf
There it shows the SEC yield is 5.17% as of 2/2 and the YTM is 5.38% as of 2/5 (net YTM would be 5.31% after deducting the 0.07% net ER).
MnD
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Re: How to invest cash at Schwab?

Post by MnD »

I use SWVXX and a 3-month 3-bill t-bill ladder. About 25% in each.

You can have a negative cash balance at Schwab without initiating a margin account.
Once a month I have a negative cash balance for several days from the purchase of a 13 week T-bill on Monday at auction (with a Thursday settlement date) and the maturity of a 13 week T-bill on that Thursday. Never paid even a penny in margin interest.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
urban
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Re: How to invest cash at Schwab?

Post by urban »

jeffyscott wrote: Tue Feb 06, 2024 8:09 am T-bills are easy to buy in a brokerage account. "Hassle of a bank" makes me think maybe you only looked into doing it via treasury direct :?: as that would involve having a separate account somewhere, so would be like using a bank savings account in that regard.

A year ago 1-3 month T-bill yields were over 4.5%, that ETF would have been similar since the ER is small.

Even at your link it shows a yield of 4.87%, though I'd go directly to the iShares site to get that information as I am unsure what "yield" yahoo is showing.
https://www.ishares.com/us/products/314 ... y-bond-etf
There it shows the SEC yield is 5.17% as of 2/2 and the YTM is 5.38% as of 2/5 (net YTM would be 5.31% after deducting the 0.07% net ER).
ER is already factored into yield.
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jeffyscott
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Re: How to invest cash at Schwab?

Post by jeffyscott »

urban wrote: Tue Feb 06, 2024 8:42 am
jeffyscott wrote: Tue Feb 06, 2024 8:09 am T-bills are easy to buy in a brokerage account. "Hassle of a bank" makes me think maybe you only looked into doing it via treasury direct :?: as that would involve having a separate account somewhere, so would be like using a bank savings account in that regard.

A year ago 1-3 month T-bill yields were over 4.5%, that ETF would have been similar since the ER is small.

Even at your link it shows a yield of 4.87%, though I'd go directly to the iShares site to get that information as I am unsure what "yield" yahoo is showing.
https://www.ishares.com/us/products/314 ... y-bond-etf
There it shows the SEC yield is 5.17% as of 2/2 and the YTM is 5.38% as of 2/5 (net YTM would be 5.31% after deducting the 0.07% net ER).
ER is already factored into yield.
It's not factored into that reported YTM, which is what I subtracted it from.

It is factored into the reported SEC yield.
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Re: How to invest cash at Schwab?

Post by urban »

jeffyscott wrote: Tue Feb 06, 2024 9:00 am
urban wrote: Tue Feb 06, 2024 8:42 am
jeffyscott wrote: Tue Feb 06, 2024 8:09 am T-bills are easy to buy in a brokerage account. "Hassle of a bank" makes me think maybe you only looked into doing it via treasury direct :?: as that would involve having a separate account somewhere, so would be like using a bank savings account in that regard.

A year ago 1-3 month T-bill yields were over 4.5%, that ETF would have been similar since the ER is small.

Even at your link it shows a yield of 4.87%, though I'd go directly to the iShares site to get that information as I am unsure what "yield" yahoo is showing.
https://www.ishares.com/us/products/314 ... y-bond-etf
There it shows the SEC yield is 5.17% as of 2/2 and the YTM is 5.38% as of 2/5 (net YTM would be 5.31% after deducting the 0.07% net ER).
ER is already factored into yield.
It's not factored into that reported YTM, which is what I subtracted it from.

It is factored into the reported SEC yield.
You are correct. My bad.
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Re: How to invest cash at Schwab?

Post by BigFoot48 »

I have used SWVXX in the past but with a cash allocation of 1%, which I maintain, I no longer bother with getting a higher return on cash.
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Re: How to invest cash at Schwab?

Post by FromAto401k »

This thread illustrates—to me at least—the single most significant advantage of Fidelity over Schwab: the ability to keep cash in a MMF and have it auto-liquidate as needed. Ultimately, I have decided I value Schwab’s customer service enough to overlook that fact and for the most part have consolidated at Schwab. I am, however, constantly considered moving our banking from Ally to Fidelity to take advantage of the auto-liquidated feature.

As for Schwab MMFs, as mentioned upthread, if you can swing the $1m to get into SNAXX, you can then keep as little as $1 in it and have access to their highest yielding fund.

Meanwhile, for moving cash out of Schwab, I have found it is always faster to do an instant transfer from brokerage account to associated checking account, and then transferring out of Schwab from the checking account. Usually happens same day if placed in the morning.
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Re: How to invest cash at Schwab?

Post by retired@50 »

CFmartin wrote: Mon Feb 05, 2024 7:02 pm
... I had assumed this account would mirror what VG does, ...
This is it, in a nutshell. Schwab is a publicly traded company with shareholders to please. Vanguard's ownership structure allows them to treat investors better.

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Re: How to invest cash at Schwab?

Post by icrf »

Any reason SGOV is mentioned, specifically, or is that just an example of the kind of short-term low-cost ETFs? I saw someone mention USFR in the past, probably on here, and that's what I have my Schwab cash sitting in. It looks pretty similar to SGOV today for a return/expense, but holdings look like 1-2 year instead of 0-3 month.
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Re: How to invest cash at Schwab?

Post by tj »

EHEngineer wrote: Mon Feb 05, 2024 7:13 pm
CFmartin wrote: Mon Feb 05, 2024 7:02 pm To add clarity to my situation-
I felt I was getting too much in of my AA into stocks and with the bond market doing poorly and a mini wind fall of money that came my way

I was tryig to find a place to park cash, my bank pays almost nothing, so with Vanguard I just started parking this cash in the settlement fund

which was getting around 5%, which seemed to be better than bonds.

So after selling some under performers at Schwab, this dumped a sizable amount in my cash holding.

I had assumed this account would mirror what VG does,

I got a lot of good info so far and I am very thankful. I am always open to suggestions on were to park money that will have lower risk, with some return.
emphasis added.

Schwab earns a substantial portion of their revenue from people making that assumption. There are recent news that schwab investors are moving more money out of the settlement account. Schwab's revenue is down enough to be news-worthy.
It didn't matter as much when interest rates were near zero. People are paying more attention when you can get 5% on a money market.
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Re: How to invest cash at Schwab?

Post by WeakOldGuy »

icrf wrote: Tue Feb 06, 2024 11:24 am Any reason SGOV is mentioned, specifically, or is that just an example of the kind of short-term low-cost ETFs? I saw someone mention USFR in the past, probably on here, and that's what I have my Schwab cash sitting in. It looks pretty similar to SGOV today for a return/expense, but holdings look like 1-2 year instead of 0-3 month.
I mentioned SGOV because of ETFs of that type it had one of the shortest duration (0-3 months) which in my ignorance I assumed that its NAV would be the most stable (other than the change that occurs at each distribution).

USFR as of today has a 30-day Sec yield of 5.43%. SGOV is 5.17%. So based on that number, USFR seems to have an advantage.

I don't understand floating rate bonds. Since I don't understand it I'm leery of investing in it. It appears to me that USFR has a longer maturity which, to my simple mind, makes it less like a MM fund which I'm trying to replace. For my purposes, I'm looking for easy, quick, cheap, and safe to put cash into and out of relatively frequently. My ignorance is unmatched however, so I may be completely misguided.

If Schwab had the type of automatic MM sweeps that Fidelity and VG have, I wouldn't be interested.
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Re: How to invest cash at Schwab?

Post by tj »

I believe BIL and SGOV would be roughly equivalent
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Re: How to invest cash at Schwab?

Post by WeakOldGuy »

tj wrote: Tue Feb 06, 2024 12:15 pm I believe BIL and SGOV would be roughly equivalent
I agree, other than BIL uses an index that tracks the 1-3 month treasury vs the 0-3 month index that SGOV uses. Their current 30-day Sec is essentially the same if I recall. I was looking at them last night.
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Re: How to invest cash at Schwab?

Post by Dmevsjd »

I hold SGOV. I would recommend that you consider buying soon after dividend drop date as this will lead to a pretty pure “income building for the next 30 days and then paying out to you at the end of the period with the drop in the NAV back to about where you bought it”.

I have held for a year and a half and have a small amount of appreciation built up after the dividend drops but it is very little. If you buy right before the dividend drops you will get all the income with a complimentary NAV hit although you haven’t owned the entire month.
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Re: How to invest cash at Schwab?

Post by icrf »

WeakOldGuy wrote: Tue Feb 06, 2024 12:11 pm My ignorance is unmatched however, so I may be completely misguided.

If Schwab had the type of automatic MM sweeps that Fidelity and VG have, I wouldn't be interested.
I am 100% with you on both points :)
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Re: How to invest cash at Schwab?

Post by WeakOldGuy »

Dmevsjd wrote: Tue Feb 06, 2024 1:45 pm I hold SGOV. I would recommend that you consider buying soon after dividend drop date as this will lead to a pretty pure “income building for the next 30 days and then paying out to you at the end of the period with the drop in the NAV back to about where you bought it”.

I have held for a year and a half and have a small amount of appreciation built up after the dividend drops but it is very little. If you buy right before the dividend drops you will get all the income with a complimentary NAV hit although you haven’t owned the entire month.
Thank you. That makes sense.
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Re: How to invest cash at Schwab?

Post by jeffyscott »

icrf wrote: Tue Feb 06, 2024 2:21 pm
WeakOldGuy wrote: Tue Feb 06, 2024 12:11 pm My ignorance is unmatched however, so I may be completely misguided.

If Schwab had the type of automatic MM sweeps that Fidelity and VG have, I wouldn't be interested.
I am 100% with you on both points :)
But only Vanguard has a low ER.

Even if settlement was to a money market fund with an ER of 0.3%+, I'm not sure that I'd use the alternatives much less than I do now. If there were automatic liquidation to pay bills, as Fidelity has, I would keep less (as in $0) in checking, though.
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Re: How to invest cash at Schwab?

Post by Cocoa Beach Bum »

WeakOldGuy wrote: Tue Feb 06, 2024 12:11 pm...
USFR as of today has a 30-day Sec yield of 5.43%. SGOV is 5.17%. So based on that number, USFR seems to have an advantage.

I don't understand floating rate bonds. Since I don't understand it I'm leery of investing in it. It appears to me that USFR has a longer maturity which, to my simple mind, makes it less like a MM fund which I'm trying to replace. For my purposes, I'm looking for easy, quick, cheap, and safe to put cash into and out of relatively frequently. My ignorance is unmatched however, so I may be completely misguided.
...
US Treasury Floating Rate Notes (FRN) are described at https://www.treasurydirect.gov/marketab ... ate-notes/. They are two-year notes which are auctioned monthly and pay out interest quarterly. Interest is earned daily and the rate is reset weekly, based on the most-recent weekly 3-month T-Bill auction. So, even though the notes don't mature until 2 years, their interest rates track the very short maturity 3-month interest rates, giving them an effective duration of about 0. In other words, they have very little interest rate risk. You can get them in an ETF wrapper with either USFR or TFLO,
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Re: How to invest cash at Schwab?

Post by WeakOldGuy »

Cocoa Beach Bum wrote: Tue Feb 06, 2024 3:56 pm
WeakOldGuy wrote: Tue Feb 06, 2024 12:11 pm...
USFR as of today has a 30-day Sec yield of 5.43%. SGOV is 5.17%. So based on that number, USFR seems to have an advantage.

I don't understand floating rate bonds. Since I don't understand it I'm leery of investing in it. It appears to me that USFR has a longer maturity which, to my simple mind, makes it less like a MM fund which I'm trying to replace. For my purposes, I'm looking for easy, quick, cheap, and safe to put cash into and out of relatively frequently. My ignorance is unmatched however, so I may be completely misguided.
...
US Treasury Floating Rate Notes (FRN) are described at https://www.treasurydirect.gov/marketab ... ate-notes/. They are two-year notes which are auctioned monthly and pay out interest quarterly. Interest is earned daily and the rate is reset weekly, based on the most-recent weekly 3-month T-Bill auction. So, even though the notes don't mature until 2 years, their interest rates track the very short maturity 3-month interest rates, giving them an effective duration of about 0. In other words, they have very little interest rate risk. You can get them in an ETF wrapper with either USFR or TFLO,
That was a very succinct and clear explanation. Thanks!
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Re: How to invest cash at Schwab?

Post by theac »

urban wrote: Mon Feb 05, 2024 8:04 pm
SlowMovingInvestor wrote: Mon Feb 05, 2024 7:43 pm I wonder what happens if you have a balance in a Schwab MM fund (say SNOXX) and make a purchase that gives you a negative cash balance (they do allow that)?
Schwab won't allow to buy without having cash ready - in the cash account. In the margin account your margin interest starts compounded if you do not have enough cash for the purchase.
Schwab won't auto liquidate a MMF to satisfice the cash requirements for the purchase.
Added: This is why some have a SGOV or BOXX or something like that instead of MMF at Schwab, so that they could sell it without waiting one day, and immediately use the resulting (even unsettled) cash to buy. Just do not sell what is bought until the transaction settles.
So the main advantage SGOV has over SNOXX is whenever you plan to use the funds within the brokerage, such as to buy another security, then you can do it one day sooner with SGOV, right?

But if I wanted to sell SGOV in order to transfer cash out of the brokerage and into my Schwab checking account--even with that mid-day sale of SGOV--I still can't make the transfer into my checking account until the following day after the etf trade settles, is that correct?
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Re: How to invest cash at Schwab?

Post by NMBob »

urban wrote: Mon Feb 05, 2024 8:04 pm
SlowMovingInvestor wrote: Mon Feb 05, 2024 7:43 pm I wonder what happens if you have a balance in a Schwab MM fund (say SNOXX) and make a purchase that gives you a negative cash balance (they do allow that)?
Schwab won't allow to buy without having cash ready - in the cash account. In the margin account your margin interest starts compounded if you do not have enough cash for the purchase.
Schwab won't auto liquidate a MMF to satisfice the cash requirements for the purchase.
Added: This is why some have a SGOV or BOXX or something like that instead of MMF at Schwab, so that they could sell it without waiting one day, and immediately use the resulting (even unsettled) cash to buy. Just do not sell what is bought until the transaction settles.
It sure looks like it will let you order without the cash on hand. With only 33 dollars cash in sweep, no recent sales waiting to settle, I have the order all set for about $150 in an IRA (but did not hit submit,) and you get this warning.

1. Caution: This buy order was accepted without sufficient settled funds to trade in your account. If you subsequently sell this security without first delivering sufficient cash by settlement date, you may incur a trading restriction requiring settled cash up front for future purchases. (AC176)
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Re: How to invest cash at Schwab?

Post by jeffyscott »

theac wrote: Tue Feb 06, 2024 10:09 pm
urban wrote: Mon Feb 05, 2024 8:04 pm
SlowMovingInvestor wrote: Mon Feb 05, 2024 7:43 pm I wonder what happens if you have a balance in a Schwab MM fund (say SNOXX) and make a purchase that gives you a negative cash balance (they do allow that)?
Schwab won't allow to buy without having cash ready - in the cash account. In the margin account your margin interest starts compounded if you do not have enough cash for the purchase.
Schwab won't auto liquidate a MMF to satisfice the cash requirements for the purchase.
Added: This is why some have a SGOV or BOXX or something like that instead of MMF at Schwab, so that they could sell it without waiting one day, and immediately use the resulting (even unsettled) cash to buy. Just do not sell what is bought until the transaction settles.
So the main advantage SGOV has over SNOXX is whenever you plan to use the funds within the brokerage, such as to buy another security, then you can do it one day sooner with SGOV, right?

But if I wanted to sell SGOV in order to transfer cash out of the brokerage and into my Schwab checking account--even with that mid-day sale of SGOV--I still can't make the transfer into my checking account until the following day after the etf trade settles, is that correct?
No the advantage is the lower ER.

Urban is mistaken, you can trade based on SNOXX holdings, you just need to sell manually by the day before settlement.

If your only "cash" were SGOV, then you might need to sell first before you can enter a buy order (or have margin). So actually SNOXX may give more flexibility than SGOV, since you can enter a buy order based on the MM balance without first entering a sell.
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Re: How to invest cash at Schwab?

Post by urban »

jeffyscott wrote: Wed Feb 07, 2024 11:46 am
theac wrote: Tue Feb 06, 2024 10:09 pm
urban wrote: Mon Feb 05, 2024 8:04 pm
SlowMovingInvestor wrote: Mon Feb 05, 2024 7:43 pm I wonder what happens if you have a balance in a Schwab MM fund (say SNOXX) and make a purchase that gives you a negative cash balance (they do allow that)?
Schwab won't allow to buy without having cash ready - in the cash account. In the margin account your margin interest starts compounded if you do not have enough cash for the purchase.
Schwab won't auto liquidate a MMF to satisfice the cash requirements for the purchase.
Added: This is why some have a SGOV or BOXX or something like that instead of MMF at Schwab, so that they could sell it without waiting one day, and immediately use the resulting (even unsettled) cash to buy. Just do not sell what is bought until the transaction settles.
So the main advantage SGOV has over SNOXX is whenever you plan to use the funds within the brokerage, such as to buy another security, then you can do it one day sooner with SGOV, right?

But if I wanted to sell SGOV in order to transfer cash out of the brokerage and into my Schwab checking account--even with that mid-day sale of SGOV--I still can't make the transfer into my checking account until the following day after the etf trade settles, is that correct?
No the advantage is the lower ER.

Urban is mistaken, you can trade based on SNOXX holdings, you just need to sell manually by the day before settlement.

If your only "cash" were SGOV, then you might need to sell first before you can enter a buy order (or have margin). So actually SNOXX may give more flexibility than SGOV, since you can enter a buy order based on the MM balance without first entering a sell.
About me being mistaken - well, I was speaking from my experience with Schwab. Last year I opened there a brokerage cash account, and attempted to place a small buy order without having money in sweep position. Now, my account did not have any MMF, but it was rather sizable, with a few ETF positions.

The web interface did not allow me to place a trade, making references to not having cash available. When I called, the rep said that if I wanted to place a trade in my cash account, I have to first either to bring a new cash to my account, or to sell some existing securities in my account. Or to enable margin for my account.

They did not mentioned anything about allowing some flexibility when having a MMF.
It is good to know about such option if having a MMF in your account. Thank you jeffyscott.
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