Best Fidelity Money Market Account to Hold Cash?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
duffer
Posts: 238
Joined: Tue Sep 09, 2014 8:18 pm

Best Fidelity Money Market Account to Hold Cash?

Post by duffer » Tue Aug 07, 2018 12:01 pm

I am a complete novice with regard to holding cash in my investment accounts--I have always been fully invested. Now I want to start building a significant cash holding. Some will be in a taxable account and some will be in a tax-deferred account.

At the present time, what is the best way to hold cash in taxable and tax-deferred accounts held within Fidelity and Fidelity custodial accounts? Which specific money market fund is most attractive in terms of yield and other characteristics that matter for holding cash?

bloom2708
Posts: 6097
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Best Fidelity Money Market Account to Hold Cash?

Post by bloom2708 » Tue Aug 07, 2018 2:48 pm

Cash in a money market, CD or taxable money market makes sense for near term purchases (1-5 years).

What is the purpose of cash in tax-deferred accounts? "Dry powder" for the upcoming crash?

Vanguard has a Federal and a Prime money market. Prime is over 2%. I assume Fidelity has similar funds. Another option is high yield online savings (~1.75%) and FDIC insured.

Is this cash for a house down payment? A car purchase? Or for market timing? :wink:
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

MikeMak27
Posts: 119
Joined: Fri Jul 03, 2015 4:37 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by MikeMak27 » Tue Aug 07, 2018 3:38 pm

I use SPRXX since it has the highest yield available to retail investors.
Mac 4 fund portfolio: 45% US small cap value (IJS, VBR), 40% Emerging Markets (IEMG, VWO, FPMAX), 10% long term US treasuries (TLT), 5% US REITS (VNQ)

SpaethCo
Posts: 155
Joined: Thu Jan 14, 2016 12:58 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by SpaethCo » Tue Aug 07, 2018 3:59 pm

MikeMak27 wrote:
Tue Aug 07, 2018 3:38 pm
I use SPRXX since it has the highest yield available to retail investors.
I’m in the same boat here.

SPRXX when I get to choose, SPAXX when Fidelity chooses via sweep.

I’m still hoping someone is going to hop in this thread and point out the magic fund that I’ve overlooked. :moneybag :greedy

dpm321
Posts: 101
Joined: Sun Mar 04, 2012 6:04 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by dpm321 » Tue Aug 07, 2018 4:31 pm

FZDXX is paying 2% right now.

User avatar
Artsdoctor
Posts: 3846
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: Best Fidelity Money Market Account to Hold Cash?

Post by Artsdoctor » Tue Aug 07, 2018 5:04 pm

Fidelity has several institutional money market funds but for the non-institutional investor, the prime money market fund is going to probably be the best but they're all very close.

https://fundresearch.fidelity.com/mutua ... /31617H805

It'll cost you $100,000 to initially invest but you can draw down that minimum investment amount quickly without having to switch to another fund.

Topic Author
duffer
Posts: 238
Joined: Tue Sep 09, 2014 8:18 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by duffer » Tue Aug 07, 2018 6:24 pm

These are all excellent and very helpful suggestions--thank you very much.

Since I posted my original question, I also discovered that if you have certain types of fidelity retirement accounts, you can buy into FNSXX, yielding 2.12, and that usually has a $10 million minimum, with amounts of only $500! But i only have one account that qualifies and I need to buy more safe money than I have in that account.

My purpose is to have a safe buffer for my equity investments as I begin my withdrawal stage soon. I want to have two to three years of safe money so that I don't have to sell equities during down periods of three years or less.

Jonathan Guyton recommends holding at least half of one's fixed income investments in very short term T-bills--3 or 6 months. He says the research indicates this is much more resistant to downturns than intermediate or long bonds and holding the T-bills can add .25 to .5% to one's safe withdrawal rate.

I am having trouble figuring out exactly how to buy T-bills through Fidelity. I am sure it is easy to do, but I am still working on understanding the process. I may do T-bills instead of money market funds.

SpaethCo
Posts: 155
Joined: Thu Jan 14, 2016 12:58 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by SpaethCo » Tue Aug 07, 2018 6:38 pm

duffer wrote:
Tue Aug 07, 2018 6:24 pm
I am having trouble figuring out exactly how to buy T-bills through Fidelity. I am sure it is easy to do, but I am still working on understanding the process. I may do T-bills instead of money market funds.
I found this link very helpful for the process: https://thefinancebuff.com/treasury-bil ... arket.html

The final piece was putting that together with the treasury calendar to find out when each bill/note/bond would show up on Fidelity. https://www.treasury.gov/resource-cente ... ctions.pdf

drzzzzz
Posts: 367
Joined: Sat Sep 22, 2012 9:56 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by drzzzzz » Tue Aug 07, 2018 7:15 pm

Buying new T bills at Fidelity is really easy, click on heading Investment Products, then click fixed income, bonds, cds; then click individual bond link, then US treasury, find bonds, then new issues, and scroll down to treasury - there is likely other paths to get to the same pages, but this is easy for me good luck

Topic Author
duffer
Posts: 238
Joined: Tue Sep 09, 2014 8:18 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by duffer » Tue Aug 07, 2018 8:06 pm

SpaethCo wrote:
Tue Aug 07, 2018 6:38 pm
duffer wrote:
Tue Aug 07, 2018 6:24 pm
I am having trouble figuring out exactly how to buy T-bills through Fidelity. I am sure it is easy to do, but I am still working on understanding the process. I may do T-bills instead of money market funds.
I found this link very helpful for the process: https://thefinancebuff.com/treasury-bil ... arket.html

The final piece was putting that together with the treasury calendar to find out when each bill/note/bond would show up on Fidelity. https://www.treasury.gov/resource-cente ... ctions.pdf
Thank you for the links--the calendar was especially helpful, since that is one of the concepts IO was missing. I thought you could buy the bills anytime, but now I see you have to wait for an auction. So, reading the calendar you linked, I will be able to buy 3 month and six month bills the day after tomorrow but not before.

Thanks!

Topic Author
duffer
Posts: 238
Joined: Tue Sep 09, 2014 8:18 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by duffer » Tue Aug 07, 2018 8:06 pm

drzzzzz wrote:
Tue Aug 07, 2018 7:15 pm
Buying new T bills at Fidelity is really easy, click on heading Investment Products, then click fixed income, bonds, cds; then click individual bond link, then US treasury, find bonds, then new issues, and scroll down to treasury - there is likely other paths to get to the same pages, but this is easy for me good luck
Thank you! I assume I can buy these through Fidelity in any kind of account, including IRA and other retirement accounts?

drzzzzz
Posts: 367
Joined: Sat Sep 22, 2012 9:56 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by drzzzzz » Tue Aug 07, 2018 8:36 pm

Thank you! I assume I can buy these through Fidelity in any kind of account, including IRA and other retirement accounts?
[/quote]

Yes, so far I have bought in both IRA and regular accounts - there is no cost to buy if you do it electronically.

User avatar
CardinalRule
Posts: 175
Joined: Sun Jan 15, 2017 11:01 am
Location: United States

Re: Best Fidelity Money Market Account to Hold Cash?

Post by CardinalRule » Wed Aug 08, 2018 3:40 pm

I'm interested in this fund and am looking further into it. Currently I am parked in a Fidelity muni money market fund (FTEXX), but FZDXX is looking like a better choice, even after taxes.
Artsdoctor wrote:
Tue Aug 07, 2018 5:04 pm
Fidelity has several institutional money market funds but for the non-institutional investor, the prime money market fund is going to probably be the best but they're all very close.

https://fundresearch.fidelity.com/mutua ... /31617H805

It'll cost you $100,000 to initially invest but you can draw down that minimum investment amount quickly without having to switch to another fund.

Cruise
Posts: 727
Joined: Mon Nov 21, 2016 7:17 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by Cruise » Wed Aug 08, 2018 7:18 pm

dpm321 wrote:
Tue Aug 07, 2018 4:31 pm
FZDXX is paying 2% right now.
Thanks for this. I’ve mafe the change today.

Gadget
Posts: 229
Joined: Fri Mar 17, 2017 1:38 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by Gadget » Mon Nov 12, 2018 3:30 pm

I recently setup a Fidelity CMA account to be used as my main checking account. I usually hold $30k in it or so. Above that gets invested in Vanguard.

How do I determine the after tax yield of the Fidelity money market options? It looks like my options are:

1) SPRXX: Fidelity's Prime Money Market Fund
2) FZDXX: Fidelity's Prime Money Market Fund if I want to invest 100k minimum
3) FTEXX: Fidelity's Municiple Money Market Fund
4) FMOXX: Fidelity's Tax Exempt Money Market Fund

I'm in the 35% tax bracket with a 5% state tax. How do I pick the highest yielding money market fund to use as a sweep account for my checking at FIdelity CMA?

Also, if I sell some Vaguard bonds to get to 100k in FZDXX, then move money out of FZDXX, can I still buy into the fund? Or can I only buy into the fund if I have 100k total assets in it at all times?

arf30
Posts: 482
Joined: Sat Dec 28, 2013 11:55 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by arf30 » Mon Nov 12, 2018 3:41 pm

I like Fidelity but don't park a lot of money there because their money market funds aren't great. 5-10k in SPRXX in the CMA to pay bills, the rest in cold storage at Vanguard in VMFXX/VMMXX.

lisaneedsbraces
Posts: 61
Joined: Sun Jan 16, 2011 1:23 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by lisaneedsbraces » Mon Nov 12, 2018 4:18 pm

arf30 wrote:
Mon Nov 12, 2018 3:41 pm
I like Fidelity but don't park a lot of money there because their money market funds aren't great. 5-10k in SPRXX in the CMA to pay bills, the rest in cold storage at Vanguard in VMFXX/VMMXX.
The October distribution for Fidelitys FZDXX was 2.13% vs Vanguards VMMXX at 2.19%. The Fidelity fund requires a larger minimum to open but the balance can dip below the minimum once funded.

arf30
Posts: 482
Joined: Sat Dec 28, 2013 11:55 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by arf30 » Mon Nov 12, 2018 4:24 pm

lisaneedsbraces wrote:
Mon Nov 12, 2018 4:18 pm
The October distribution for Fidelitys FZDXX was 2.13% vs Vanguards VMMXX at 2.19%. The Fidelity fund requires a larger minimum to open but the balance can dip below the minimum once funded.
100k is a major barrier to entry, especially for a fund with a 7 day yield of 2.11% - compare that to VMFXX with a 7 day yield of 2.12%, no minimums, holds government debt instead of commercial paper, 70% tax exempt in most states, and not subject to the liquidity and redemption regulations imposed on Prime funds.

mervinj7
Posts: 838
Joined: Thu Mar 27, 2014 3:10 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by mervinj7 » Mon Nov 12, 2018 4:54 pm

Gadget wrote:
Mon Nov 12, 2018 3:30 pm
I'm in the 35% tax bracket with a 5% state tax. How do I pick the highest yielding money market fund to use as a sweep account for my checking at FIdelity CMA?
What's the purpose of the $30K? That is, how liquid do you need to keep it? You can effectively make your own money market fund using a Treasury Ladder and get much higher yield. For example, a 3 month T-bill has a yield of 2.36% and its state tax free. Thus your tax-equivalent yield is 2.55%. You could keep it simple with three bills that mature every month. To see how the TEY was calculated, please take a look at Kevin M's thread:
viewtopic.php?t=248539#p3909329

In my Fidelity CMA, I keep $5k in FDLXX and the rest of my 6 month EF in auto-rolling treasury bills (they auto-renew automatically).
https://www.fidelity.com/fixed-income-b ... ll-program

Gadget
Posts: 229
Joined: Fri Mar 17, 2017 1:38 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by Gadget » Tue Nov 13, 2018 9:33 am

mervinj7 wrote:
Mon Nov 12, 2018 4:54 pm
Gadget wrote:
Mon Nov 12, 2018 3:30 pm
I'm in the 35% tax bracket with a 5% state tax. How do I pick the highest yielding money market fund to use as a sweep account for my checking at FIdelity CMA?
What's the purpose of the $30K? That is, how liquid do you need to keep it? You can effectively make your own money market fund using a Treasury Ladder and get much higher yield. For example, a 3 month T-bill has a yield of 2.36% and its state tax free. Thus your tax-equivalent yield is 2.55%. You could keep it simple with three bills that mature every month. To see how the TEY was calculated, please take a look at Kevin M's thread:
viewtopic.php?t=248539#p3909329

In my Fidelity CMA, I keep $5k in FDLXX and the rest of my 6 month EF in auto-rolling treasury bills (they auto-renew automatically).
https://www.fidelity.com/fixed-income-b ... ll-program

I want it to be completely liquid where fidelity would draw from it to cover charges to a checking account. I move the non liquid funds to Vanguard.

betablocker
Posts: 492
Joined: Mon Jan 11, 2016 1:26 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by betablocker » Tue Nov 13, 2018 9:51 am

If you have a high tax rate, I'd use their muni money market or I'm looking at Fidelity® Conservative Income Municipal Bond Fund. It's a bit more risk than a MM but pretty low duration with a tax equivalent yield of 3%. If you don't need the cash on any given day you might also look at 3, 6, or 12 month treasuries. Fidelity has a program where they will automatically roll them for you.

dcdowden
Posts: 139
Joined: Sun Sep 28, 2014 11:42 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by dcdowden » Tue Nov 13, 2018 11:33 am

I have been keeping cash in ICSH - an IShares Ultra Short Term Bond ETF. It has a very low ER of 0.08% and a YTD Yield of 1.91%.
I have also been buying a two year CD every month as interest rates have been rising - this month at 3.1% through Fidelity.

I don't much like the Sweep Account at Fidelity which for me is FDRXX. It has an ER of 0.37% and a YTD Yield of 1.26%.

cowbman
Posts: 37
Joined: Sat Jan 14, 2017 2:10 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by cowbman » Tue Mar 12, 2019 11:27 pm

dcdowden wrote:
Tue Nov 13, 2018 11:33 am
I have been keeping cash in ICSH - an IShares Ultra Short Term Bond ETF. It has a very low ER of 0.08% and a YTD Yield of 1.91%.
I have also been buying a two year CD every month as interest rates have been rising - this month at 3.1% through Fidelity.

I don't much like the Sweep Account at Fidelity which for me is FDRXX. It has an ER of 0.37% and a YTD Yield of 1.26%.
You lose the benefit of the automatic sales in the CMA account with the ETF. SPRXX and FZDXX have respectable yields. There are treasury and muni options as well if your tax bracket is high enough.

Arby
Posts: 324
Joined: Fri Jun 19, 2009 2:17 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by Arby » Wed Mar 13, 2019 3:18 pm

FZDXX has a only a 10K minimum purchase if it's in an IRA.

You might also want to consider setting up a 4 week Tbill auto roll ladder with 1/4 of the position maturing every week.

Theoretical
Posts: 1474
Joined: Tue Aug 19, 2014 10:09 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by Theoretical » Wed Mar 13, 2019 8:26 pm

If you need the full 30K to be a true cash withdrawal, then SPRXX is really the only choice. In a mutual fund wrapper (next day availability), use FCONX - mostly ultrashort corporate bonds or take some duration risk and use the short term bond mutual fund with a duration around 2 years.

If you can stand for some of it to be in an ETF, I second the use of ICSH. It’s an awesome fund.

pward
Posts: 354
Joined: Fri Dec 21, 2018 8:18 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by pward » Wed Mar 13, 2019 8:29 pm

Will you need the money? Or is it a permanent allocation? I personally am a fan at Fidelity of purchasing T-Bills direct. They have 0 commissions or fees and even have a convenient auto-roll feature that will save you from having to buy new ones when they mature. They also are a higher yield than you will find in any money market.

remomnyc
Posts: 652
Joined: Mon Jan 04, 2016 4:27 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by remomnyc » Sun Mar 31, 2019 8:47 am

If you buy $100k FDZXX, do you have to maintain $100k? My sister does not want to lump sum into market, so I thought FDZXX would be a good place for $ to sit while she dollar cost averages into market.

marcopolo
Posts: 2025
Joined: Sat Dec 03, 2016 10:22 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by marcopolo » Sun Mar 31, 2019 8:53 am

remomnyc wrote:
Sun Mar 31, 2019 8:47 am
If you buy $100k FDZXX, do you have to maintain $100k? My sister does not want to lump sum into market, so I thought FDZXX would be a good place for $ to sit while she dollar cost averages into market.
You need $100k to get in. But, there is no required minimum to maintain. I basically use it as my sweep account in CMA (checking acct) at Fidelity. I currently have about $12k in it. I periodically manually put money into it, it comes out automatically to cover expenses.
Once in a while you get shown the light, in the strangest of places if you look at it right.

bawr
Posts: 67
Joined: Thu May 19, 2011 9:10 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by bawr » Sun Mar 31, 2019 9:17 am

marcopolo wrote:
Sun Mar 31, 2019 8:53 am
You need $100k to get in. But, there is no required minimum to maintain. I basically use it as my sweep account in CMA (checking acct) at Fidelity. I currently have about $12k in it. I periodically manually put money into it, it comes out automatically to cover expenses.
I am under the impression that a minimum balance of $10,000 is required in order to avoid fees. The minimum is waived for those with Private Client status.

marcopolo
Posts: 2025
Joined: Sat Dec 03, 2016 10:22 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by marcopolo » Sun Mar 31, 2019 9:24 am

bawr wrote:
Sun Mar 31, 2019 9:17 am
marcopolo wrote:
Sun Mar 31, 2019 8:53 am
You need $100k to get in. But, there is no required minimum to maintain. I basically use it as my sweep account in CMA (checking acct) at Fidelity. I currently have about $12k in it. I periodically manually put money into it, it comes out automatically to cover expenses.
I am under the impression that a minimum balance of $10,000 is required in order to avoid fees. The minimum is waived for those with Private Client status.
I asked my Rep about this a while ago, and she said no minimum. But, I am a Private Client, so that might be why.
I was curious, so, I just looked at the prospectus, and it says:
Fidelity may deduct a small balance maintenance fee of $12.00 from a fund balance with a value of less than $2,000 in shares.
Are you seeing $10k somewhere else?
Once in a while you get shown the light, in the strangest of places if you look at it right.

Ferdinand2014
Posts: 264
Joined: Mon Dec 17, 2018 6:49 pm
Location: New England

Re: Best Fidelity Money Market Account to Hold Cash?

Post by Ferdinand2014 » Sun Mar 31, 2019 10:21 am

FDLXX

‘Treasury only money market’
2.02%
Pure treasury
Most daily and weekly liquidity of any money market at over 99%
SEC requirement is 10/30% for MMF

radiowave
Posts: 2230
Joined: Thu Apr 30, 2015 5:01 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by radiowave » Sun Mar 31, 2019 10:28 am

Another alternative to consider, albeit a mutual fund, is the Fidelity FUMBX Short Term Treasury fund. Minimum $0, 2.46% SEC yield, and 0.03% expense ratio.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

MikeG62
Posts: 1677
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Best Fidelity Money Market Account to Hold Cash?

Post by MikeG62 » Mon Apr 01, 2019 8:36 am

marcopolo wrote:
Sun Mar 31, 2019 9:24 am
bawr wrote:
Sun Mar 31, 2019 9:17 am
marcopolo wrote:
Sun Mar 31, 2019 8:53 am
You need $100k to get in. But, there is no required minimum to maintain. I basically use it as my sweep account in CMA (checking acct) at Fidelity. I currently have about $12k in it. I periodically manually put money into it, it comes out automatically to cover expenses.
I am under the impression that a minimum balance of $10,000 is required in order to avoid fees. The minimum is waived for those with Private Client status.
I asked my Rep about this a while ago, and she said no minimum. But, I am a Private Client, so that might be why.
I was curious, so, I just looked at the prospectus, and it says:
Fidelity may deduct a small balance maintenance fee of $12.00 from a fund balance with a value of less than $2,000 in shares.
Are you seeing $10k somewhere else?
Not only can the balance drop below $100,000, but I have successful added a position in FZDXX to other brokerage accounts I have at Fidelity where I don’t have $100,000 in ready cash (accounts other than my main in brokerage account, such as an account I have set up to fund wedding costs for each of my daughters) by simply transferring $1,000 in shares of FZDXX from my main brokerage account to these other accounts (and transferring $1,000 in cash from these accounts back to my main brokerage account). Then I am able to add to FZDXX in these secondary accounts without needing $100,000 cash to get in. :wink:
Real Knowledge Comes Only From Experience

marcopolo
Posts: 2025
Joined: Sat Dec 03, 2016 10:22 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by marcopolo » Mon Apr 01, 2019 9:13 am

MikeG62 wrote:
Mon Apr 01, 2019 8:36 am
marcopolo wrote:
Sun Mar 31, 2019 9:24 am
bawr wrote:
Sun Mar 31, 2019 9:17 am
marcopolo wrote:
Sun Mar 31, 2019 8:53 am
You need $100k to get in. But, there is no required minimum to maintain. I basically use it as my sweep account in CMA (checking acct) at Fidelity. I currently have about $12k in it. I periodically manually put money into it, it comes out automatically to cover expenses.
I am under the impression that a minimum balance of $10,000 is required in order to avoid fees. The minimum is waived for those with Private Client status.
I asked my Rep about this a while ago, and she said no minimum. But, I am a Private Client, so that might be why.
I was curious, so, I just looked at the prospectus, and it says:
Fidelity may deduct a small balance maintenance fee of $12.00 from a fund balance with a value of less than $2,000 in shares.
Are you seeing $10k somewhere else?
Not only can the balance drop below $100,000, but I have successful added a position in FZDXX to other brokerage accounts I have at Fidelity where I don’t have $100,000 in ready cash (accounts other than my main in brokerage account, such as an account I have set up to fund wedding costs for each of my daughters) by simply transferring $1,000 in shares of FZDXX from my main brokerage account to these other accounts (and transferring $1,000 in cash from these accounts back to my main brokerage account). Then I am able to add to FZDXX in these secondary accounts without needing $100,000 cash to get in. :wink:
That's a nice trick. I was not aware you could do that. I will have to remember that for next time.
I just moved $100k+ around a couple of accounts to accomplish this.
Once in a while you get shown the light, in the strangest of places if you look at it right.

dkturner
Posts: 1490
Joined: Sun Feb 25, 2007 7:58 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by dkturner » Mon Apr 01, 2019 12:59 pm

marcopolo wrote:
Sun Mar 31, 2019 9:24 am
bawr wrote:
Sun Mar 31, 2019 9:17 am
marcopolo wrote:
Sun Mar 31, 2019 8:53 am
You need $100k to get in. But, there is no required minimum to maintain. I basically use it as my sweep account in CMA (checking acct) at Fidelity. I currently have about $12k in it. I periodically manually put money into it, it comes out automatically to cover expenses.
I am under the impression that a minimum balance of $10,000 is required in order to avoid fees. The minimum is waived for those with Private Client status.
I asked my Rep about this a while ago, and she said no minimum. But, I am a Private Client, so that might be why.
I was curious, so, I just looked at the prospectus, and it says:
Fidelity may deduct a small balance maintenance fee of $12.00 from a fund balance with a value of less than $2,000 in shares.
Are you seeing $10k somewhere else?
We keep a sizeable balance in the Vanguard Prime Money Market Fund and have considered moving $100k to FZDXX. But, the Vanguard Prime fund has a higher yield and higher quality investments. I think we will instead move money from Vanguard to our Fidelity Government Money Market Fund monthly or quarterly for use in checkwriting and BillPay.

MotoTrojan
Posts: 4179
Joined: Wed Feb 01, 2017 8:39 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by MotoTrojan » Thu Apr 11, 2019 10:00 pm

mervinj7 wrote:
Mon Nov 12, 2018 4:54 pm
Gadget wrote:
Mon Nov 12, 2018 3:30 pm
I'm in the 35% tax bracket with a 5% state tax. How do I pick the highest yielding money market fund to use as a sweep account for my checking at FIdelity CMA?
What's the purpose of the $30K? That is, how liquid do you need to keep it? You can effectively make your own money market fund using a Treasury Ladder and get much higher yield. For example, a 3 month T-bill has a yield of 2.36% and its state tax free. Thus your tax-equivalent yield is 2.55%. You could keep it simple with three bills that mature every month. To see how the TEY was calculated, please take a look at Kevin M's thread:
viewtopic.php?t=248539#p3909329

In my Fidelity CMA, I keep $5k in FDLXX and the rest of my 6 month EF in auto-rolling treasury bills (they auto-renew automatically).
https://www.fidelity.com/fixed-income-b ... ll-program
How liquid are these? If I need the cash how long would it take to sell them (I assume I could liquidate some/all on the open market) and get it into a MM in the same account?

sarabayo
Posts: 244
Joined: Fri Jun 29, 2018 6:59 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by sarabayo » Thu Apr 11, 2019 11:48 pm

I use FDLXX, myself. I'd use FZDXX but I don't have enough cash lying around to meet its minimum investment requirement.

I made a big spreadsheet containing the 7-day yields of SPRXX, SPAXX, FDRXX, FZFXX, FDLXX, FTEXX, FMOXX, FCFXX, FSPXX, FZDXX, FZCXX, and FZEXX since Jan 1, 2016. I looked up the percentages of fund income from federal debt obligations and the percentage from California state municipal debt obligations (since I live in California), and wrote some formulas to convert pre-tax 7-day yields to after-tax yields. Then I plotted the 7-day yields to see what the trends looked like:

Image

Apparently municipal MMFs fluctuate quite a bit, and I didn't want to be hopping from fund to fund all year round, so I also made a chart which shows the 12-month trailing averages:

Image

So it seems like, at least for someone like me who's in the 24% federal and 9.3% state brackets in California, FZDXX is far and away the best option, and if you don't have $100k sitting around in cash, FDLXX and SPRXX are the best options without minimum investment requirements. I chose FDLXX over SPRXX for three reasons:
  • FDLXX seems to be outstripping SPRXX recently
  • SPRXX is a prime MMF whereas FDLXX is a government MMF. Since this is for my Fidelity CMA which I use for paying my bills, I don't want to be caught out with redemption gates or redemption fees in the case of a liquidity crisis, which is something that SPRXX could have but FDLXX can't.
  • Given two investments with approximately equal after-tax return, I prefer the one with lower pre-tax return (and therefore less taxes to pay), because it makes tax planning a bit easier, I guess.
BTW, all 12 of these Fidelity MMFs (yes, even the ones with $100k minimum investments) suck compared to Vanguard's offerings, so I just keep $5k or so in my Fidelity CMA and replenish it monthly from Vanguard where I keep the other $25k of my emergency fund in VMFXX, which, last I checked, is giving me 1.74% after-tax :mrgreen: If I scrape together $50k at some point I'll upgrade that to VUSXX which gives me 1.79% after-tax.

Anyway, none of this is relevant to people who aren't in my state and my tax bracket, but I thought it might be interesting and/or give people ideas on how to find their own best options.

mervinj7
Posts: 838
Joined: Thu Mar 27, 2014 3:10 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by mervinj7 » Mon Apr 15, 2019 10:53 am

MotoTrojan wrote:
Thu Apr 11, 2019 10:00 pm
mervinj7 wrote:
Mon Nov 12, 2018 4:54 pm
What's the purpose of the $30K? That is, how liquid do you need to keep it? You can effectively make your own money market fund using a Treasury Ladder and get much higher yield. For example, a 3 month T-bill has a yield of 2.36% and its state tax free. Thus your tax-equivalent yield is 2.55%. You could keep it simple with three bills that mature every month. To see how the TEY was calculated, please take a look at Kevin M's thread:
viewtopic.php?t=248539#p3909329

In my Fidelity CMA, I keep $5k in FDLXX and the rest of my 6 month EF in auto-rolling treasury bills (they auto-renew automatically).
https://www.fidelity.com/fixed-income-b ... ll-program
How liquid are these? If I need the cash how long would it take to sell them (I assume I could liquidate some/all on the open market) and get it into a MM in the same account?
Treasury bills, in general, are very liquid and typically have very low spreads. I've only have to sell a T-bill early once (i.e. tapping my EF) and money was available in my CMA by the end of the day. Note, in this case, I was writing a unexpected large check (e.g. HVAC duct repair) that would have drawn down my cash reserves and wanted to replenish them for normally expected expenditures (e.g. mortgage, tuition, CC bills).

MotoTrojan
Posts: 4179
Joined: Wed Feb 01, 2017 8:39 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by MotoTrojan » Mon Apr 15, 2019 11:25 am

mervinj7 wrote:
Mon Apr 15, 2019 10:53 am
MotoTrojan wrote:
Thu Apr 11, 2019 10:00 pm
mervinj7 wrote:
Mon Nov 12, 2018 4:54 pm
What's the purpose of the $30K? That is, how liquid do you need to keep it? You can effectively make your own money market fund using a Treasury Ladder and get much higher yield. For example, a 3 month T-bill has a yield of 2.36% and its state tax free. Thus your tax-equivalent yield is 2.55%. You could keep it simple with three bills that mature every month. To see how the TEY was calculated, please take a look at Kevin M's thread:
viewtopic.php?t=248539#p3909329

In my Fidelity CMA, I keep $5k in FDLXX and the rest of my 6 month EF in auto-rolling treasury bills (they auto-renew automatically).
https://www.fidelity.com/fixed-income-b ... ll-program
How liquid are these? If I need the cash how long would it take to sell them (I assume I could liquidate some/all on the open market) and get it into a MM in the same account?
Treasury bills, in general, are very liquid and typically have very low spreads. I've only have to sell a T-bill early once (i.e. tapping my EF) and money was available in my CMA by the end of the day. Note, in this case, I was writing a unexpected large check (e.g. HVAC duct repair) that would have drawn down my cash reserves and wanted to replenish them for normally expected expenditures (e.g. mortgage, tuition, CC bills).
Sweet. Just bought 4 3-month bills with autoroll to see how it works. Blown away that I’d have to call to cancel the autoroll but going to try selling before maturity to see if that works.

mervinj7
Posts: 838
Joined: Thu Mar 27, 2014 3:10 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by mervinj7 » Mon Apr 15, 2019 11:40 am

MotoTrojan wrote:
Mon Apr 15, 2019 11:25 am
Sweet. Just bought 4 3-month bills with autoroll to see how it works. Blown away that I’d have to call to cancel the autoroll but going to try selling before maturity to see if that works.
I also wish there was a single button to cancel auto-roll but you do have several options. You can chat online with them to cancel auto-roll. Or simply just sell the bill before it matures. Or you can cancel the pending order for the next T-bill once its posts to your account. I have never called them for this purpose yet.

MotoTrojan
Posts: 4179
Joined: Wed Feb 01, 2017 8:39 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by MotoTrojan » Mon Apr 15, 2019 11:57 am

mervinj7 wrote:
Mon Apr 15, 2019 11:40 am
MotoTrojan wrote:
Mon Apr 15, 2019 11:25 am
Sweet. Just bought 4 3-month bills with autoroll to see how it works. Blown away that I’d have to call to cancel the autoroll but going to try selling before maturity to see if that works.
I also wish there was a single button to cancel auto-roll but you do have several options. You can chat online with them to cancel auto-roll. Or simply just sell the bill before it matures. Or you can cancel the pending order for the next T-bill once its posts to your account. I have never called them for this purpose yet.
Nice glad to hear there are options. If you want a partial roll I assume selling some of them prior to maturity is the right way to do it, and the remaining will roll?

fire_maybe
Posts: 6
Joined: Sat Sep 23, 2017 4:17 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by fire_maybe » Wed May 15, 2019 8:10 pm

sarabayo wrote:
Thu Apr 11, 2019 11:48 pm
So it seems like, at least for someone like me who's in the 24% federal and 9.3% state brackets in California, FZDXX is far and away the best option, and if you don't have $100k sitting around in cash, FDLXX and SPRXX are the best options without minimum investment requirements.
Very interesting post! Would you be willing to share your spreadsheet?

I'm a little surprised that FSPXX and FCFXX didn't come out on top for you given their very high tax-equivalent yield right now. Is there a reason you didn't use tax-equivalent yield numbers for municipal funds and raw 7-day yield numbers for the taxable funds?

Also, where did you find the 7-day yield historical data?

Thanks.

sarabayo
Posts: 244
Joined: Fri Jun 29, 2018 6:59 pm

Re: Best Fidelity Money Market Account to Hold Cash?

Post by sarabayo » Thu May 16, 2019 5:40 pm

fire_maybe wrote:
Wed May 15, 2019 8:10 pm
sarabayo wrote:
Thu Apr 11, 2019 11:48 pm
So it seems like, at least for someone like me who's in the 24% federal and 9.3% state brackets in California, FZDXX is far and away the best option, and if you don't have $100k sitting around in cash, FDLXX and SPRXX are the best options without minimum investment requirements.
Very interesting post! Would you be willing to share your spreadsheet?
Sure, here you go: https://gofile.io/?c=vU2RE2
fire_maybe wrote:
Wed May 15, 2019 8:10 pm
I'm a little surprised that FSPXX and FCFXX didn't come out on top for you given their very high tax-equivalent yield right now.
Well, here's the latest graph: https://i.imgur.com/U7yIYmm.png

As you can see, there was a spike in municipals, but they've quickly dropped again. As I mentioned, municipal money market funds seem to be very unstable in terms of yields.
fire_maybe wrote:
Wed May 15, 2019 8:10 pm
Is there a reason you didn't use tax-equivalent yield numbers for municipal funds and raw 7-day yield numbers for the taxable funds?
Well, mainly because it just seemed easier and more straightforward to calculate, I guess. It doesn't really matter whether you use after-tax or tax-equivalent pre-tax if your main goal is just to compare among these funds, right?

As I understand it, taxation of these funds depends on several factors -- my federal tax bracket and my state tax bracket, of course, but also the percentage of each fund's holdings which qualify as federal or California state or municipal obligations (say X%), and the percentage of each fund's income that is attributable to interest from federal or California state or municipal obligations (say Y%). If X% < 50%, then California fully taxes all income from the fund; otherwise, it taxes 100% - Y% of income from the fund.

Meanwhile, if I understand correctly, the federal government taxes 100% - Z% of income from the fund, where Z% is the percentage of the fund's income that is attributable to interest from municipal obligations generally.

Image

I got the above numbers from tax forms provided by Fidelity on their website. These numbers are only provided on an annual basis, so I'm using the numbers for 2018 now. The percentage of income attributable to federal obligations comes from the 2018 Percentage of Income from U.S. Government Securities form, and the percentage of income attributable to municipal generally and California obligations comes from 2018 Tax-Exempt Income from Fidelity Funds. Some of the funds don't appear in one or the other of the PDFs, so I just assumed their percentages based on the stated goal of each fund; these assumed numbers are highlighted in red.

Hopefully my calculations are accurate -- please let me know if you find anything wrong with them :)
fire_maybe wrote:
Wed May 15, 2019 8:10 pm
Also, where did you find the 7-day yield historical data?
Here: https://institutional.fidelity.com/app/funds/hpdy?pos=T

I found this page by googling "fidelity historical prices". It actually provides daily yields as well, but I went with 7-day since that's what Vanguard provides, and I already had a similar spreadsheet for Vanguard.

anoop
Posts: 850
Joined: Tue Mar 04, 2014 1:33 am

Re: Best Fidelity Money Market Account to Hold Cash?

Post by anoop » Thu May 16, 2019 9:16 pm

sarabayo wrote:
Thu May 16, 2019 5:40 pm
I got the above numbers from tax forms provided by Fidelity on their website. These numbers are only provided on an annual basis, so I'm using the numbers for 2018 now. The percentage of income attributable to federal obligations comes from the 2018 Percentage of Income from U.S. Government Securities form, and the percentage of income attributable to municipal generally and California obligations comes from 2018 Tax-Exempt Income from Fidelity Funds. Some of the funds don't appear in one or the other of the PDFs, so I just assumed their percentages based on the stated goal of each fund; these assumed numbers are highlighted in red.
I don't see many of the Fidelity's treasury MM funds listed in the above docs. How can we know, for a given fund, whether the interest is state tax exempt? I just paid state tax on all of the interest (non-qualified dividends as it was reported) for 2018. I'd like to see if I can have it, or a portion of it, exempted for 2019. The fund in question is SPAXX.

Post Reply