Fidelity interest rates

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Greatness
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Fidelity interest rates

Post by Greatness » Sat Jul 15, 2017 12:27 pm

Since the crash, it seems the interest rates that Fidelity has been paying has been much lower than other online institutions. Are you guys just keeping the money there or utilizing GS Bank or another institution instead to obtain a higher "safe" guaranteed yield?

abner kravitz
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Re: Fidelity interest rates

Post by abner kravitz » Sat Jul 15, 2017 12:48 pm

I use Goldman Sachs at 1.2%. Fidelity doesn't compete in this space and will only pay typical bricks-and-mortar bank interest

flah
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Re: Fidelity interest rates

Post by flah » Sat Jul 15, 2017 12:56 pm

It's a brokerage account. If you want interest, you'll have to buy CDs or bonds.

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whodidntante
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Re: Fidelity interest rates

Post by whodidntante » Sat Jul 15, 2017 1:09 pm

I use Fidelity as my main checking account and generally have one month or less of expenses there. In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account. It's decent for a checking account and the interest buys me a coffee now and then.

For the taxable brokerage account and IRA I have there, I only have a few dollars in cash, so I don't care what they pay.

I'm curious what you are doing that causes a concern about cash rates at a broker. You would need to keep a large amount for a long time in cash for it to make a substantial difference.

TBillT
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Re: Fidelity interest rates

Post by TBillT » Sat Jul 15, 2017 1:19 pm

Sounds like you (OP) may be comparing apples and oranges.
You seem to be talking about on-line banks such as Ally etc. which are a different type of institution.
Money Market funds are now getting back to 1% but are not FDIC insured.
So the period where Banks were 1% and Fidelity/Vanguard was 0% in money market funds is about over for now. although many here like the on-line banks and there is still some possible yield advantage in the on-line banks.

Greatness
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Re: Fidelity interest rates

Post by Greatness » Sat Jul 15, 2017 1:38 pm

whodidntante wrote:I use Fidelity as my main checking account and generally have one month or less of expenses there. In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account. It's decent for a checking account and the interest buys me a coffee now and then.

For the taxable brokerage account and IRA I have there, I only have a few dollars in cash, so I don't care what they pay.

I'm curious what you are doing that causes a concern about cash rates at a broker. You would need to keep a large amount for a long time in cash for it to make a substantial difference.
I have my checking and emergency savings @ Fidelity. I have secondary savings @ Ally.

Spirit Rider
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Re: Fidelity interest rates

Post by Spirit Rider » Sat Jul 15, 2017 1:42 pm

This is not just Fidelity, but all Money Market Funds (MMF). SEC regulations restrict MMFs to very specific investments and Weighted Average Maturity (WAM) to 60 days and Weighted Average Life (WAL) to 120 days. The rates general track fairly closely to 3-month treasury bills. These have been very low for the last several years, with daily yields only breaking 1.00% in the last month or so.

You can not compare a MMF rate to a banking product rate. Online savings accounts, CDs, etc... are much more flexible is setting their rates based on the financial institution's income producing portfolio and their reserve requirements.

I am receiving a 1.08% 7-day yield for FZDXX in my Fidelity CMA.

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dm200
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Re: Fidelity interest rates

Post by dm200 » Sat Jul 15, 2017 3:31 pm

Spirit Rider wrote:This is not just Fidelity, but all Money Market Funds (MMF). SEC regulations restrict MMFs to very specific investments and Weighted Average Maturity (WAM) to 60 days and Weighted Average Life (WAL) to 120 days. The rates general track fairly closely to 3-month treasury bills. These have been very low for the last several years, with daily yields only breaking 1.00% in the last month or so.
You can not compare a MMF rate to a banking product rate. Online savings accounts, CDs, etc... are much more flexible is setting their rates based on the financial institution's income producing portfolio and their reserve requirements.
I am receiving a 1.08% 7-day yield for FZDXX in my Fidelity CMA.
Very true.

A Money Market FUND (company) can only pay out what the underlying holdings allow and earn. A bank or credit union account can pay just about (within reason) however much or little it chooses to pay. So, for example, a credit union that has account(s) where the holders are not rate sensitive and just leave the money there might choose to keep rates low. On the other hand, a credit union might choose to pay high or very high rates on certain types of accounts to meet goals of growth in certain types of accounts and certain penetration of market areas.

The term "money market account" for banks and credit unions is a descriptive term that can mean something different for every banks and credit union offering them. On the other hand a "Money Market Fund" must meet extensive financial and regulatory and compliance requirements to be called a "Money Market Fund".

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CyberBob
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Re: Fidelity interest rates

Post by CyberBob » Mon Jul 17, 2017 1:12 pm

whodidntante wrote:In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account.
Isn't the FDIC-insured deposit sweep account your core position for the cash account?
How do you get an automatic draw from SPRXX to reconcile debits? Or do you just do it manually?

Spirit Rider
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Re: Fidelity interest rates

Post by Spirit Rider » Mon Jul 17, 2017 2:29 pm

CyberBob wrote:
whodidntante wrote:In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account.
Isn't the FDIC-insured deposit sweep account your core position for the cash account?
How do you get an automatic draw from SPRXX to reconcile debits? Or do you just do it manually?
If you hold Fidelity Money Market Funds in their CMA, they will automatically redeem from those funds to the core position to satisfy debits (ACH, Check and ATM). At least it has worked for me like that for a decade.

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whodidntante
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Re: Fidelity interest rates

Post by whodidntante » Mon Jul 17, 2017 10:44 pm

CyberBob wrote:
whodidntante wrote:In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account.
Isn't the FDIC-insured deposit sweep account your core position for the cash account?
How do you get an automatic draw from SPRXX to reconcile debits? Or do you just do it manually?
To add to what the other respondent said, you implement this by manually buying SPRXX with any funds you transfer in, but you do not need to manually sell. The funding priority is described on their website. I think it's core > money market > margin. They also have automatic replenishment features that I do not use because I don't keep significant amounts of cash anywhere else.

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aj76er
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Re: Fidelity interest rates

Post by aj76er » Mon Jul 17, 2017 10:51 pm

whodidntante wrote:
CyberBob wrote:
whodidntante wrote:In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account.
Isn't the FDIC-insured deposit sweep account your core position for the cash account?
How do you get an automatic draw from SPRXX to reconcile debits? Or do you just do it manually?
To add to what the other respondent said, you implement this by manually buying SPRXX with any funds you transfer in, but you do not need to manually sell. The funding priority is described on their website. I think it's core > money market > margin. They also have automatic replenishment features that I do not use because I don't keep significant amounts of cash anywhere else.
Is this for brokerage accounts as well or only the CMA account?
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle

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whodidntante
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Re: Fidelity interest rates

Post by whodidntante » Tue Jul 18, 2017 10:51 am

aj76er wrote:
whodidntante wrote:
CyberBob wrote:
whodidntante wrote:In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account.
Isn't the FDIC-insured deposit sweep account your core position for the cash account?
How do you get an automatic draw from SPRXX to reconcile debits? Or do you just do it manually?
To add to what the other respondent said, you implement this by manually buying SPRXX with any funds you transfer in, but you do not need to manually sell. The funding priority is described on their website. I think it's core > money market > margin. They also have automatic replenishment features that I do not use because I don't keep significant amounts of cash anywhere else.
Is this for brokerage accounts as well or only the CMA account?
You could dig around on the site to find out. But the easiest way is to try. Buy a MMF, and then check your balances. See if "available to trade without margin impact" includes your money market. Or are you trying to use your brokerage account like a CMA account?

new2bogle
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Re: Fidelity interest rates

Post by new2bogle » Tue Jul 18, 2017 10:58 am

whodidntante wrote:I use Fidelity as my main checking account and generally have one month or less of expenses there. In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account. It's decent for a checking account and the interest buys me a coffee now and then.

For the taxable brokerage account and IRA I have there, I only have a few dollars in cash, so I don't care what they pay.

I'm curious what you are doing that causes a concern about cash rates at a broker. You would need to keep a large amount for a long time in cash for it to make a substantial difference.
SPRXX has a yield of 0.96 but ER of 0.42. Does that mean that if the yield falls below 0.42 (or yearly return below 0.42), you will lose money?

acanthurus
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Re: Fidelity interest rates

Post by acanthurus » Tue Jul 18, 2017 11:05 am

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whodidntante
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Re: Fidelity interest rates

Post by whodidntante » Tue Jul 18, 2017 11:17 am

new2bogle wrote:
whodidntante wrote:I use Fidelity as my main checking account and generally have one month or less of expenses there. In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account. It's decent for a checking account and the interest buys me a coffee now and then.

For the taxable brokerage account and IRA I have there, I only have a few dollars in cash, so I don't care what they pay.

I'm curious what you are doing that causes a concern about cash rates at a broker. You would need to keep a large amount for a long time in cash for it to make a substantial difference.
SPRXX has a yield of 0.96 but ER of 0.42. Does that mean that if the yield falls below 0.42 (or yearly return below 0.42), you will lose money?
The yield is after expenses. SPRXX has never lost money in nominal terms, but it has lost to inflation plenty of years.

new2bogle
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Re: Fidelity interest rates

Post by new2bogle » Tue Jul 18, 2017 11:19 am

whodidntante wrote:
new2bogle wrote:
whodidntante wrote:I use Fidelity as my main checking account and generally have one month or less of expenses there. In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. They liquidate it at the end of each day to reconcile debits in the account. It's decent for a checking account and the interest buys me a coffee now and then.

For the taxable brokerage account and IRA I have there, I only have a few dollars in cash, so I don't care what they pay.

I'm curious what you are doing that causes a concern about cash rates at a broker. You would need to keep a large amount for a long time in cash for it to make a substantial difference.
SPRXX has a yield of 0.96 but ER of 0.42. Does that mean that if the yield falls below 0.42 (or yearly return below 0.42), you will lose money?
The yield is after expenses. SPRXX has never lost money in nominal terms, but it has lost to inflation plenty of years.
Thank you.

LK2012
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Re: Fidelity interest rates

Post by LK2012 » Tue Jul 18, 2017 11:24 am

whodidntante wrote:I use Fidelity as my main checking account and generally have one month or less of expenses there. In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. .
Hmm, so if I put my entire cash management account (which is sitting in cash) into SPRXX, when I write a check to cash management would they just take it straight out of SPRXX?

Spirit Rider
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Re: Fidelity interest rates

Post by Spirit Rider » Tue Jul 18, 2017 1:14 pm

LK2012 wrote:
whodidntante wrote:I use Fidelity as my main checking account and generally have one month or less of expenses there. In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. .
Hmm, so if I put my entire cash management account (which is sitting in cash) into SPRXX, when I write a check to cash management would they just take it straight out of SPRXX?
Technically, they would redeem SPRXX to the core account and then debit the core account, but effectively this is the same as if they had taken it straight out of SPRXX.

LK2012
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Re: Fidelity interest rates

Post by LK2012 » Tue Jul 18, 2017 5:26 pm

Spirit Rider wrote:
LK2012 wrote:
whodidntante wrote:I use Fidelity as my main checking account and generally have one month or less of expenses there. In my cash management account I use SPRXX -- Fidelity Money Market. The current yield is 0.96%. .
Hmm, so if I put my entire cash management account (which is sitting in cash) into SPRXX, when I write a check to cash management would they just take it straight out of SPRXX?
Technically, they would redeem SPRXX to the core account and then debit the core account, but effectively this is the same as if they had taken it straight out of SPRXX.
Thanks. If I go to my Fidelity account and try to "Change Core Position," I get only two choices:

SPAXX Fidelity Government Money Market Fund 0.58% 7-Day Yield

FZFXX Fidelity Treasury Money Market Fund 0.59% 7-Day Yield

Of course, I can just buy shares of SPRXX Fidelity Money Market Fund, 0.94% 7-Day Yield.

I hadn't looked at the Fidelity interest rates in a while, so as always, good to see what's cooking at Bogleheads.

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SeeMoe
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Re: Fidelity interest rates

Post by SeeMoe » Wed Jul 19, 2017 1:15 pm

Maybe it is helping out the Fidelity Johnson Family's bottom line a wee bit. Read where their net worth is nearly $22 billion dollars USD since starting Fidelity in 1947. That's a lot of profit, not to mention employee payroll and operating costs over the years. Someone has to pay " their" bills,...

SeeMoe.. :oops:
"By gnawing through a dike, even a Rat can destroy a nation ." {Edmund Burke}

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