Schwab user. Where should I put my Emergency Fund?

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ldav07
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Schwab user. Where should I put my Emergency Fund?

Post by ldav07 » Tue Dec 04, 2018 10:05 pm

Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!

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fortfun
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Re: Schwab user. Where should I put my Emergency Fund?

Post by fortfun » Tue Dec 04, 2018 10:11 pm

ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
Consider opening an account at Ally. 2% Savings 2.25% no risk CD.

radiowave
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Re: Schwab user. Where should I put my Emergency Fund?

Post by radiowave » Tue Dec 04, 2018 10:15 pm

Also agree with Ally. Of note, 1 year CD is 2.65% right now.

Be careful about transferring money out of BoA, e.g. push $ from BoA to Ally as they hit you with a fee.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

trueblueky
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Re: Schwab user. Where should I put my Emergency Fund?

Post by trueblueky » Tue Dec 04, 2018 10:31 pm

ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
Depending on your state tax situation, look into opening a Schwab checking account linked to a Schwab brokerage account. Use the brokerage account to buy Treasuries for some of your emergency fund. You also get a debit card with no foreign transaction fees.

NoHeat
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Re: Schwab user. Where should I put my Emergency Fund?

Post by NoHeat » Tue Dec 04, 2018 10:34 pm

If the sweep account pays too little, then T bills.

Alternatively BIL or SHV (whichever is on the no-commission ETF list). These are ETFs that now pay 2.07% and 2.25% respectively, which you can just buy once and forget about. BIL holds T-bills, SHV holds short-term Treasury notes; durations are about 0.2 and 0.4 years, respectively.

These short-term treasury securities will give you the greatest comfort in a worst-case emergency, when you are afraid of losing a job at the same time the economy is cratering and credit markets freezing up, as nearly happened in 2008.

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Taylor Larimore
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Taylor Larimore » Tue Dec 04, 2018 10:51 pm

ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
ldav07:

I do not have a separate, low-yielding, "emergency fund." I know that in an "emergency" (I've never had one) I can obtain money from my bank account, my credit card, or my portfolio.

Keep investing simple with as few funds as possible. Read my "Simplicity" link below.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

ofckrupke
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Re: Schwab user. Where should I put my Emergency Fund?

Post by ofckrupke » Tue Dec 04, 2018 10:53 pm

trueblueky wrote:
Tue Dec 04, 2018 10:31 pm
ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
Depending on your state tax situation, look into opening a Schwab checking account linked to a Schwab brokerage account. Use the brokerage account to buy Treasuries for some of your emergency fund. You also get a debit card with no foreign transaction fees.
As an alternative to buying individual treasuries, at least for someone starting out, let me add - for Schwab specifically: SCHO (short term treasury ETF, duration 1.9y) and/or SWSBX (short term bond index fund, duration 2.8y, basically no minimum to start, add, or subtract, and divs settable to reinvest)...both er=0.06% and transaction-fee free. The bit of term risk is, to me at least, easier to bear than rewarding Schwab for setting up even the purchased money market funds as modest profit centers (@ er=0.35% or more). My checking account balance at Schwab bank and sweep balance in brokerage are both ~zero presently.

retiredflyboy
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Re: Schwab user. Where should I put my Emergency Fund?

Post by retiredflyboy » Tue Dec 04, 2018 11:53 pm

I use Ally savings for emergency and also keep small balance in Ally checking. One day transfer from savings to checking. Checks and debit card tied to checking with $1000 atm limit. I keep $1000 in checking and the bulk of it in savings. I also have some in Vanguard Prime MM with $250 minimum check writing.
Facts are stubborn things. Everything works until it doesn’t.

isira
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Re: Schwab user. Where should I put my Emergency Fund?

Post by isira » Wed Dec 05, 2018 1:24 am

If you want to keep everything at Schwab, one of the money market funds would be fine. SWVXX is currently 2.14%.

acanthurus
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Re: Schwab user. Where should I put my Emergency Fund?

Post by acanthurus » Wed Dec 05, 2018 10:26 am

removed
Last edited by acanthurus on Tue Oct 15, 2019 12:52 pm, edited 1 time in total.

BogleMelon
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Re: Schwab user. Where should I put my Emergency Fund?

Post by BogleMelon » Wed Dec 05, 2018 10:48 am

retiredflyboy wrote:
Tue Dec 04, 2018 11:53 pm
I use Ally savings for emergency and also keep small balance in Ally checking. One day transfer from savings to checking. Checks and debit card tied to checking with $1000 atm limit. I keep $1000 in checking and the bulk of it in savings. I also have some in Vanguard Prime MM with $250 minimum check writing.
Transferring between Ally saving to checking or the opposite, is instant.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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Nate79
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Nate79 » Wed Dec 05, 2018 11:08 am

isira wrote:
Wed Dec 05, 2018 1:24 am
If you want to keep everything at Schwab, one of the money market funds would be fine. SWVXX is currently 2.14%.
+1 This is what I use.

MisterMister
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Re: Schwab user. Where should I put my Emergency Fund?

Post by MisterMister » Wed Dec 05, 2018 11:16 am

ldav07 wrote:
Tue Dec 04, 2018 10:05 pm
Hi all,

I use Schwab for my Roth and investments and I'm trying to decide where to keep my emergency fund. I bank with Bank of America and am realizing I should not be letting it just sit in my savings account. The only reason being it helps maintain preferred member status.

What would be a simple route to go? MM? CDs? Any Schwab users recommend anything specific?

Thanks for any help in advance!
Agree with Ally. 11-month no-penalty CD is 2.25%, a good choice if you think you will need to tap into the money. Of course 1-year 2.65% is better if you're over 90% certain you won't need to do that. Ally's EWP's are generally good, although they will tap into principal to cover the EWP if you take the money out too soon.

Ally is an excellent online bank, good customer service 24/7, the Web site is quite good, and the offerings are as well.

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Just sayin...
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Just sayin... » Wed Dec 05, 2018 11:59 am

I am with Schwab and keep my emergency funds in SWVXX:

https://www.schwabfunds.com/public/csim ... mbol=SWVXX

Bhairston2018
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Bhairston2018 » Wed Dec 05, 2018 2:25 pm

isira wrote:
Wed Dec 05, 2018 1:24 am
If you want to keep everything at Schwab, one of the money market funds would be fine. SWVXX is currently 2.14%.
+1

michaeljmroger
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Re: Schwab user. Where should I put my Emergency Fund?

Post by michaeljmroger » Wed Dec 05, 2018 2:34 pm

If you live in a high income tax state like CA you’d be better off with SNSXX: it’s safer and the after-tax yield will be slightly higher.

Joe_[Investor]
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Joe_[Investor] » Wed Dec 05, 2018 3:14 pm

I'm a Schwab fanboy (and a Boglehead... weird.) and use them for all of my brokerage and banking services. Schwab offers Investor savings and checking accounts linked to an existing Schwab One brokerage account, which makes creating a tiered EF fund quite easy (at least it did for me). I use a separate Schwab brokerage account for general investing outside of this tiered setup.

Tiered EF using Schwab One Brokerage account with linked Investor Savings & Investor Checking accounts:
Schwab One Brokerage:
-CD Ladder
-Tax-Exempt Municipal Money Market Funds (SWTXX)

Investor Savingss:
-2-3 Mo. Household Expenses

Investor Checking:
-Everyday Cash (direct deposit goes in here)
-Debit Card (Schwab offers great features on their checking accounts & debit cards)

MnD
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Re: Schwab user. Where should I put my Emergency Fund?

Post by MnD » Wed Dec 05, 2018 6:34 pm

Nate79 wrote:
Wed Dec 05, 2018 11:08 am
isira wrote:
Wed Dec 05, 2018 1:24 am
If you want to keep everything at Schwab, one of the money market funds would be fine. SWVXX is currently 2.14%.
+1 This is what I use.
SWVXX and T-bills of desired duration. I have 25% in SWVXX and 75% in a 13-week T-bill ladder at 2.5% TEY (75%). but that's mainly for soon upcoming spending. If I had a long term emergency fund I'd go out farther on the yield curve with a 26 week or 1 year T-bill ladder. If you already have Schwab accounts I don't see the point of having yet another financial institution for checking and/or emergency savings.

retiredflyboy
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Re: Schwab user. Where should I put my Emergency Fund?

Post by retiredflyboy » Tue Dec 11, 2018 12:01 am

BogleMelon wrote:
Wed Dec 05, 2018 10:48 am
retiredflyboy wrote:
Tue Dec 04, 2018 11:53 pm
I use Ally savings for emergency and also keep small balance in Ally checking. One day transfer from savings to checking. Checks and debit card tied to checking with $1000 atm limit. I keep $1000 in checking and the bulk of it in savings. I also have some in Vanguard Prime MM with $250 minimum check writing.
Transferring between Ally saving to checking or the opposite, is instant.
Thank you, I should have stated same day.
Facts are stubborn things. Everything works until it doesn’t.

drk
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Re: Schwab user. Where should I put my Emergency Fund?

Post by drk » Tue Dec 11, 2018 1:14 am

Joe_[Investor] wrote:
Wed Dec 05, 2018 3:14 pm
I'm a Schwab fanboy (and a Boglehead... weird.)
That's not weird. That's the Vanguard Effect. Many of us are happy Schwab customers.

dardeninvestor
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Re: Schwab user. Where should I put my Emergency Fund?

Post by dardeninvestor » Thu Aug 22, 2019 7:49 pm

Curious to those on this thread, now that a year has passed:

Are you using SCHO or SNSXX for your emergency fund (assuming you choose to keep it invested in Treasuries)

SCHO is Schwab's short-term treasury ETF with a low ER (it's not ultra-short like I presume a money market would be, but $0 commission, low ER, not a huge term exposure)

SNSXX is Schwab's treasury money market fund with higher ER

NMBob
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Re: Schwab user. Where should I put my Emergency Fund?

Post by NMBob » Thu Aug 22, 2019 8:01 pm

FLRN - spdr barclays floating rate investment grade ultra short bond commission free etf at schwab.

SUB - ishares short term muni bond etf commission free at schwab. not ultra short but good quality.
Last edited by NMBob on Thu Aug 22, 2019 8:09 pm, edited 1 time in total.

dardeninvestor
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Re: Schwab user. Where should I put my Emergency Fund?

Post by dardeninvestor » Thu Aug 22, 2019 8:03 pm

And as a follow-up do you feel yields are any different than what you'd get via on-line savings accounts.

To clarify, since MM (SNSXX) won't decline in value and high yield on-line savings is FDIC insured...do people feel there is any potential return advantage/premium you achieve by investing in short-term treasury ETFs (SCHO/SHY) or ultrashort ETFs (SHV, BIL, or the ETFs mentioned in the above post).

Guess it's a broader question about the ideal investment is for a relatively safe rainy day fund (short term treasury ETF vs treasury MM vs on-line savings insured by FDIC).

Jmh04j
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Jmh04j » Thu Aug 22, 2019 9:05 pm

Guess it's a broader question about the ideal investment is for a relatively safe rainy day fund (short term treasury ETF vs treasury MM vs on-line savings insured by FDIC).
This is a great question. I am in the process of consolidating financial institutions (most likely to Schwab) and was wondering the same thing. Why not just put emergency fund and other extra cash in SCHO or some other type short term “safe” bond fund and be done with it? If I need cash I simple sell then transfer to my Schwab checking account.

dardeninvestor
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Re: Schwab user. Where should I put my Emergency Fund?

Post by dardeninvestor » Thu Aug 22, 2019 9:28 pm

I'm really glad I'm not the only one with this question! For me I don't need the immediate liquidity on-line savings or MM would provide, so I've debated why not park it in SCHO.

Jmh04j
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Jmh04j » Fri Aug 23, 2019 9:56 am

why not park it in SCHO
My thought process is as follows:

- Treasury is same credit risk as FDIC

- If rates go up, NAV falls. The difference in yield is made up (approximately) by the effective duration of the fund.

- If rates go down, NAV rises and there is upside in total return vs. a money market fund

- The question is then one of time horizon. If rates go up will I need the money before the effective duration of the fund to recover the NAV loss?

Let me know when if I am missing something here.

dardeninvestor
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Re: Schwab user. Where should I put my Emergency Fund?

Post by dardeninvestor » Fri Aug 23, 2019 10:07 am

Honestly I really never touch it. So effective duration of 1.9 years is OK I suppose. Just an emergency fund.

Granted with SCHO I'm missing the current higher yielding ultra-short end of things.

NerdicSkier
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Re: Schwab user. Where should I put my Emergency Fund?

Post by NerdicSkier » Fri Aug 23, 2019 10:13 am

My "emergency fund" is in SCHO but a local credit union has a 4% savings account I am considering. Only hesitation is that I'm not sure the complexity is worth it.

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BigFoot48
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Re: Schwab user. Where should I put my Emergency Fund?

Post by BigFoot48 » Fri Aug 23, 2019 10:36 am

isira wrote:
Wed Dec 05, 2018 1:24 am
If you want to keep everything at Schwab, one of the money market funds would be fine. SWVXX is currently 2.14%.
That's what I use. I also like simplifying accounts in one firm, so Schwab checking account is also used. Agree with Taylor that a separate fund, like SWVXX, is probably not really necessary, but it was hard to resist!
Retired | Two-time in top-10 in Bogleheads S&P500 contest; 13-time loser

Quaestner
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Quaestner » Fri Aug 23, 2019 5:43 pm

I know you are looking at Schwab, but I use (tax deferred, inflation adjusted) I-bonds held at Treasury Direct for much of my emergency fund. If you consider this, take the time to learn what you're getting into. The complication is not worth it for some!

almostretired1965
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Re: Schwab user. Where should I put my Emergency Fund?

Post by almostretired1965 » Fri Aug 23, 2019 5:53 pm

For convenience, I put my emergency funds in my Vanguard brokerage account. One less vendor I have to work with. It's parked in the Prime Money Market account right now. When MM rates hit zero in the aftermath of the great recession, I moved it to short term investment grade/corporate bond.

Granted, this is really catastrophe money. I tend to keep a balance of around $25K to $30K in my local checking/savings accounts, which is on balance around 4 to 6 months of living expenses. Knock on wood, but I've never had to touch the Vanguard money, except when I grossly under-estimated how much money I needed to pay the IRS one year.

A

Malinois000
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Malinois000 » Sat Aug 24, 2019 6:01 pm

I use SWVXX...it currently pays a little over 2% and convenient if you need in an emergency.

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Wiggums
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Wiggums » Sat Aug 24, 2019 6:07 pm

dardeninvestor wrote:
Fri Aug 23, 2019 10:07 am
Honestly I really never touch it. So effective duration of 1.9 years is OK I suppose. Just an emergency fund.

Granted with SCHO I'm missing the current higher yielding ultra-short end of things.
Same here

retiredflyboy
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Re: Schwab user. Where should I put my Emergency Fund?

Post by retiredflyboy » Sat Aug 24, 2019 9:30 pm

I use Ally bank savings account linked to my checking account.
Facts are stubborn things. Everything works until it doesn’t.

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Elric
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Re: Schwab user. Where should I put my Emergency Fund?

Post by Elric » Sat Aug 24, 2019 10:03 pm

We use Schwab as our brokerage account, Ally Savings for emergency cash and cash "holding area" (xfer money monthly, as needed, to our BoA checking account, which we mainly keep for local Safe Deposit Box and other minor in-person conveniences).
"No man is free who works for a living." | Illya Kuryakin

drk
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Re: Schwab user. Where should I put my Emergency Fund?

Post by drk » Sat Aug 24, 2019 10:31 pm

A nice thing with SCHO: with the addition of SPST to the commission-free list, it's possible to TLH when the NAV does fall.

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