Best Fidelity Money Market Account to Hold Cash?

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duffer
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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
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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
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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
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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
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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.

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Artsdoctor
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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
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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
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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
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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
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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
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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
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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.

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CardinalRule
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.

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