Where to park cash in Fidelity?

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MikeG62
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Re: Where to park cash in Fidelity?

Post by MikeG62 » Wed May 20, 2020 5:00 pm

corp_sharecropper wrote:
Tue May 19, 2020 7:39 pm
Maybe I don't have as big of a stock pile of cash as some (by design), but there are exactly ZERO HYS or CD rates out there right now that are worth me lifting a finger to chase. I already feel dirty for having expended the time & energy to type this, 1.X% APY, just not worth the hassle of messing with my setup (happens to be with Fidelity, I'm a "one stop shop" situation, but it really wouldn't matter if I was anywhere else other than the usual suspects, not worth it to MOVE, whether it's to Marcus, Ally, or that super obscure credit union w/ a 1990's website).
The time to move is not now. It was in 2019 and even earlier this year. For example, I’ve got ten no penalty CD’s between Ally and Marcus at rates ranging mostly from 2.0% to 2.35%. I’ve got five traditional CD’s with Ally purchased in mid 2019 with yields ranging from 2.5% to 2.85%. I’ve got six CD’s with PSECU bought in Oct/Nov 2019 with rates ranging from 3.0% to 3.25% (two of which I am still adding to) and two with NFCU purchased in March of 2020 with rates as high as 3.0%. The vast majority of this I consider as the short end of my FI exposure (and not cash).

I used to be reluctant to move my around for incremental yield. Then Treasury yields began to fall and I found much better yield elsewhere.

It’s really does not take a lot of time or effort to pick up not inconsequential amounts of incremental yield.
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malabargold
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Re: Where to park cash in Fidelity?

Post by malabargold » Wed May 20, 2020 7:37 pm

WSJ had an article on this paradigm shift a few months back.
With 0 commissions and low-cost investment products, making money off customer’s cash accounts is now an important money-makers for brokerages.

Article suggested keeping cash in on-line banks. Cleaving off money accounts from the brokerages as far as practicable.

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1789
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Re: Where to park cash in Fidelity?

Post by 1789 » Thu May 21, 2020 3:44 am

I would keep the cash as liquid as possible and not take any risk with the stocks or bonds. So i keep them at Fidelity at SPAXX. All my accounts are at Fidelity so whatever available without a headache there i picked that one.
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Re: Where to park cash in Fidelity?

Post by inbox788 » Thu May 21, 2020 5:56 pm

1789 wrote:
Thu May 21, 2020 3:44 am
I would keep the cash as liquid as possible and not take any risk with the stocks or bonds. So i keep them at Fidelity at SPAXX. All my accounts are at Fidelity so whatever available without a headache there i picked that one.
I think the yield is approaching zero these days, so I'm shopping around. If I switch, I just hope the 1.3%+ high yield savings/MM aren't going to follow down soon after. The gap between these risk free or very low risk cash like deposits was virtually zero a couple of years ago, but a 1% delta is enough to get me to move.

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Re: Where to park cash in Fidelity?

Post by Kevin M » Thu May 21, 2020 7:03 pm

statefan03 wrote:
Wed May 20, 2020 4:50 pm
To the original topic, a couple funds to consider.

FIPDX - tips
FUMBX - short term treasuries
FUAMX - intermediate treasuries

all would be state tax exempt.
How does this address the original topic?
rgs92 wrote:
Tue May 19, 2020 12:23 pm
Is there any place in Fidelity that would function as a high yield savings account or money market fund? I've been using SPRXX (their Fidelity Money Market fund) but the yield is tiny (.23 % now).
A high yield savings account or money market fund has a duration of 0 years, and good HY savings account yields are in the ballpark of 1.3%.

FUMBX has a 30-day yield of 0.21% and a duration of 2.7 years.

FUAMX has a 30-day yield of 0.47% and a duration of 6.5 years.

The state tax exemption makes almost no difference at these low yields.

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Leif
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Re: Where to park cash in Fidelity?

Post by Leif » Fri May 22, 2020 12:31 am

I don't think it is even worth while to do a transfer from a core account, such as SPAXX to a slightly higher yielding SPRXX, even if it only takes a few seconds for each account. I think I will just let new money go into SPAXX, keep that at the desired level, and transfer any excess to a high yield account for taxable. Looks like they are all going to 0.01%.

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Re: Where to park cash in Fidelity?

Post by statefan03 » Fri May 22, 2020 4:28 pm

Kevin M wrote:
Thu May 21, 2020 7:03 pm
statefan03 wrote:
Wed May 20, 2020 4:50 pm
To the original topic, a couple funds to consider.

FIPDX - tips
FUMBX - short term treasuries
FUAMX - intermediate treasuries

all would be state tax exempt.
How does this address the original topic?
rgs92 wrote:
Tue May 19, 2020 12:23 pm
Is there any place in Fidelity that would function as a high yield savings account or money market fund? I've been using SPRXX (their Fidelity Money Market fund) but the yield is tiny (.23 % now).
A high yield savings account or money market fund has a duration of 0 years, and good HY savings account yields are in the ballpark of 1.3%.

FUMBX has a 30-day yield of 0.21% and a duration of 2.7 years.

FUAMX has a 30-day yield of 0.47% and a duration of 6.5 years.

The state tax exemption makes almost no difference at these low yields.

Kevin
Why is that so out of the question?

SPRXX
- YTD 0.36%
- ER 0.42%

FIPDX
- YTD 4.81%
- ER 0.05%

FUMBX
- YTD 4.06%
- ER 0.03%

FUAMX
- YTD 9.34%
- ER 0.03%

I'm not an expert but those look like reasonable alternatives to a money market account. Higher returns and lower fees. I'll take it.

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Kevin M
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Re: Where to park cash in Fidelity?

Post by Kevin M » Fri May 22, 2020 7:53 pm

statefan03 wrote:
Fri May 22, 2020 4:28 pm
Kevin M wrote:
Thu May 21, 2020 7:03 pm
statefan03 wrote:
Wed May 20, 2020 4:50 pm
To the original topic, a couple funds to consider.

FIPDX - tips
FUMBX - short term treasuries
FUAMX - intermediate treasuries

all would be state tax exempt.
How does this address the original topic?
rgs92 wrote:
Tue May 19, 2020 12:23 pm
Is there any place in Fidelity that would function as a high yield savings account or money market fund? I've been using SPRXX (their Fidelity Money Market fund) but the yield is tiny (.23 % now).
A high yield savings account or money market fund has a duration of 0 years, and good HY savings account yields are in the ballpark of 1.3%.

FUMBX has a 30-day yield of 0.21% and a duration of 2.7 years.

FUAMX has a 30-day yield of 0.47% and a duration of 6.5 years.

The state tax exemption makes almost no difference at these low yields.

Kevin
Why is that so out of the question?

SPRXX
- YTD 0.36%
- ER 0.42%

FIPDX
- YTD 4.81%
- ER 0.05%

FUMBX
- YTD 4.06%
- ER 0.03%

FUAMX
- YTD 9.34%
- ER 0.03%

I'm not an expert but those look like reasonable alternatives to a money market account. Higher returns and lower fees. I'll take it.
You're not looking at the right numbers to compare fixed income alternatives. Yields matter more than past returns (e.g., YTD is a past return), and you're ignoring interest-rate risk (e.g., duration). Expense ratios are good to consider, but SEC yield incorporates ERs. And you ignored high-yield savings accounts, which is what the OP was asking for a competitive alternative to.

Yields. All those funds have yields of less than 0.5%, while a high-yield savings account as a yield of 1.3%. Funds have much lower yields.

Duration. All of those funds have durations of multiple years, while a HY savings account has a duration of 0 years. Funds are much riskier.

Lower yields, higher risk. I'll skip them.

Kevin
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Artsdoctor
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Re: Where to park cash in Fidelity?

Post by Artsdoctor » Fri May 22, 2020 8:08 pm

Ferdinand2014 wrote:
Tue May 19, 2020 8:57 pm
I buy treasury bills at auction on auto roll.
Yes, but T bills are not cash. You might THINK they are, and I did, but they are not. I tried to sell T bills as the price reached par a month or so out from maturity and couldn't find a buyer at Fidelity so I couldn't get rid of them. I raised a stink at Fidelity's bond desk and was told there wasn't a buyer for a bill with a negative yield. So much for liquidity. In this environment, I canceled all auto-roll features. I had plenty of reserves in a money market account but it was a sobering experience.

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Re: Where to park cash in Fidelity?

Post by ofckrupke » Sat May 23, 2020 12:55 pm

Artsdoctor wrote:
Fri May 22, 2020 8:08 pm
Yes, but T bills are not cash. You might THINK they are, and I did, but they are not. I tried to sell T bills as the price reached par a month or so out from maturity and couldn't find a buyer at Fidelity so I couldn't get rid of them. I raised a stink at Fidelity's bond desk and was told there wasn't a buyer for a bill with a negative yield. So much for liquidity.
This sounds more like a case of inflexibility...maybe in Fidelity's order ticket autofill, because you wouldn't have had to give up much to find someone on the other side of that trade. WRT not getting par -> wasn't cash...well, you knew darn well all along for T bills that the only day par is guaranteed at surrender is the maturity date.

I did not mind selling some 28th May T-bills at 99.9923 on 22nd April, and neither remember what the ask screen looked like nor care that Schwab's bond desk was the counterparty. The additional $3.93 in eventual CA taxation on the capital gain, booked because my cash flow need couldn't wait for the bills to mature with all accrued discount taken as state-exempt interest, bugs me more than the $2.16 shortfall to par (or even somewhat more to a hypothetical over par ask) on a $28k transaction.

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FIREchief
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Re: Where to park cash in Fidelity?

Post by FIREchief » Sat May 23, 2020 2:25 pm

Artsdoctor wrote:
Fri May 22, 2020 8:08 pm
Ferdinand2014 wrote:
Tue May 19, 2020 8:57 pm
I buy treasury bills at auction on auto roll.
Yes, but T bills are not cash. You might THINK they are, and I did, but they are not. I tried to sell T bills as the price reached par a month or so out from maturity and couldn't find a buyer at Fidelity so I couldn't get rid of them. I raised a stink at Fidelity's bond desk and was told there wasn't a buyer for a bill with a negative yield. So much for liquidity. In this environment, I canceled all auto-roll features. I had plenty of reserves in a money market account but it was a sobering experience.
While this is true, I will suggest that auto rolling 4 week T-Bills is essentially cash. Of course, the yield is only 0.09% currently, so hardly worth the (very small) effort.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Where to park cash in Fidelity?

Post by abuss368 » Sat May 23, 2020 2:29 pm

I read an article today on the TIAA website where negative interest rates may be possible by December. Incredible. If that occurs, I will end up moving to a limited or short term bond fund.
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Re: Where to park cash in Fidelity?

Post by Cash » Sat May 23, 2020 9:09 pm

corp_sharecropper wrote:
Tue May 19, 2020 7:39 pm
Maybe I don't have as big of a stock pile of cash as some (by design), but there are exactly ZERO HYS or CD rates out there right now that are worth me lifting a finger to chase. I already feel dirty for having expended the time & energy to type this, 1.X% APY, just not worth the hassle of messing with my setup (happens to be with Fidelity, I'm a "one stop shop" situation, but it really wouldn't matter if I was anywhere else other than the usual suspects, not worth it to MOVE, whether it's to Marcus, Ally, or that super obscure credit union w/ a 1990's website).
I agree. I assume most of the people yield chasing either have very large sums of cash and rely on said cash for income, or they just enjoy playing the game.

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Re: Where to park cash in Fidelity?

Post by Artsdoctor » Mon Jun 01, 2020 5:13 pm

ofckrupke wrote:
Sat May 23, 2020 12:55 pm
Artsdoctor wrote:
Fri May 22, 2020 8:08 pm
Yes, but T bills are not cash. You might THINK they are, and I did, but they are not. I tried to sell T bills as the price reached par a month or so out from maturity and couldn't find a buyer at Fidelity so I couldn't get rid of them. I raised a stink at Fidelity's bond desk and was told there wasn't a buyer for a bill with a negative yield. So much for liquidity.
This sounds more like a case of inflexibility...maybe in Fidelity's order ticket autofill, because you wouldn't have had to give up much to find someone on the other side of that trade. WRT not getting par -> wasn't cash...well, you knew darn well all along for T bills that the only day par is guaranteed at surrender is the maturity date.

I did not mind selling some 28th May T-bills at 99.9923 on 22nd April, and neither remember what the ask screen looked like nor care that Schwab's bond desk was the counterparty. The additional $3.93 in eventual CA taxation on the capital gain, booked because my cash flow need couldn't wait for the bills to mature with all accrued discount taken as state-exempt interest, bugs me more than the $2.16 shortfall to par (or even somewhat more to a hypothetical over par ask) on a $28k transaction.
Sorry for the delay. I probably was not detailed enough in my description. The concept was this:

I bought 90-day T-bills a while back at auction through Fidelity. At around Day 60, the price was nearing par and I wanted to sell them. Obviously, par would have been reached at Day 90 but at Day 60, it was pretty close because interest rates had plummeted. When I went to sell the T-bills online, I was asked to submit a request for a price; the sale would not go through electronically. I didn't get a price back by the end of the day. The next day, I still couldn't get a price and I called the Bond Desk at Fidelity. I was told that the price was so close to par that any buyer would effectively be getting a negative yield so the Bond Desk told me that the bills could not be sold (the price would have been something like 99.97). Effectively, the asset was illiquid.

I didn't really need the T-bills and I essentially viewed it as a learning experience. I didn't ask to speak to a supervisor and I didn't rant/rave. The price also started declining a small bit over the following few days but I didn't try again to sell. For all I know, the "illiquid" asset might have been more liquid with pushing and waiting.

But cash it was not. If I would have "needed" the money, I would have had to look elsewhere. I realize we're in an unusual environment with rates being so miniscule. But at least for me, cash is defined as something I can get immediately--not something that I have to rely on a Bond Desk representative to get for me.

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Re: Where to park cash in Fidelity?

Post by ofckrupke » Tue Jun 02, 2020 10:37 am

Artsdoctor wrote:
Mon Jun 01, 2020 5:13 pm
Sorry for the delay. I probably was not detailed enough in my description. The concept was this:

I bought 90-day T-bills a while back at auction through Fidelity. At around Day 60, the price was nearing par and I wanted to sell them. Obviously, par would have been reached at Day 90 but at Day 60, it was pretty close because interest rates had plummeted. When I went to sell the T-bills online, I was asked to submit a request for a price; the sale would not go through electronically. I didn't get a price back by the end of the day. The next day, I still couldn't get a price and I called the Bond Desk at Fidelity. I was told that the price was so close to par that any buyer would effectively be getting a negative yield so the Bond Desk told me that the bills could not be sold (the price would have been something like 99.97). Effectively, the asset was illiquid.

I didn't really need the T-bills and I essentially viewed it as a learning experience. I didn't ask to speak to a supervisor and I didn't rant/rave. The price also started declining a small bit over the following few days but I didn't try again to sell. For all I know, the "illiquid" asset might have been more liquid with pushing and waiting.

But cash it was not. If I would have "needed" the money, I would have had to look elsewhere. I realize we're in an unusual environment with rates being so miniscule. But at least for me, cash is defined as something I can get immediately--not something that I have to rely on a Bond Desk representative to get for me.
Your story reinforces my prior impression that Schwab's bond desk is a much more engaged market maker, perhaps as much as a service to its smaller clients as for the collection of nickels and pennies along the way, than Fidelity's or Vanguard's (no comparable experiences with other brokers). Our experiences with (most likely) different issues with slightly different remaining terms, on (most likely) different days....but Schwab was matching for small quantities the best external bid on the order book (that was for blocks of $200k+) so pikers like me could use t-bills as cash. Whereas Fidelity's programs apparently set a much higher bar for round-trip profit to the company of taking the other side of trades like this - enough higher that it would not provide you liquidity on t-bills with a third of their term remaining. They weren't willing to split $3 per $10k with a low-but-positive-yield buyer to be named later by aggregating shelf stock from small in-house sell orders, whereas Schwab was in, for a spread to par of 77c per $10k. The disparity in our experiences may be a fluke, but when I resume putting cash in treasuries, I'm pretty sure I'll return to Chuck's parking lot.

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Re: Where to park cash in Fidelity?

Post by goaties » Tue Jun 02, 2020 11:07 am

abuss368 wrote:
Sat May 23, 2020 2:29 pm
I read an article today on the TIAA website where negative interest rates may be possible by December. Incredible. If that occurs, I will end up moving to a limited or short term bond fund.
When this happens, does that mean that money market funds will "break the buck"? Wouldn't there be a lot of desire by fund companies to keep that from happening?

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Re: Where to park cash in Fidelity?

Post by ofckrupke » Tue Jun 02, 2020 11:23 am

goaties wrote:
Tue Jun 02, 2020 11:07 am
abuss368 wrote:
Sat May 23, 2020 2:29 pm
I read an article today on the TIAA website where negative interest rates may be possible by December. Incredible. If that occurs, I will end up moving to a limited or short term bond fund.
When this happens, does that mean that money market funds will "break the buck"? Wouldn't there be a lot of desire by fund companies to keep that from happening?
TIAA's main vehicle in this category is an annuity product and accumulates rather than distributing interest income, so it's inherently a variable rather than buck-priced product. In this respect they don't have much of a dilemma and can let its price per accumulation unit (share equivalent) start declining rather than subsidizing it from elsewhere in the firm to maintain static pricing (the equivalent of ~zero yield and "propped" buck pricing in a MMF...which is what fund companies did in the last period of ~zero overnight rates).

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Re: Where to park cash in Fidelity?

Post by abuss368 » Tue Jun 02, 2020 11:29 am

goaties wrote:
Tue Jun 02, 2020 11:07 am
abuss368 wrote:
Sat May 23, 2020 2:29 pm
I read an article today on the TIAA website where negative interest rates may be possible by December. Incredible. If that occurs, I will end up moving to a limited or short term bond fund.
When this happens, does that mean that money market funds will "break the buck"? Wouldn't there be a lot of desire by fund companies to keep that from happening?
I would expect the Federal Reserve and the fund companies themselves to use all available options to prevent negative interest rates.
John C. Bogle: Two Fund Portfolio - Total Stock & Total Bond - “Simplicity is the master key to financial success."

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Re: Where to park cash in Fidelity?

Post by bck63 » Tue Jun 02, 2020 11:35 am

rgs92 wrote:
Tue May 19, 2020 12:23 pm
Is there any place in Fidelity that would function as a high yield savings account or money market fund? I've been using SPRXX (their Fidelity Money Market fund) but the yield is tiny (.23 % now).

It is annoying to have to use Ally or Marcus to place cash savings, so I wonder why Fidelity or other big financial firms don't have a decent option.
{edit: I see that the Vanguard Prime money market fund also yields just .4 %, so that's not much better.}
Fidelity Conservative Income Bond Fund (FCONX) and Fidelity Conservative Income Municipal Bond Fund (FCRDX) have yields of 1.01% and 1.09%, respectively. Durations are 0.31 and 0.61 years, respectively. Frequent trading rules are suspended, per the prospectuses. EDIT: ERs for both funds are 0.35%. Not terrible, IMHO.

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Re: Where to park cash in Fidelity?

Post by JAZZISCOOL » Tue Jun 02, 2020 12:07 pm

rgs92 wrote:
Tue May 19, 2020 12:37 pm
Thank you. I considered ultrashort bond funds/ETFs like ICSH (Ishares ultrashort bond fund) but they are surprisingly volatile, with a dip from 50.50 to 48.56 in March. That's not really acceptable in money market fund as I see it. Am I wrong here? Thank you.
FWIW

Per Schwab this ETF has 45.3% in corporates. As many know, the bond market suffered severe dislocations in March.

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Re: Where to park cash in Fidelity?

Post by bck63 » Tue Jun 02, 2020 12:30 pm

Kevin M wrote:
Thu May 21, 2020 7:03 pm
statefan03 wrote:
Wed May 20, 2020 4:50 pm
To the original topic, a couple funds to consider.

FIPDX - tips
FUMBX - short term treasuries
FUAMX - intermediate treasuries

all would be state tax exempt.
How does this address the original topic?
rgs92 wrote:
Tue May 19, 2020 12:23 pm
Is there any place in Fidelity that would function as a high yield savings account or money market fund? I've been using SPRXX (their Fidelity Money Market fund) but the yield is tiny (.23 % now).
A high yield savings account or money market fund has a duration of 0 years, and good HY savings account yields are in the ballpark of 1.3%.

FUMBX has a 30-day yield of 0.21% and a duration of 2.7 years.

FUAMX has a 30-day yield of 0.47% and a duration of 6.5 years.

The state tax exemption makes almost no difference at these low yields.

Kevin
I do use FUMBX as a savings account. I keep $1K in the FDIC core account in my CMA so I can access with an ATM. This usually gets replenished with new funds when I get paid if I've used any of it. The rest I keep in FUMBX, which gets added to with new money on payday as well. It's money I hope not to use anytime soon, but I prefer the shorter duration (compared to IT bond funds) in case I do have to use it. So I guess I would say that I use FUMBX for money I may need to use in the next 1-5 years. My brokerage account is for money I will be using in greater than five years. I use an intermediate term bond fund there (Fidelity Municipal Bond index fund at present, FMBIX).

I just can't deal with paying the .42% ER on the MMFs.

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Re: Where to park cash in Fidelity?

Post by JAZZISCOOL » Tue Jun 02, 2020 2:07 pm

malabargold wrote:
Wed May 20, 2020 7:37 pm
WSJ had an article on this paradigm shift a few months back.
With 0 commissions and low-cost investment products, making money off customer’s cash accounts is now an important money-makers for brokerages.

Article suggested keeping cash in on-line banks. Cleaving off money accounts from the brokerages as far as practicable.
I remember that article. If I recall correctly, 40%+ of Schwab's revenues come from its cash products.

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