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Yeah, this is pretty much how I approach it as well although now that cash earns 5% I’m more comfortable having quite a bit in MM funds and especially since Merrill lets you into Fidelity funds that are otherwise high minimum. But I’ve never been a big one for strict planning And I do a lot of funding for emergencies a little bit seat to the pants.
I retain an old school perspective that my parents -- who were products of the great depression and dust bowl -- taught me. That perspective taught me to strive to have enough $'s available to pay for foreseeable expenses with cash. That conservative way of relating to my personal finances has served me too well over the decades to change it at this point. But it does make sense to me to keep in mind that credit cards are available for use in unforeseen emergency situations. I also maintain a home equity line of credit with a $0 balance for possible use in unforeseen emergency situations.
All good points but there are some rather peculiar tweaks I have found since my wife and I stopped getting paychecks. I get SS but not till the last of the month, and it generally is not enough to pay for big ticket items like estimated taxes, April trip to Africa, etc.
So for the first time I am taking money out of our investment accounts. With interest rates up so much, we are making a goodly amount on treasuries and MMF I use as our safe cash to avoid loosing a ton this early in retirement.
We like having a B+M local bank but it pays little on a checking account so I try to leave money in the MMF as long as possible. For the same reason I have not set up automatic seeps of the dividends and interest to our bank.
While it easy to move the money, Schwab requires you sell the MMF first, and it takes a couple of days to clear, so a fair amount of planning is involved. This to me is the major disadvantage to using Schwab.
To avoid always using our cash cushion for expenses, (as it is intended for DCA and increasing equities when they go on sale), I am selling some of our appreciated stocks, but trying to do so in a proportional manner.
Once my wife is on SS ( and I have to take RMDs) it will be a little more manageable.
"While it easy to move the money, Schwab requires you sell the MMF first, and it takes a couple of days to clear, so a fair amount of planning is involved. This to me is the major disadvantage to using Schwab."
SMA3 "While it easy to move the money, Schwab requires you sell the MMF first, and it takes a couple of days to clear, so a fair amount of planning is involved. This to me is the major disadvantage to using Schwab."
FD: it takes only one day to clear, and I never had any issues, I'm a trader who has done it many times. The next day I can write a check. BTW, I always sell a fund or MM which is a fund and buy another on the same day. No need to wait. Fidelity is worst, you sell your total position in a fund in your IRA (where I have most of my money), you can't enter a buy order on the same day, and you must call a rep. This rep will only allow you 90% of the proceeds. Several times in the past the rep told me I couldn't do it and I told him to bring a supervisor to confirm it. At Schwab, I have entered many times 99% of the proceeds, because I sold a bond fund. No rep help was needed The other issues are just very small unexpected "mistakes" but Schwab will credit your account anyway. Try to get a Fidelity rep to give you a free commission on an inst fund share.
The discussion in front of us is...show me one emergency I must have over several thousands of cash NOW.
I have sold 100% of OEFs at Fido a number of times. The full amount has always been available to reinvest the next morning. I have closed out ETFs and CEFs in their entirety at Fido and the funds were always available to reinvest in a matter of seconds. Perhaps if I had wanted to withdraw the cash it might have taken an extra day or two? Don’t know.
EFTs (electronic fund transfers) to my bank and CU from Fido’s money market fund (money management account) take one night - perhaps a second night on occasion. Since I can write checks against the money market fund, you might say the cash is always available.
I have sold 100% of OEFs at Fido a number of times. The full amount has always been available to reinvest the next morning. I have closed out ETFs and CEFs in their entirety at Fido and the funds were always available to reinvest in a matter of seconds. Perhaps if I had wanted to withdraw the cash it might have taken an extra day or two. Don’t know. EFTs (electronic fund transfers) to my bank and CU from Fido’s money market fund (money management account) take one night - perhaps a second night on occasion. Since I can write checks against the money market fund, you might say the cash is always available.
That is not what I posted. Try it now (or tomorrow during trading hours), you can cancel later. Go ahead now, and sell 100% of your shares in one OEF, then try to enter another trade to buy another fund. You can't, you have to wait for the next day. I tried it and got "(313012) The Estimated Order Value for this order exceeds your Cash Available to Trade." I don't have cash in my account. It is zero, and I don't want to wait another day. As I said before, you must call a rep.
At Schwab, it works great. Being a Fidelity customer since 1976 doesn't get you more stuff.
OK - I guess I misunderstood you @FD. That’s the only thing I miss about being at TRP - the ease of moving from one fund to another. You sold at and bought into the new fund at both funds’ closing price.
So, Fido makes you wait an extra day to complete a fund-to-fund trade. I can live with that. Agree sooner would be better.
I retain an old school perspective that my parents -- who were products of the great depression and dust bowl -- taught me.
Ditto. Parents were in their “formative” years during the Depression. Stocks were a dirty word. I gifted them a money market fund in the 70s once into which I’d deposited $500. MM funds paid double-digest interest then. But they didn’t trust it and moved the $$ to the local bank they could actually see driving by every day.
Fido makes you wait an extra day to complete a fund-to-fund trade. I can live with that. Agree sooner would be better.
Once upon a time Fido let you reinvest a portion, up to 90% of anticipated sale proceeds as of the last closing price as I recall, during the same trading day. But that ended many years ago.
Their current policy was a source of great frustration for me in early April 2020 when I sold shares an OEF on the day the market bottomed but couldn't finalize buying shares of the replacement OEF until the next trading day. Several % were lost on that trade. That is one of the benefits of investing in ETFs rather that OEFs at Fidelity.
For clarity, note that Fido OEF exchanges happen the at close of market on the same day. Only OEF exchanges that include at least one non-fido OEF take two days.
Examples: FXAIX exchanged for FNCMX: SELL/BUY both occur same day (Have done these as long as I can remember.) FXAIX exchanged for any non-Fido OEF: FXAIX sold today. Non-Fido OEF bought next day. Any non-Fido OEF exchanged for any other non-Fido OEF: SELL today, BUY next day.
This is IMO really a small problem that is getting blown out of proportion here, especially if you are a LT investors - there are workarounds (as suggested, ETFs, CEFs) or a wee bit of planning that can remedy this. Traders is perhaps another story, but my guess is traders are more commonly trading stuff other than OEFs.
@FD100 I should have been clearer; The couple of days is on the bank's end. Wells Fargo says it takes two days before funds available in your account
When I called them they said the transfer from their side to the merchant also takes two days so they seemed to think that made it ok to move money that was not there yet. Seemed a bit dicey to me
While it is a PIA at Schwab to not have sweep account, I think you can sell a fund, and buy another the same day although they will tell you you don't have enough settled funds
"While it is a PIA at Schwab to not have sweep account, I think you can sell a fund, and buy another the same day although they will tell you you don't have enough settled funds"
By coincidence I just did that a few minutes ago- a simultaneous Sell SNOXX / Buy SNSXX order (all within one transaction) which will (hopefully) occur at market close today. We shall see. I didn't get the "unsettled funds" advisory, perhaps because I used the simultaneous buy/sell transaction option.
you may not have gotten the "Settled funds" message because Schwab MMFs all settle the same day. All other funds and stocks settle in two or three days
I think Schwab, unlike Fidelity will let you buy funds without enough cash in your account to cover it. If the funds are not there by settlement they will charge you interest at margin rates
Stillers’ point is well taken. I have a brokerage account at Fido, but don’t own any of their funds except, of course, a money market fund. (Keep very little in cash.) So I wasn’t addressing Fidelity’s own funds in earlier post. Agree it’s a gamble when you sell a potentially volatile fund and can’t buy something else at that day’s close. . Could work in your favor or go against you. Of course if you owned a big chunk of a Fidelity mm fund, there wouldn’t be any problem.
“Yep, for most investors it doesn't matter, but it does for me...as a trader.”
LOL. I didn’t realize FD is a trader! Not aware of many on this forum. ISTM that OEFs would be a poor vehicle for trading. Why not use ETFs, CEFs and individual stocks?
FWIW (to quote our favorite MFO leader) The SNOXX / SNSXX trade at Schwab went without a hitch at close of trading today. Of course both of those are MMKT funds, so that's about a simple as it gets.
Hank, I'm not a typical trader. My trades are based on my system. In "normal" market I may hold a fund for weeks/months, in risky market a lot shorter. One day can be very meaningful. When I discussed trading funds it was all about none Schwab/Fidelity funds. Why not ETF? Because most ETFs for bond fund are generic. Can you find an ETF for PIMIX,RCTIX,SEMMX,CBLDX,RSIIX? Another crucial difference, in volatile market ETF will lose a lot more money while OEFs don't which is another reason for me to get out before a crash.
Transfering money from Schwab to someone's bank can be quicker than the usual 2-3 days. You can write a check and deposit it in your bank account via your phone, I have done it many times and the money was available the next morning. Schwab supplies me with free checks. From memory, Schwab is a real bank while Fidelity isn't. But the biggest advantage I get at Schwab is when they waive the $49.95 fees when I buy Institutional shares.
Comments
But I’ve never been a big one for strict planning And I do a lot of funding for emergencies a little bit seat to the pants.
So for the first time I am taking money out of our investment accounts. With interest rates up so much, we are making a goodly amount on treasuries and MMF I use as our safe cash to avoid loosing a ton this early in retirement.
We like having a B+M local bank but it pays little on a checking account so I try to leave money in the MMF as long as possible. For the same reason I have not set up automatic seeps of the dividends and interest to our bank.
While it easy to move the money, Schwab requires you sell the MMF first, and it takes a couple of days to clear, so a fair amount of planning is involved. This to me is the major disadvantage to using Schwab.
To avoid always using our cash cushion for expenses, (as it is intended for DCA and increasing equities when they go on sale), I am selling some of our appreciated stocks, but trying to do so in a proportional manner.
Once my wife is on SS ( and I have to take RMDs) it will be a little more manageable.
I surely agree on that.
https://www.mutualfundobserver.com/discuss/discussion/comment/171434/#Comment_171434
FD: it takes only one day to clear, and I never had any issues, I'm a trader who has done it many times. The next day I can write a check. BTW, I always sell a fund or MM which is a fund and buy another on the same day. No need to wait.
Fidelity is worst, you sell your total position in a fund in your IRA (where I have most of my money), you can't enter a buy order on the same day, and you must call a rep. This rep will only allow you 90% of the proceeds. Several times in the past the rep told me I couldn't do it and I told him to bring a supervisor to confirm it.
At Schwab, I have entered many times 99% of the proceeds, because I sold a bond fund. No rep help was needed
The other issues are just very small unexpected "mistakes" but Schwab will credit your account anyway. Try to get a Fidelity rep to give you a free commission on an inst fund share.
The discussion in front of us is...show me one emergency I must have over several thousands of cash NOW.
EFTs (electronic fund transfers) to my bank and CU from Fido’s money market fund (money management account) take one night - perhaps a second night on occasion. Since I can write checks against the money market fund, you might say the cash is always available.
Go ahead now, and sell 100% of your shares in one OEF, then try to enter another trade to buy another fund. You can't, you have to wait for the next day. I tried it and got "(313012) The Estimated Order Value for this order exceeds your Cash Available to Trade."
I don't have cash in my account. It is zero, and I don't want to wait another day.
As I said before, you must call a rep.
At Schwab, it works great. Being a Fidelity customer since 1976 doesn't get you more stuff.
So, Fido makes you wait an extra day to complete a fund-to-fund trade. I can live with that. Agree sooner would be better.
Their current policy was a source of great frustration for me in early April 2020 when I sold shares an OEF on the day the market bottomed but couldn't finalize buying shares of the replacement OEF until the next trading day. Several % were lost on that trade. That is one of the benefits of investing in ETFs rather that OEFs at Fidelity.
Fido OEF exchanges happen the at close of market on the same day.
Only OEF exchanges that include at least one non-fido OEF take two days.
Examples:
FXAIX exchanged for FNCMX: SELL/BUY both occur same day (Have done these as long as I can remember.)
FXAIX exchanged for any non-Fido OEF: FXAIX sold today. Non-Fido OEF bought next day.
Any non-Fido OEF exchanged for any other non-Fido OEF: SELL today, BUY next day.
This is IMO really a small problem that is getting blown out of proportion here, especially if you are a LT investors - there are workarounds (as suggested, ETFs, CEFs) or a wee bit of planning that can remedy this. Traders is perhaps another story, but my guess is traders are more commonly trading stuff other than OEFs.
When I called them they said the transfer from their side to the merchant also takes two days so they seemed to think that made it ok to move money that was not there yet. Seemed a bit dicey to me
While it is a PIA at Schwab to not have sweep account, I think you can sell a fund, and buy another the same day although they will tell you you don't have enough settled funds
By coincidence I just did that a few minutes ago- a simultaneous Sell SNOXX / Buy SNSXX order (all within one transaction) which will (hopefully) occur at market close today. We shall see. I didn't get the "unsettled funds" advisory, perhaps because I used the simultaneous buy/sell transaction option.
Keep us posted.
you may not have gotten the "Settled funds" message because Schwab MMFs all settle the same day. All other funds and stocks settle in two or three days
I think Schwab, unlike Fidelity will let you buy funds without enough cash in your account to cover it. If the funds are not there by settlement they will charge you interest at margin rates
“Yep, for most investors it doesn't matter, but it does for me...as a trader.”
LOL. I didn’t realize FD is a trader! Not aware of many on this forum. ISTM that OEFs would be a poor vehicle for trading. Why not use ETFs, CEFs and individual stocks?
When I discussed trading funds it was all about none Schwab/Fidelity funds.
Why not ETF? Because most ETFs for bond fund are generic. Can you find an ETF for PIMIX,RCTIX,SEMMX,CBLDX,RSIIX?
Another crucial difference, in volatile market ETF will lose a lot more money while OEFs don't which is another reason for me to get out before a crash.
Transfering money from Schwab to someone's bank can be quicker than the usual 2-3 days. You can write a check and deposit it in your bank account via your phone, I have done it many times and the money was available the next morning. Schwab supplies me with free checks.
From memory, Schwab is a real bank while Fidelity isn't.
But the biggest advantage I get at Schwab is when they waive the $49.95 fees when I buy Institutional shares.