Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
@msf "I do know that at Vanguard you generally cannot link Vanguard accounts to outside institutions. " Generally" comes into play here. I just finished looking at my VG account & I can move money in & out to my local bank. Since establishing this link , Vanguard Cash Plus has been implemented. Maybe they prefer clients to use this means.
Can you move money by initiating that transfer at the bank? That's what I meant by difficulty in linking Vanguard accounts to your bank. Or are you moving money by initiating transfers at Vanguard? Then you've linked your bank to Vanguard.
That latter type of linking is supposed to be easy anywhere. No routing numbers from Vanguard (or TRP, or wherever) needed. Just the bank's info.
"Supposed to be" is the key phrase here. From @crash 's post it sounds like that is exactly what his son was trying to do - link the CU account to TRP and initiate transfers from the TRP side.
I doubt the problem is caused by the Glendale Schools Credit Union changing from federal charter to state charter. Nor do I think that the problem is because they are insured by American Share Insurance instead of NCUA. (Only state-charted CUs can be privately insured; that may have motivated the charter change.) But I'm not going to check further down that rabbit hole.
My son just opened TRP acct. Everything went smoothly until attempting to link his credit union acct with TRP. Sorry, we are unable.... Feces.
He STILL refuses to get a credit card. Prefers cash and debit card. Dunno if that factors in.
An entire generation has been conditioned to think debit cards = credit cards. I would never use a debit card for everyday purchases primarily since the consumer protections are not as strong as they are on credit cards.
People forget that if you responsibily pay your credit card bills off every month, it's no different than using a debit card (from our perspective) ... but that means banks are paying more for interchange fees and consumer protections, plus they're not making $$ from you on interest or potential overdraft fees and stores hate paying banks to accept credit cards. So it's no wonder why banks (and stores) prefer people use debit v credit.
I have a CC and debit card. Here's something I read online years ago, that I never thought of, and why I NEVER use my debit card for online purchases:
When using a CC, if there's some problem -- no matter who's at fault -- you have plenty of time to dispute it, and you don't have to pay it until it's settled.
With a debit card the purchase comes out of your bank account immediately. If there's some problem with the purchase and even if it's in your favor, you have to get the money BACK from the vendor -- which may or may not be a PITA.
The best thing is to not get a debit card at all to avoid any and all risk to the attached account. While a debit card is typically the default, most banks will, upon request, issue a plain vanilla ATM card. It can only be used to withdraw cash (with a PIN) and cannot be used to make purchases.
I vaguely remember the trade cut off time for Vanguard funds at Schwab to be 3:00PM EST. I now notice that it is 4:00PM. Does that 4:00PM cut off time apply to all Vanguard funds available at Schwab or are you aware of any exceptions?
Once again, Schwab is having problems pricing preferred shares. I logged in this evening and was greeted with a nearly 10K 'loss' on an AT&T preferred position despite the share price being up on the day as confirmed by 3 other websites. It's the first time it's happened on this position.
I dumped out of my a different preferred stock months ago b/c they could never calculate the cost basis when it was DRIPped ... and now this. I don't get it.....
On a related note, I'm seeing TV ads trying to brand Schwab as a place for 'traders' which I find mildly concerning. We all know that's why they bought TD so they could get ThinkDesktop to replace SSE as their active trader platform -- which is interesting b/c I understand the company is torn between staying 'boring' for its older/wealthier clients and trying to be 'cool' and 'action-packed' for younger folks and/or traders.
Many days my account balances at Schwab are wrong by a few percentage points. I stopped worrying about $$ reflected. I just hope that someone is not salami slicing my accounts slowly because I would not detect it as I do not check the History often. The big corporations have won the game of desensitizing me to their deliberate incompetence.
IBKR patrons talk highly about it. May be it is time to check them out?
Many days my account balances at Schwab are wrong by a few percentage points. I stopped worrying about $$ reflected. I just hope that someone is not salami slicing my accounts slowly because I would not detect it as I do not check the History often. The big corporations have won the game of desensitizing me to their deliberate incompetence.
IBKR patrons talk highly about it. May be it is time to check them out?
I'm really not in a rush to change brokerages and Schwab's been mostly decent otherwise (not as good as the old TDA), but I'll look. It's been ages since I explored IBKR (back when I was futures trading 15 years go) but when I get some time I'll take a gander.
I was trying to follow up on the irritating Schwab MM settlement of T+1 Schwab implements and checked their prospectus which says,
"To purchase, redeem, exchange or convert shares held in your Schwab account or in your account at another intermediary, you must place your orders with the intermediary that holds your shares. You may not purchase, redeem, exchange or convert shares held in your intermediary account directly with a fund.
When selling or exchanging shares, you should be aware of the following fund policies: For accounts held through a financial intermediary, each fund typically expects to pay sale proceeds to the financial intermediary for payment to redeeming shareholders within two business days following receipt of a shareholder redemption order; however, each fund may take up to seven days to pay sale proceeds."
Bizarre wording given that you can buy them only through intermediaries and not directly through the fund.
In any case, the above general settlement time language is similar as in many mutual funds' prospectus. Below is the link to the prospectus (strange that I pulled it in my Schwab account and I get a morningstar.com link.)
In continuation of my above post, why are other brokerages allowing same day settlement of their own Money Market funds, unlike Schwab? Does the settlement timing depend on how the fund is set up (e.g., prospectus) and somehow the other fund companies started liberally and are stuck with being good to customers? Are there any specific SEC rules for the timing of settlement of money market fund trades that are different from those applicable to other mutual funds?
If you have to spend time researching the above, please ignore my questions. I am hoping you have the answers in your repository. In any case, feel free to send me a PM or email if that is more convenient for you.
I have done the following for years at Schwab. Suppose I have $100k in MM and want to buy $100k PRWCX.
I sell $100k of MM and buy PRWCX in the morning. At night I see the results, no problem. If you do the reverse, same results. If you sell all the shares of PRWCX, you don't know the exact results, just buy 95%. The next day buy the rest of the MM. Yes, Schwab made money on that small amount.
When selling or exchanging shares, you should be aware of the following fund policies: For accounts held through a financial intermediary, each fund typically expects to pay sale proceeds to the financial intermediary for payment to redeeming shareholders within two business days following receipt of a shareholder redemption order; however, each fund may take up to seven days to pay sale proceeds."
Bizarre wording given that you can buy them only through intermediaries and not directly through the fund.
In any case, the above general settlement time language is similar as in many mutual funds' prospectus. Below is the link to the prospectus (strange that I pulled it in my Schwab account and I get a morningstar.com link.)
It is not all that unusual for fund families, especially boutique firms, to sell funds only through third party distributors.
At one time Janus closed off its direct sales channel to new investors. It allowed only existing investors with class D shares to continue investing directly. Everyone else had to buy T shares through third parties.
Schwab originated as a brokerage and likely leaned on that distribution channel when it started running funds.
With respect to M*, as I recall it used to make prospectuses available to users of its websites. As with much of M*'s content, M* seems to have monetized its fund documents:
The Clients We Serve The Morningstar Document Library is ideal for brokerage firms or retirement plan service providers that want to outsource costly document collection and maintenance. In addition to this web interface, the Document Library can also be private-labeled or provided through APIs. Advisors and plan providers can grant investors direct access to the library via their own websites, ensuring investors receive immediate access to key documents. Fund companies and compliance officers find it a valuable resource for current and archived proprietary and competitor filings.
Providing the right document solutions at the right time, every time Donnelley Financial Solutions′s RightProspectus is the next generation in compliance communications for mutual fund, variable annuity, and retirement product providers, as well as broker/dealers and clearing firms. With RightProspectus, documents in our repository are automatically tracked and updated as changes are filed with the SEC, ensuring constant access to the most current and accurate prospectuses. RightProspectus represents a quantum leap forward featuring a new, state-of-the-art online platform.
If you sell all the shares of PRWCX, you don't know the exact results, just buy 95%. The next day buy the rest of the MM. Yes, Schwab made money on that small amount.
Why give Schwab the float? What I've done at Vanguard is sell a dollar amount equal to 95% of the previous close and purchased that amount of the target fund (here, a non-sweep MMF). No float on this first step.
If the remaining 5% is still sizeable, rinse and repeat.
Otherwise, sell the remainder and do a same day purchase of 95% of that remainder. This reduces the float from 5% to 5% of 5%, i.e. 25 basis points. Less if you've iterated.
If you place a sell order for 95%+ of a position in dollars, Vanguard issues a warning. It says that if the shares aren't enough to cover your sell order, it will liquidate your position. But it still lets you place these orders.
for me at schwab, i can place an order for anything even if i don't have the funds to pay for it immediately. i am told, before placing the order, that i'll need to have the necessary funds in my account within two or three days (can't remember which). never have to sell MM funds before buying or anything like that. same thing doesn't work at fidelity, at least not for me.
@msf If the remaining 5% is still sizeable, rinse and repeat. What do you consider sizeable ?
How much risk and money is important is an individual preference. If I'm moving $100K from an investment to a non-sweep MMF, I'm not going to care about giving Schwab use of the entire $100K for a day. That's roughly (very roughly) $100K x 4% / 400 days = $10. Peanuts to many.
What I personally care about is not the floating of some cash but in being out of the market for a day. If I sell $100K and wait a day to purchase a replacement security, especially if it is a lateral move (replacing one fund for another of the same type), I want that money continuously invested.
Sure, the market might go down in that day and I'd be able to buy more shares. But it might also go up and I'd lose on the "exchange". I prefer to eliminate that market risk. If the market (funds in question) move even 1% in that day, that's $1K that I might lose or make depending on my luck that day. Four figure amounts look like real money to me.
Again, it's a personal matter. I don't like putting money at risk, even with 50:50 odds, if I don't need to. Others don't care about such short term risks. I'm comfortable losing the price of a movie ticket ($10). I'm not thrilled at putting the price of two cross country round trip tickets at risk. (I'm cheap - I book economy, nonrefundable.)
for me at schwab, i can place an order for anything even if i don't have the funds to pay for it immediately. i am told, before placing the order, that i'll need to have the necessary funds in my account within two or three days (can't remember which). never have to sell MM funds before buying or anything like that. same thing doesn't work at fidelity, at least not for me.
Years ago it was 3 days (T+3). Until recently it was 2 days (T+2). Now it's just a day (T+1). Fidelity automatically sells your MMFs as needed, as though they were your core (transaction) account. Or you could think of them as "overdraft protection". AFAIK, no one else does this.
I bought something and sold Schwab MM fund on Friday. What I bought settled on Monday and evidently Schwab MM fund settled on Tuesday because Monday was a holiday for the MM fund, resulting in an overdraft and trading violation alert because it is an IRA. If it were a taxable account, it would have resulted in margin interest expense.
On Monday, Columbus Day, or Indigenous Day, the stock market was open but the bond market was closed. This was unusual and that is why m-mkt fund settlements were affected. It was a federal holiday - Federal Reserve, Post Office and several banks were closed. But it wasn't a holiday for many states and businesses.
I have done the following for years at Schwab. Suppose I have $100k in MM and want to buy $100k PRWCX.
I sell $100k of MM and buy PRWCX in the morning. At night I see the results, no problem. I
have you tried buying, say, PRWCX in the morning and selling, say, $100k of MM later on? or even the equivalent amount from a fund you hold but no longer like, say, VASIX or similar? that's just switching the order from what you do but, again, no problem. and if it's a fund you no longer like, you still have the rest of the day to change your mind and sell something else. i don't know why anyone would use the so-called exchange feature when this other option can be used.
have you tried buying, say, PRWCX in the morning and selling, say, $100k of MM later on? or even the equivalent amount from a fund you hold but no longer like, say, VASIX or similar? that's just switching the order from what you do but, again, no problem. and if it's a fund you no longer like, you still have the rest of the day to change your mind and sell something else. i don't know why anyone would use the so-called exchange feature when this other option can be used.
The mechanics may be different for ETFs, but FWIW saying I've bought stock and sold SGOV an hour later and there were no problems at Schwab. I also like that ETFs are tradable in the pre/post-market which gives me added time to 'cover' myself and avoid margin expenses.
(ETFs are also cheaper than Schwab's MMFs, which I appreciate on principle - and principal.)
Litner, the system forced me to do the sell first.
MSF, I usually sell the whole position, I believe in very concentrated portfolio of just 2-3 funds. Funds that I see a potential, I sell minus 2 shares per account and why I don't know the final amount. But, I trade bond funds and in most cases I buy at 99% at "normal" markets. In a very risky market I go to MM and I buy at 95%.
The whole MM business is mostly irrelevant for me because I'm usually invested at 99+%. I trade one fund, not MM, for another fund. This is where Schwab shines over Fidelity where you can buy only 90% and must call a broker. That missing day of just 0.1% in 2-3 accounts can easily be worth at least $1000+1500 per year. This is a major part of my system, and what annoys me most at Fidelity.
for me at schwab, i can place an order for anything even if i don't have the funds to pay for it immediately. i am told, before placing the order, that i'll need to have the necessary funds in my account within two or three days (can't remember which). never have to sell MM funds before buying or anything like that. same thing doesn't work at fidelity, at least not for me.
Years ago it was 3 days (T+3). Until recently it was 2 days (T+2). Now it's just a day (T+1). Fidelity automatically sells your MMFs as needed, as though they were your core (transaction) account. Or you could think of them as "overdraft protection". AFAIK, no one else does this.
Sweep is the term, right? Fidelity lets MMF etc. be so used, yes. ML otoh specifically says 'this is not a sweep fund.' However, and this appears to be new, if you do the 'buy stock before MMF sale' thing, they do NOT hit your margin account but let everything go through normally and settle belatedly. When I called to ask (apologetically) about that, the nice c/s person said it was a courtesy to (certain) customers, please don't do it again or at least don't make a habit of it, but no prob this time yada yada. I believe this was not the case say a year ago.
if you do the 'buy stock before MMF sale' thing, they do NOT hit your margin account but let everything go through normally and settle belatedly
That is, the trade is settled belatedly (passive voice). If Schwab is automatically using your purchased money funds to settle, then that's what Fidelity is doing. But if Schwab is merely requiring you to come up with the cash (by selling the MMF or otherwise adding cash), then that's just the definition of settlement date.
Vanguard lets you do this, even warning you if you don't currently have enough cash in an account to settle a trade. Margin doesn't come into play until you actually draw upon that margin on settlement day.
Other brokerages, such as Fidelity, are more strict than required by law. They don't permit purchases without cash (including all MMFs) already available. If you have margin on your account, Fidelity will let the trade go through because it knows you are good for the cash. But here too, margin shouldn't be drawn upon unless you don't otherwise have cash to cover the trade come settlement day.
Correct about all of the Fido ops and sequences, but the 'they' in the 'do not draw on one's margin account' was referring to ML (perhaps unclear, sorry) --- a new (I believe!) development. No Vanguard-style warning, iirc.
Quick update on a Schwab issue I had mentioned previously,
I recently noticed that in all my Schwab accounts I am now able to place a buy stock / ETF order first and then place a sell MM order to cover for the buy. This means that I am also able to place resting limit GTC orders without having to sell MM before the buys are filled.
Not sure when they made that change but I discovered it last week. If this issue is of interest to you, check your accounts.
Quick update on a Schwab issue I had mentioned previously,
I recently noticed that in all my Schwab accounts I am now able to place a buy stock / ETF order first and then place a sell MM order to cover for the buy. This means that I am also able to place resting limit GTC orders without having to sell MM before the buys are filled.
Not sure when they made that change but I discovered it last week. If this issue is of interest to you, check your accounts.
I was able to do that with SGOV a few weeks ago when I bought APA. Bought first. then sold SGOV. (But then again, I have a margin account, so that could also explain why)
Comments
That latter type of linking is supposed to be easy anywhere. No routing numbers from Vanguard (or TRP, or wherever) needed. Just the bank's info.
"Supposed to be" is the key phrase here. From @crash 's post it sounds like that is exactly what his son was trying to do - link the CU account to TRP and initiate transfers from the TRP side.
I doubt the problem is caused by the Glendale Schools Credit Union changing from federal charter to state charter. Nor do I think that the problem is because they are insured by American Share Insurance instead of NCUA. (Only state-charted CUs can be privately insured; that may have motivated the charter change.) But I'm not going to check further down that rabbit hole.
Have a nice evening, Derf
I dumped out of my a different preferred stock months ago b/c they could never calculate the cost basis when it was DRIPped ... and now this. I don't get it.....
On a related note, I'm seeing TV ads trying to brand Schwab as a place for 'traders' which I find mildly concerning. We all know that's why they bought TD so they could get ThinkDesktop to replace SSE as their active trader platform -- which is interesting b/c I understand the company is torn between staying 'boring' for its older/wealthier clients and trying to be 'cool' and 'action-packed' for younger folks and/or traders.
Le sigh.
Many days my account balances at Schwab are wrong by a few percentage points. I stopped worrying about $$ reflected. I just hope that someone is not salami slicing my accounts slowly because I would not detect it as I do not check the History often. The big corporations have won the game of desensitizing me to their deliberate incompetence.
IBKR patrons talk highly about it. May be it is time to check them out?
"To purchase, redeem, exchange or convert shares held in your Schwab account or in your account at another intermediary, you must place your orders with the intermediary that holds your shares. You may not purchase, redeem, exchange or convert shares held in your intermediary account directly with a fund.
When selling or exchanging shares, you should be aware of the following fund policies:
For accounts held through a financial intermediary, each fund typically expects to pay sale proceeds to the financial intermediary for payment to redeeming shareholders within two business days following receipt of a shareholder redemption order; however, each fund may take up to seven days to pay sale proceeds."
Bizarre wording given that you can buy them only through intermediaries and not directly through the fund.
In any case, the above general settlement time language is similar as in many mutual funds' prospectus. Below is the link to the prospectus (strange that I pulled it in my Schwab account and I get a morningstar.com link.)
https://doc.morningstar.com/docdetail.aspx?clientid=schwab&key=84b36f1bf3830e07&cusip=808515605
In continuation of my above post, why are other brokerages allowing same day settlement of their own Money Market funds, unlike Schwab? Does the settlement timing depend on how the fund is set up (e.g., prospectus) and somehow the other fund companies started liberally and are stuck with being good to customers? Are there any specific SEC rules for the timing of settlement of money market fund trades that are different from those applicable to other mutual funds?
If you have to spend time researching the above, please ignore my questions. I am hoping you have the answers in your repository. In any case, feel free to send me a PM or email if that is more convenient for you.
Thanks
Suppose I have $100k in MM and want to buy $100k PRWCX.
I sell $100k of MM and buy PRWCX in the morning. At night I see the results, no problem.
If you do the reverse, same results.
If you sell all the shares of PRWCX, you don't know the exact results, just buy 95%. The next day buy the rest of the MM.
Yes, Schwab made money on that small amount.
It doesn't bother me.
At one time Janus closed off its direct sales channel to new investors. It allowed only existing investors with class D shares to continue investing directly. Everyone else had to buy T shares through third parties.
Schwab originated as a brokerage and likely leaned on that distribution channel when it started running funds.
With respect to M*, as I recall it used to make prospectuses available to users of its websites. As with much of M*'s content, M* seems to have monetized its fund documents: https://doc.morningstar.com/home.aspx
Note the "clientid=schwab" argument in the URL.
M* is providing all of the fund documentation for Schwab, not just for Schwab funds. For example, here's Schwab's page for FCNTX and the link to the fund's prospectus.
https://www.schwab.com/research/mutual-funds/quotes/summary/fcntx
https://doc.morningstar.com/docdetail.aspx?clientid=schwab&key=84b36f1bf3830e07&cusip=316071109
M* is not the only third party provider of Schwab fund prospectuses. Here's your same SWVXX prospectus hosted by righprospectus.com
https://connect.rightprospectus.com/Schwab/TVT/808515605/SP?site=FundDocs
And links to all the Schwab fund docs hosted there:
https://connect.rightprospectus.com/Schwab/ https://rightprospectus.com/
Yes, Schwab made money on that small amount.
Why give Schwab the float? What I've done at Vanguard is sell a dollar amount equal to 95% of the previous close and purchased that amount of the target fund (here, a non-sweep MMF). No float on this first step.
If the remaining 5% is still sizeable, rinse and repeat.
Otherwise, sell the remainder and do a same day purchase of 95% of that remainder. This reduces the float from 5% to 5% of 5%, i.e. 25 basis points. Less if you've iterated.
If you place a sell order for 95%+ of a position in dollars, Vanguard issues a warning. It says that if the shares aren't enough to cover your sell order, it will liquidate your position. But it still lets you place these orders.
What I personally care about is not the floating of some cash but in being out of the market for a day. If I sell $100K and wait a day to purchase a replacement security, especially if it is a lateral move (replacing one fund for another of the same type), I want that money continuously invested.
Sure, the market might go down in that day and I'd be able to buy more shares. But it might also go up and I'd lose on the "exchange". I prefer to eliminate that market risk. If the market (funds in question) move even 1% in that day, that's $1K that I might lose or make depending on my luck that day. Four figure amounts look like real money to me.
Again, it's a personal matter. I don't like putting money at risk, even with 50:50 odds, if I don't need to. Others don't care about such short term risks. I'm comfortable losing the price of a movie ticket ($10). I'm not thrilled at putting the price of two cross country round trip tickets at risk. (I'm cheap - I book economy, nonrefundable.)
Fidelity automatically sells your MMFs as needed, as though they were your core (transaction) account. Or you could think of them as "overdraft protection". AFAIK, no one else does this.
It was a federal holiday - Federal Reserve, Post Office and several banks were closed. But it wasn't a holiday for many states and businesses.
(ETFs are also cheaper than Schwab's MMFs, which I appreciate on principle - and principal.)
MSF, I usually sell the whole position, I believe in very concentrated portfolio of just 2-3 funds.
Funds that I see a potential, I sell minus 2 shares per account and why I don't know the final amount.
But, I trade bond funds and in most cases I buy at 99% at "normal" markets. In a very risky market I go to MM and I buy at 95%.
The whole MM business is mostly irrelevant for me because I'm usually invested at 99+%. I trade one fund, not MM, for another fund. This is where Schwab shines over Fidelity where you can buy only 90% and must call a broker. That missing day of just 0.1% in 2-3 accounts can easily be worth at least $1000+1500 per year. This is a major part of my system, and what annoys me most at Fidelity.
Neither are the non-core Fidelity MM funds (cash is not swept into them).
Schwab not only says that this is not a sweep fund, but adds: https://client.schwab.com/secured/cash-investments/sweep-and-interest-services (Bank Sweep FAQ)
In contrast, Fidelity says explicitly that "cash available to withdraw" (and hence to trade) is the... https://www.fidelity.com/products/stocksbonds/content/cash-available-to-withdraw.shtml
if you do the 'buy stock before MMF sale' thing, they do NOT hit your margin account but let everything go through normally and settle belatedly
That is, the trade is settled belatedly (passive voice). If Schwab is automatically using your purchased money funds to settle, then that's what Fidelity is doing. But if Schwab is merely requiring you to come up with the cash (by selling the MMF or otherwise adding cash), then that's just the definition of settlement date.
Vanguard lets you do this, even warning you if you don't currently have enough cash in an account to settle a trade. Margin doesn't come into play until you actually draw upon that margin on settlement day.
Other brokerages, such as Fidelity, are more strict than required by law. They don't permit purchases without cash (including all MMFs) already available. If you have margin on your account, Fidelity will let the trade go through because it knows you are good for the cash. But here too, margin shouldn't be drawn upon unless you don't otherwise have cash to cover the trade come settlement day.
I recently noticed that in all my Schwab accounts I am now able to place a buy stock / ETF order first and then place a sell MM order to cover for the buy. This means that I am also able to place resting limit GTC orders without having to sell MM before the buys are filled.
Not sure when they made that change but I discovered it last week. If this issue is of interest to you, check your accounts.