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Funding Vanguard Brokerage Account
Old 02-01-2012, 04:50 PM   #1
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Funding Vanguard Brokerage Account

Hi,
Does anyone know a creative way to fund their Vanguard brokerage account?

It seems you have to keep money in the Vanguard money market, so you can trade on-line. It pays basically zero.

The only other option I know of, is to transfer money from your bank account the day you want to make the trade, but then you have to call them and they will verify the funds are in your bank account, then you have to ask them to do the trade over the phone. It can not be done on-line.

I don't believe you can keep the money in a fund, since I believe they settle after hours. I believe ETF's settle right away.

I see Vanguard has some short term bond ETF's which they say are very low risk. Maybe you could keep a chunk of money in those, then sell when you want to buy a stock? I imagine there may be some fees.

Any thoughts would be appreciated.
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Old 02-01-2012, 05:24 PM   #2
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Get a margin account. ETF's settle in T+3 days, just like stocks.

Or blow off Vanguard and get a WellsFargo PMA package with a WellsTrade account. There would be better transfers between your checking and brokerage accounts that way.
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Old 02-02-2012, 09:19 AM   #3
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How much money are you going to be keeping in the MM account

I have a brokerage account with my ROTH and I do have other funds to move the money if it is not invested... But yes, I would recommend the ST bond fund for money just sitting around.. there are no fees to transferring the money, it just takes a day to get it done... However, as long as you have money in some fund they do not seem to prevent a trade..
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Old 02-02-2012, 09:26 AM   #4
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Originally Posted by SaverNY View Post
It seems you have to keep money in the Vanguard money market, so you can trade on-line. It pays basically zero.

The only other option I know of, is to transfer money from your bank account the day you want to make the trade, but then you have to call them and they will verify the funds are in your bank account, then you have to ask them to do the trade over the phone. It can not be done on-line.
Not trying to be a wise-a$$ (for a change) - but your bank account pays more than "basically zero?" Mine sure doesn't pay any better than a MMF.

I have a big chunk in ST Investment grade because cash is negative real returns these days. I'd never owned this asset class before, wasn't necessary IMO. There is no good answer these days, choice between lesser evils...
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Old 02-02-2012, 09:41 AM   #5
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Our settlements and dividend accumulations for our VBA are done against Vanguard's fund 0045 (Vanguard Tax-Exempt Money Market Fund)
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Old 02-02-2012, 09:58 AM   #6
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Originally Posted by SaverNY View Post
Hi,
Does anyone know a creative way to fund their Vanguard brokerage account?
I decided that any solution I've investigated was more painful than the problem. Even if the trading funds amounted to, say, $100k and the delta in interest between the MM fund and some other totally liquid investment was 0.25%, that would amount to a maximum of $250 per year pre-tax. That would be reduced depending on how often and how long you had a portion of that $100k invested. That's just not worth the trouble of transfering in and out or other frequent manipulations.

For money being held waiting for a "buying opportunity" (as opposed to "trading money"), I use a short term bond fund within my brokerage account that has no transaction fees or short term trading penalties.
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Old 02-02-2012, 11:38 AM   #7
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Originally Posted by SaverNY View Post
Hi,
Does anyone know a creative way to fund their Vanguard brokerage account?
It seems you have to keep money in the Vanguard money market, so you can trade on-line. It pays basically zero.
I'm not sure I understand the problem.

If you're trading your way to riches in a Vanguard brokerage account then you'll be earning far more in cap gains (and possibly dividends) than you'll be missing out on in foregone interest. You have the liquidity to buy assets in an instant, when they're at a discount, and rapidly realize a profit. Why complain about missing out on interest?

It sounds like you're trying to simultaneously chase yield while pursuing higher-risk investments. Pick the one you like the best, because here I think it's truly a zero-sum game.
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Old 02-04-2012, 06:13 PM   #8
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Originally Posted by LOL! View Post
Get a margin account. ETF's settle in T+3 days, just like stocks.

Or blow off Vanguard and get a WellsFargo PMA package with a WellsTrade account. There would be better transfers between your checking and brokerage accounts that way.
Thank you ,

I will look into that.
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Old 02-04-2012, 06:17 PM   #9
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How much money are you going to be keeping in the MM account

I have a brokerage account with my ROTH and I do have other funds to move the money if it is not invested... But yes, I would recommend the ST bond fund for money just sitting around.. there are no fees to transferring the money, it just takes a day to get it done... However, as long as you have money in some fund they do not seem to prevent a trade..
Thank you,

I am thinking of doing approx 70k in my IRA brokerage account and maybe another 70k in my regular brokerage account. All depends, on whether I can find enough stocks that I think are worth investing in. Plan to start slowly and carefully.
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Old 02-04-2012, 06:19 PM   #10
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Not trying to be a wise-a$$ (for a change) - but your bank account pays more than "basically zero?" Mine sure doesn't pay any better than a MMF.

I have a big chunk in ST Investment grade because cash is negative real returns these days. I'd never owned this asset class before, wasn't necessary IMO. There is no good answer these days, choice between lesser evils...
Thanks, I was referring to the Vanguard MM being basically zero.
I am getting .9 and .5 % in my savings accounts. That is why I prefer to get something if possible at Vanguard, while waiting to invest.
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Old 02-04-2012, 06:21 PM   #11
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Our settlements and dividend accumulations for our VBA are done against Vanguard's fund 0045 (Vanguard Tax-Exempt Money Market Fund)
Thank you, That looks like a pretty good option.
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Old 02-04-2012, 06:23 PM   #12
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I decided that any solution I've investigated was more painful than the problem. Even if the trading funds amounted to, say, $100k and the delta in interest between the MM fund and some other totally liquid investment was 0.25%, that would amount to a maximum of $250 per year pre-tax. That would be reduced depending on how often and how long you had a portion of that $100k invested. That's just not worth the trouble of transfering in and out or other frequent manipulations.

For money being held waiting for a "buying opportunity" (as opposed to "trading money"), I use a short term bond fund within my brokerage account that has no transaction fees or short term trading penalties.
Good point. I usually lean towards convenience.
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