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Anyone use Vanguard Brokerage? Q about parking cash
Old 05-18-2012, 01:32 PM   #1
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Anyone use Vanguard Brokerage? Q about parking cash

So, I was going to open a Vanguard Brokerage account and pick up some individual stocks for the first time. I was planning to keep my excess cash in a high yield savings and keep maybe $3k in the brokerage account for the occasional trade.

In filling out the application it looks like the MMA has a minimum of $3k. So if you fund that, can you purchase $2k worth of stock and leave $1k in the MMA for a while? Or am I pretty much limited to $3k minimum trades?

Thanks
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Old 05-18-2012, 01:51 PM   #2
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"Imposes a $10 annual fee on accounts falling below $2,500, regardless of whether due to market weakness or redemptions. Fees are waived for shareholders with at least $50,000 in Vanguard accounts."

You may be subject to fees, but from what I've read they aren't anxious to enforce the minimum and only review for minimums once or twice a year. Google will give you several hits to review...
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Old 05-18-2012, 02:21 PM   #3
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Thanks. Figured I'd call Vanguard to discuss as well but can't do the call until later. I'll check google some more too (just did one basic search and then posted here).
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Old 05-18-2012, 03:06 PM   #4
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I am not sure how much you are going to invest....

But I have a whopping $136 in my MM account tied to my brokerage account... but I am north of the $50K mentioned, so I probably do not have to worry....
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Old 05-18-2012, 03:13 PM   #5
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Quote:
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Thanks. Figured I'd call Vanguard to discuss as well but can't do the call until later. I'll check google some more too (just did one basic search and then posted here).
As long as you have $3000 initial the worst that can happen is probably
  • they warn you a few times, maybe charge a fee(s) and then cut you a check to return your balance if it's a taxable account,
  • or warn you and charge fees if it's a deferred account (they can't cut a check as it would be a distribution).
That said, hopefully your account would grow to be consistently above the $3000 minimum (speaking as a Vanguard investor)...
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Old 05-18-2012, 03:33 PM   #6
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I am well into the "voyager" client territory with vanguard ($50k-$500k). And will continue to be mostly an index investor. I was thinking about dabbling in some individual stocks.

So I'll consistently have $3k+ in vanguard and even the brokerage specific account. I just don't want to consistently park any cash in that account as the interest rates are abysmal.

I was thinking that if I see a stock I want to buy or trending towards my personal purchase point that I'd then fund $$ into the MMA account a few days+ before so that I can execute a real time trade or put a trade order in at the price point I want and wait for the price to hit it. If I have to fund and do trades in $3k increments its not a huge deal but wanted to understand logistics since I haven't traded on individual stocks previously.

Thanks
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Old 05-18-2012, 04:33 PM   #7
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In the past 7 years, I often have had less than $1,000 in the money market fund linked to my Vanguard brokerage account. I have never been warned or paid any fee (>$50k in Vanguard funds).
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Old 05-18-2012, 05:18 PM   #8
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Quote:
Originally Posted by ChadR View Post
I am well into the "voyager" client territory with vanguard ($50k-$500k). And will continue to be mostly an index investor. I was thinking about dabbling in some individual stocks.

So I'll consistently have $3k+ in vanguard and even the brokerage specific account. I just don't want to consistently park any cash in that account as the interest rates are abysmal.

I was thinking that if I see a stock I want to buy or trending towards my personal purchase point that I'd then fund $$ into the MMA account a few days+ before so that I can execute a real time trade or put a trade order in at the price point I want and wait for the price to hit it. If I have to fund and do trades in $3k increments its not a huge deal but wanted to understand logistics since I haven't traded on individual stocks previously.

Thanks
I have bought stocks without having the necessary funds in the MM account... but plenty in the IRA account that the MM is part of... after buying the stock, I transfer the money.
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Old 05-18-2012, 05:32 PM   #9
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Yeah, You shouldn't have any problems. I have a usual balance of about $1k and have had it as low as $150. If you have over $50k I believe you won't hear from them.
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Old 05-18-2012, 11:43 PM   #10
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Quote:
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...wanted to understand logistics since I haven't traded on individual stocks previously.
It's been quite a while since I was in your spot, but from what I remember it was no big deal calling the Vanguard brokerage desk to ask questions and to have them walk you through the steps on entering trades online. They didn't seem to be under any pressure to steer toward "phone order" trades that can come with a higher commission fee.

Either way, it's all very easy, at least in the execution of trades.

Making money on your trades, not so much.

You may be surprised by some things at first, like a delay of a few days between an order and the purchased shares showing up cleanly on your account page balance sheet as "100 shares of Megacorp" at $X.XX".

Her's another one. You didn't say whether the funds were in an IRA or a taxable account. If taxable and you have stuck with the same mutual funds from the start of your investing career, check out the IRS instructions for Schedule D before you make your first sale. It's not hard, but there are details you need to be aware of.

For example, you'll want to be familiar with the tax differences between dividends, short-term capital gains and long-term capital gains so the 1099 form that arrives in February is not a surprise. Don't ask me how I learned this when I started trading stocks.
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Old 06-15-2012, 06:29 AM   #11
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Do not quote me on this (ask to be sure), but if I remember correctly Vanguard only counts the money invested in Vanguard Funds towards the $50k. So, even if you have $100k with them, but most of it is in non Vanguard Funds you will not get all the benefits they advertise...
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Old 06-20-2012, 10:20 PM   #12
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I talked to Vanguard recently and they told me the same. So +1.
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