Vanguard posting IRA CD Interest to Sweep Account?

[RHONDAVE]

I just noticed that Vanguard is posting interest returns to the sweep account in our individual IRA CD'S. Because the purchase increments are $1000, I will have to adjusted downward my expected returns for the CD'S. My sweep account is in the money market and wife's is in the cash reserve. Vanguard lost me when they offered one of us the cash option and not the other.
Since the sweep account is earning less than the CD that was issued, I am at a loss what to do with the $999 on one IRA.

 

[COcheesehead]

Brokered CDs do not compound as you have learned. You may have access to fractional share CDs to invest the $999. Fractional shares are $100/share.

 

[njhowie]

Leave the $999 alone for a week. At the end of the month, you'll have earned at least $1 in interest and can then buy a new CD.

 

[disneysteve]

I just noticed that Vanguard is posting interest returns to the sweep account in our individual IRA CD'S. .

Where else would they put the interest?

As said, as soon as you have enough in there, buy another CD.

 

[COcheesehead]

Where else would they put the interest?

As said, as soon as you have enough in there, buy another CD.

Direct purchase CDs reinvest in the original instrument.

 

[RHONDAVE]

Compounding? Not Really when its outside of the instrument.

 

[MarieIG]

Leave the $999 alone for a week. At the end of the month, you'll have earned at least $1 in interest and can then buy a new CD.

This or transfer in $1.

 

[COcheesehead]

Compounding? Not Really when its outside of the instrument.

Correct and that is an attribute of a brokered vs direct purchase CD which is what you have and why distributions are going into your sweep account.