VG CD Purchase question

[bizlady]

We have decided to purchase some CD's within our IRA that is at Vanguard Brokerage.

We will purchase using money market funds within the IRA.

I know I have to sell X to buy the CD, but it looks like I need to let the money "settle into" the settlement account before I can purchase any CD's. Is this correct?

 

[RunningBum]

Yes, that's what I've found.

 

[xlf11]

Yes and that's my experience as well, which is different than Fido. Normally VG takes your available fund in MM 3 business days before the date of scheduled CD purchase date and credited matured CD to your MM the next business day.

 

[sengsational]

If you buy a new issue CD that doesn't start for a few days, you might be able to do that with unsettled funds. Nothing to loose by just trying it.


My experience with Vanguard stock trading is that unsettled funds work fine. Maybe bonds or CD's are different.

 

[GenXguy]

A few weeks back, I transferred money out of my Vanguard cash reserves money market fund into my Vanguard settlement fund, which I had already cleaned out and had no balance prior to that. And then I bought a CD that same day with those funds that I had just initiated the transfer to settlement. It might have given me some sort of warning when purchasing the CD regarding unsettled funds, but I'm not sure now, and it went through fine.

Just took a look. The trade date of both transactions was March 20th (I initiated them later in day on March 19th). The settlement date of the Cash Reserves MM sell was March 21st. The CD settlement date was March 23rd.

 

[Graybeard]

I keep all my fixed income that is not already in T bills and CDs in the Settlement Fund. It has a great yield and I'm ready to buy at any point in time.

 

[COcheesehead]

Fido has something called limited margin which allows you to buy in IRAs based on unsettled funds. So as long as you do not sell prior to settlement, you won’t get a good faith violation.

 

[frayne]

Call me prudent or just cautious but I always make sure there are sufficient funds in my settlement account prior to making any purchase, be it stocks, funds, ETFs and even CDs with a future settlement date. Just how I roll and it makes it easier to track as well.

 

[bizlady]

I keep all my fixed income that is not already in T bills and CDs in the Settlement Fund. It has a great yield and I'm ready to buy at any point in time.

Had no idea the settlement acct paid anything!

 

[GenXguy]

Had no idea the settlement acct paid anything!

Sometimes it has been pretty flat, but it's decent interest now, still well below year over year inflation, and that's not even factoring taxes when not in an IRA.

 

[audreyh1]

Had no idea the settlement acct paid anything!

Too funny!

 

[Rianne]

Yes, just check the settlement date of the CD. Usually, if it's a few days after you sell a fund or MM it's fine. We did that. The settlement date of the CD was March 30. Our treasury reached maturity (I think the 27th). It was fine. I called the bond desk to make sure and they said they see the transaction going into the settlement account.

 

[Sojourner]

Had no idea the settlement acct paid anything!

Not only does it pay "something", it is actually one of the very highest-paying money market funds that Vanguard offers. As of today, 4.75% 7-day SEC yield. You really can't do much better than that for a settlement fund, IMHO. I've moved a lot of idle cash out of my high-yield savings accounts into Vanguard recently for this exact reason.