Vanguard Transactions Take Too Long

[Spanky]

Have you noticed that Vanguard takes a long time before posting the credit to your account? As an example, I bought additional shares of money market fund via electronic transfer from my bank on 4/3/08. My bank account shows that the transaction on the same day. Vanguard took a couple of days to move from Pending to Processed? status, but the increased number of shares is unavailable as of 4/7/08. My past experience tells me that it would take up to 7 days before the increase in shares or balance becomes available. The same thing applies to selling shares from the brokerage account as well. We sold shares of an ETF on 4/2/08. As of 4/7/08 (the settlement date), the account shows a credit but has not yet been posted to our sweeping money account. I am hoping that it will be posted tomorrow so that we can transfer it into our Roth IRA by 4/15/08.

I am not pleased about the delay since money is getting held up. This is so inconvenient. E*trade seems more efficient - the money from selling stocks usually becomes available almost instantaneously or next day (the latest).

 

[FIREd]

Last week, I made a transfer from my bank on Wednesday afternoon and it was credited to my Vanguard account on Friday morning. My bank account was debited on Friday night. Of course, once the money is credited to my Vanguard account, it takes 10 days before it becomes available, that is it takes 10 days before I can transfer it back to my bank account or before I can invest it in non-Vanguard funds or stocks in my Vanguard brokerage account (I believe that Vanguard will let you do exchanges as soon as your Vanguard account gets credited even if the money is "unavailable"). There is about a two day delay for brokerage purchases and/or sales to post on my sweep account. It's OK with me because I don't trade much, but if you do a lot of trading, then I agree, Vanguard's brokerage account is not ideal.

 

[twaddle]

Spanky, did you push the funds to Vanguard or pull them using Vanguard to initiate the transaction?

I think a push from another institution is quick, but a pull is slow. We had another thread about this not too long ago.

 

[FIREd]

In my case I pulled from VG (I use the "buy" function on VG's website). And by the way, I think the reason why transfers to/from VG brokerage accounts are slow is because their brokerage accounts are actually held by Pershing, so you probably have to deal with a bank-to-bank transfer between the sweep account and the brokerage account. With Etrade, you don't have to deal with that.

 

[Spanky]

Spanky, did you push the funds to Vanguard or pull them using Vanguard to initiate the transaction?

I think a push from another institution is quick, but a pull is slow. We had another thread about this not too long ago.

It was a pull? -- sold Vanguard ETF from my brokerage account.

 

[twaddle]

FWIW, I did a push to Vanguard on 4/3 and the funds were available at Vanguard on 4/4.

 

[FIREd]

It was a pull? -- sold Vanguard ETF from my brokerage account.

If you initiated the transaction from the brokerage account, then it's a push (because you are transferring money to your Vanguard sweep account). Don't think of you VG brokerage account as a Vanguard account at all. In fact I view it as a Pershing account.

 

[twaddle]

If you sold a stock or ETF, the funds aren't available until the trade is settled. I think settlement time is the same everywhere.

Edit: also, do you have a margin account at both Vanguard and eTrade? Margin vs cash account could affect the availability of funds for reinvestment.

 

[Spanky]

I think E*trade allows proceeds from unsettled sales for re-investment immediately.

 

[twaddle]

OK, it sounds like you have a margin account at e-Trade. If you also have a margin account at Vanguard, then FIREdreamer is probably right that it has to do with VBS vs Vanguard mutual funds. Within VBS, you should be able to use the proceeds immediately for another VBS purchase.

 

[W2R]

Spanky, this type of delay in the 21st century is annoying no matter whether you pushed, pulled, or jumped up and down!

I had experienced delays as well, but thought my bank was to blame. My bank has always listed my direct deposited federal paycheck as "pending" for several days after it arrives, and insinuates that I cannot spend it right away (which I personally feel is illegal, or should be). Earlier this month they stopped doing that so maybe they finally figured that out.

Delay just seems so unnecessary in today's highly computerized environment.

 

[RichoRosai]

I'm having this same problem for the last 3 days. Do you get the fund at the price it was when you bought or what it is whenever they finally finish doing whatever they're doing while it's "pending"?

 

[Spanky]

I'm having this same problem for the last 3 days. Do you get the fund at the price it was when you bought or what it is whenever they finally finish doing whatever they're doing while it's "pending"?

I think it is the latter.

 

[RichoRosai]

Ugh. The purchase is becoming less favorable every day.

 

[retire@40]

Yup, I put a transaction through on Wed night ( 4/30/08 ) after 10pm to buy from my local checking and the Vanguard fund didn't show as a buy until after the close on Friday ( 5/2/08 ).

Why can't Vanguard place the buy order after the close on Thursday ( 5/1/08 )?

 

[RichoRosai]

I placed on Wednesday and still nothing today. I don't want to do the math and depress myself even more but I think I've lost 100s of dollars worth of shares.

 

[redduck]

I'm having this same problem for the last 3 days. Do you get the fund at the price it was when you bought or what it is whenever they finally finish doing whatever they're doing while it's "pending"?

You get the fund at the price it was when you bought it (that is, the price of the mutual fund at the end of the trading day. It's locked in.

 

[LOL!]

If you sold a stock or ETF, the funds aren't available until the trade is settled. I think settlement time is the same everywhere.

Edit: also, do you have a margin account at both Vanguard and eTrade? Margin vs cash account could affect the availability of funds for reinvestment.

I do not have a margin account at WellsFargo, but if you sold a stock or ETF, the funds are available immediately to purchase another stock, ETF or mutual fund. You do not have to wait until the settlement date. I have not attempted to withdraw money out of my WF brokerage account immediately after a sell and before the settlement date.

Anyways, if you want instant results, switch to using ETFs.

 

[Ronnieboy]

It is weird. I have automatic investment plan set up so every other Friday $$ goes into my IRA. It gets credited into my IRA on Thursday, but doesn't get taken out of checking until Friday.
When I recently opened a new fund (VTSMX) I filled out all the online info on Thursday and it didn't complete until Monday.

 

[RichoRosai]

FWIW here's what they told me.

When using the Electronic Bank Transfer option, it is a three business day
transmission process. The timeline is as follows:

DAY 1
Transaction is received before 10 p.m., Eastern time.

DAY 2
The trade date for your purchase.

DAY 3
Your bank account is debited. Completed transaction is viewable on
Vanguard.com.

 

[Spanky]

FWIW here's what they told me.

When using the Electronic Bank Transfer option, it is a three business day
transmission process. The timeline is as follows:

DAY 1
Transaction is received before 10 p.m., Eastern time.

DAY 2
The trade date for your purchase.

DAY 3
Your bank account is debited. Completed transaction is viewable on
Vanguard.com.

.. and another 7 to 10 days before the shares will be available for trading or exhanging.

 

[gtlong2]

Vanguard delay on fund purchase from bank

Just got whacked by Vanguard on a fund purchase yesterday. Thought I would take advantage of the 10% drop in the market on Monday and buy in by purchasing with an electronic bank transfer prior to the market close.

Find out today that the transaction didn't clear yesterday and I'll get today's closing price. (i.e. just add an effective 5% sales charge to my purchase, since the market is back up today).

Fidelity, T. Rowe Price, and others don't have this delay for a bank transfer. Ridiculous.

ugh.

 

[FinanceDude]

Just got whacked by Vanguard on a fund purchase yesterday. Thought I would take advantage of the 10% drop in the market on Monday and buy in by purchasing with an electronic bank transfer prior to the market close.

Find out today that the transaction didn't clear yesterday and I'll get today's closing price. (i.e. just add an effective 5% sales charge to my purchase, since the market is back up today).

Fidelity, T. Rowe Price, and others don't have this delay for a bank transfer. Ridiculous.

ugh.

Yeah, but on the bright side, they have the lowest expenses out there...........

 

[cute fuzzy bunny]

Not enough poorly performing active managed funds that charge huge front end loads though.

I think they're just fine with things taking a day or two longer than anyone else. They dont want market timers being drawn in that will come to count on fast transactions.

I guess the main question is this: would you be as pissed about it if your COB transaction today followed another 800 point drop in the market?

 

[FIREd]

This is what I do at Vanguard: as soon as I have extra cash, I transfer it to my Vanguard MMF. When I see a good deal, I do an exchange (no delay) and that way I am guaranteed to scoop up the fund I want at the price I want.

I always keep some cash in the MMF (it's my EF) and I sometimes use the float to make transactions. I buy a fund with the EF money while new money is being transferred from my checking account to the MMF to replenish the EF. That way I don't have to worry about money transfer delays.