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Where to park brokerage cash?
Old 07-29-2020, 09:02 AM   #1
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Where to park brokerage cash?

I have about $50K in my brokerage account that is just sitting in cash. I had it invested in munis until they started tanking, and got out (I know, bad idea). This needs to be relatively "safe" money, but not as safe as money market. I was looking at TIPs, but it seems like everyone is expecting inflation and TIPs have gotten relatively expensive. Any suggestions?
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Old 07-29-2020, 09:16 AM   #2
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Brokerage accounts typically don't have great options for holding cash, so you'll probably want to transfer it to an online savings account (offered by, for example, Ally Bank) to get roughly 1.0% APR interest. Ally and other banks also offer no-penalty CDs paying much more than the cash holding accounts at most brokerages. Another idea would be some sort of ultra short-term bond fund, such as ICSH.

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Old 07-29-2020, 09:30 AM   #3
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I have the same amount. FWIW, I'm keeping $20K in Money Market and $30K in Vanguard GNMA.
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Old 07-29-2020, 10:29 AM   #4
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I stuck my cash in VNLA. Not too volatile and pays a monthly dividend every month I don't need it. 1.55% forward looking annual yield.
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Old 07-29-2020, 10:40 AM   #5
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I transfer my cash to a high yield savings account which is offering far more than any money market fund. This is easy to do in taxable brokerage accounts.
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Old 07-29-2020, 12:06 PM   #6
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All cash is shifted to whichever has the highest rate between between Online Savings, MM, CDís, and Stable value.

Currently CDís are the winner. When they mature at the moment next best is stable value fund.

I look at portfolio as a whole so for cash Iím not concerned if it resides in brokerage, IRAís or 401k.
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Old 07-29-2020, 01:05 PM   #7
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While a diehard pennypincher i find it hard to get excited about any options. Ally savings and no penalty CDs get the overflow when balances get too large. Meanwhile I've allowed my BM checking and Fido CM to grow. No big deal either way.
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Old 07-30-2020, 11:24 AM   #8
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Quote:
Originally Posted by audreyh1 View Post
I transfer my cash to a high yield savings account which is offering far more than any money market fund. This is easy to do in taxable brokerage accounts.
I still have our cash in our credit union account, mainly out of complacency. Do you have an online savings account you feel comfortable recommending? I know we get next to nothing for parking our cash where it is currently and I'd like to do better because it's not an insignificant amount of money.
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Old 07-30-2020, 11:34 AM   #9
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I currently have ours in Capital One's 360 MM/savings account. Gets 1%. Easy to transfer from this account to my checking account with my CU if needed. Usually takes 3 days to transfer in and out though.
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Old 07-30-2020, 11:38 AM   #10
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Ally and Discover are mentioned.

Our choice was Discover, and it is linked to our local checking used to pay bills. It is still paying 0.95%. Others are probably higher.

When that account grew too large, I set up a CD for 2% at Discover.
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Old 07-30-2020, 11:45 AM   #11
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Originally Posted by steady saver View Post
I still have our cash in our credit union account, mainly out of complacency. Do you have an online savings account you feel comfortable recommending? I know we get next to nothing for parking our cash where it is currently and I'd like to do better because it's not an insignificant amount of money.
I have accounts at Ally Bank, Synchrony Bank, and American Express Bank.
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Old 07-31-2020, 02:20 PM   #12
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What about a really short term muni bond fund like VWSTX? Little more return, of course who knows what municipalities will look like 6,12 or longer from now but duration of this fund is short at 1.2 years. Just an idea, not saying it works for everyone.
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Old 07-31-2020, 07:57 PM   #13
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Thank you all for sharing the online savings accounts that you use!
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Old 08-02-2020, 10:17 AM   #14
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Lawrence,

WRT VNLA, it looks to have a 0.26% fee ... seems high relative to other options of same type?
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Old 08-02-2020, 11:39 AM   #15
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Lawrence,

WRT VNLA, it looks to have a 0.26% fee ... seems high relative to other options of same type?
The 1.55% is after fees. If you have other options, I'm all ears. MINT (0.82%) may also be viable but does not do as well as VNLA. I pulled all my cash out of Ally (1%) when I found a better place. Unlike a CD, I can pull it out at anytime with no penalty.
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Old 08-02-2020, 12:04 PM   #16
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Quote:
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Lawrence,

WRT VNLA, it looks to have a 0.26% fee ... seems high relative to other options of same type?
Quote:
Originally Posted by Lawrencewendall View Post
The 1.55% is after fees. If you have other options, I'm all ears. MINT (0.82%) may also be viable but does not do as well as VNLA. I pulled all my cash out of Ally (1%) when I found a better place. Unlike a CD, I can pull it out at anytime with no penalty.
This is from the janushenderson site: 30-Day SEC Yield (As of 06/30/2020) 0.97%.

Does the idea of a forward-looking yield come from a specific reference? It appears to me that the dividend for VNLA has been dropping since inception.
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Old 08-02-2020, 01:28 PM   #17
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This is from the janushenderson site: 30-Day SEC Yield (As of 06/30/2020) 0.97%.

Does the idea of a forward-looking yield come from a specific reference? It appears to me that the dividend for VNLA has been dropping since inception.
As of 8/2/20. It has dropped. current monthly dividend (according to dividendchannel.com) is 0.0514 per share per month (can change monthly). Based on the current price (50.37) that calculates to .00102 return per month time 12 months equals 1.22% annual returns. A little lower than 1.55% but am still interested in places to put cash at a better rate that is not locked up long term.
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Old 08-03-2020, 06:21 AM   #18
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This is from the janushenderson site: 30-Day SEC Yield (As of 06/30/2020) 0.97%.

Does the idea of a forward-looking yield come from a specific reference? It appears to me that the dividend for VNLA has been dropping since inception.
Quote:
Originally Posted by Lawrencewendall View Post
As of 8/2/20. It has dropped. current monthly dividend (according to dividendchannel.com) is 0.0514 per share per month (can change monthly). Based on the current price (50.37) that calculates to .00102 return per month time 12 months equals 1.22% annual returns. A little lower than 1.55% but am still interested in places to put cash at a better rate that is not locked up long term.
Ok, that's easier than reading a thread about how SEC yield is calculated. Lol, I actually just did that and retained nothing at all.

I am staying with Stable Value in 401k, VBTLX in SEP-IRA, CDs and hi-interest in taxable.

I do have a similar quest as you, but I'm searching for the best solution(s) for brokerage cash (earns .01%) to be invested on the fixed income side of a Rollover-IRA at Schwab. I'd prefer to pick something that will be right for the future. It will serve as ballast for the total portfolio.
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Old 08-03-2020, 10:56 AM   #19
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I do have a similar quest as you, but I'm searching for the best solution(s) for brokerage cash (earns .01%) to be invested on the fixed income side of a Rollover-IRA at Schwab. I'd prefer to pick something that will be right for the future. It will serve as ballast for the total portfolio.
May want to look at CLM. Pays monthly dividends. Currently 20.44% future annual returns (AFTER fees). As of 8/3/20, share price is $10.86 with monthly dividends of 0.1853. Their top 25 holdings aren't going anywhere, IMO, and are:

Microsoft Corp
Alphabet Inc Class C
Amazon.com Inc
JPMorgan Chase & Co
Adams Diversified Equity Fund
General American Investors
Berkshire Hathaway Inc B
Cisco Systems Inc
Mastercard Inc A
The Home Depot Inc
Johnson & Johnson
Verizon Communications Inc
Procter & Gamble Co
Pfizer Inc
Intel Corp
Apple Inc
Boeing Co
Visa Inc Class A
Merck & Co Inc
The Walt Disney Co
Comcast Corp Class A
Bank of America Corporation
Exxon Mobil Corp
AllianzGI NFJ Div Interest & Prem
Walmart Inc

Due to the dividends, it's become my largest position but because CLM in itself is diversified, I'm not too worried.
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Old 08-03-2020, 11:24 AM   #20
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May want to look at CLM. Pays monthly dividends. Currently 20.44% future annual returns (AFTER fees). As of 8/3/20, share price is $10.86 with monthly dividends of 0.1853.
From Charles Schwab website:
Gross Expense Ratio
before waivers/reductions 2.01%
Net Expense Ratio
after waivers/reductions 2.01%
Category Average
Net Expense Ratio for Large Blend 1.11%

This is a closed end fund. An ER of 2% plus at a minimum exchange trade fees and maybe a commission. Lawrencewendall: what is your experience with being able to liquidate shares? Is it the standard 3 day period? Not saying this isn't a good investment, especially if the income is better than any other investment, minus the fees.

- Rita
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