Uninvested Cash at Schwab

[jim584672]

And... the cash is out of the account! I have their index funds and a couple of ETFs, so that money will stay to avoid capital gains. All new money will go to Fido and Vanguard. The cash balance will be reviewed and cleaned out periodically.

You can do an ACTS transfer to move those to another brokerage without selling them.

 

[target2019]

Wow. Had no idea Schwab was so close to VG and so much larger than Fido.

That is their target. The acquisitions were necessary to outgrow some of the competition.

 

[pb4uski]

You can do an ACTS transfer to move those to another brokerage without selling them.

aka an in-kind transfer... the securities in your taxable account are transferred from Schwab to your new broker... not a taxable event since you haven't sold them but just transferred th to a different keeper.

 

[FIREd_2015]

"...The plaintiffs say Schwab used its cash-sweep program “to confer significant benefits upon itself and its affiliates by: (1) taking for itself and its affiliates the vast majority of the compensation earned from its customers’ cash at the expense of its customers and principals, who received only a minimal return on their cash deposits” and concealing the benefits Schwab received...The lawsuit contends that Schwab “omitted critical disclosures regarding their contractual obligations...pursuant to an agreement reached with TD Bank and TD Bank USA in 2020″ in connection with Schwab’s 2020 acquisition of TD Ameritrade...the suit states, Schwab...entered into an agreement with TD Bank and TD Bank USA and “committed to direct and maintain a minimum amount at least $50 billion of cash swept from their customers’ accounts to TD Bank and TD Bank USA, in exchange for substantial benefits” to Schwab, through June 2031..."

Schwab Used Cash Sweep Funds in TD Ameritrade Deal: Lawsuit | ThinkAdvisor

Schwab struck a deal to direct at least $50 billion to TD Bank through 2031, customers allege.

www.thinkadvisor.com

 

[Another Reader]

aka an in-kind transfer... the securities in your taxable account are transferred from Schwab to your new broker... not a taxable event since you haven't sold them but just transferred th to a different keeper.

Yes, but they are Schwab proprietary funds and ETFs. The ETF's, sure, but I'm not comfortable with Schwab funds at Vanguard or Fidelity.

 

[Texas Proud]

I wasn't a customer then. I don't recall what I agreed to when I opened the account, so there is that.

So what did you get when you opened your account? I can tell you that I saw right away that their interest rates were crap and came here to find a solution... I am not a fan of the solution but do it anyhow...

And since I do not have any large cash balances coming my way I can even wait a week or so to move the money and not lose that much...

It is only a major problem if you make it a major problem...

 

[Texas Proud]

Yes, but they are Schwab proprietary funds and ETFs. The ETF's, sure, but I'm not comfortable with Schwab funds at Vanguard or Fidelity.

Why not

I have Vanguard funds are Schwab and might move some to Fido in the future... and I do mean MF... but some ETFs also...

I am in the decumulation phase of life so not buying them anymore.... and in fact bought a Schwab one...

 

[HarveyS]

When I log in to Schwab to move the cash to an account that pays more, I transfer the $ to Fidelity.

 

[pb4uski]

Yes, but they are Schwab proprietary funds and ETFs. The ETF's, sure, but I'm not comfortable with Schwab funds at Vanguard or Fidelity.

So what? Why would you be uncomfortable? Especially if it is an ETF.

I have VTSAX in my Schwab brokerage account and sleep like a baby. It's just a ticker. Ask your broker if they see any risk of you having the Schwab funds or ETFs with them.

 

[MarieIG]

I own Schwab funds, including SCHD at Vanguard, and it hasn't been a problem.

I have Vanguard funds, including VTI and VPU in my Schwab account, and it hasn't been a problem.

 

[ziggy29]

Yeah, I don't think there's really any issue with holding Schwab funds in Vanguard or Fidelity funds at Schwab or anything like that, other than that additional purchases come with a fee. ETFs are a non-issue in that regard.

I only hold "cash" in one of my Schwab accounts, and it's all in money market funds (SWVXX). I started taking SEPP from that one in 2018 -- can stop next April when I turn 59.5 -- and I want to keep a cushion of a couple years of withdrawals in cash in case I need to take distributions when the market tanks. That I'd been getting ~5% for over a year made it easier, of course.

But once I no longer need to take SEPP withdrawals, I plan to shift my focus to Roth conversions. And in general, while I have accounts with all of the "big three", if there's going to be an account in the future that needs to have some cash in it, it ain't going to be at Schwab.

 

[Chuckanut]

Having to move my idle cash around in Schwab is a very minor inconvenience for me. Schwab does many things right for me, and I don’t let the perfect become the enemy of the good.

 

[target2019]

Uninvested cash can be moved to checking for bill payment. We do that for four R.E. tax payments to the township.

 

[Closet_Gamer]

When interest rates were zero anyways, I didn’t care.

Now I use SWVVX in IRAs and SWTTX in taxable accounts. I trade so infrequently, it’s very minor issue. Figure out what I need to do on the weekend and sell the right amount of MM funds, execute the trades on Tuesday.

 

[Palmtree]

I was going to recommend the free Schwab robo advisor to a relative who was just getting started into investing after receiving a small inheritance. That was until I found out that it's not exactly free. They require you to keep a significant percentage of the investments in a cash account that draws very little interest. I asked if they could keep the amount in a money market account but the answer was no.

 

[Badger]

I don't see what the big problem is. Today I took a couple of minutes to transfer cash that I didn't need for a while from Schwab to my local CU account. Then I purchased a 1 year 5% CD. Even for a computer challenged old man it was easy. I suppose I could have just bought the CD at Schwab in less time but the CU rates were a little better.

 

[Texas Proud]

I don't see what the big problem is. Today I took a couple of minutes to transfer cash that I didn't need for a while from Schwab to my local CU account. Then I purchased a 1 year 5% CD. Even for a computer challenged old man it was easy. I suppose I could have just bought the CD at Schwab in less time but the CU rates were a little better.

Well, I can tell you what the big problem is... even though I do get around it...

I should NOT have to be investing idle cash into a good MM account to get interest that is market compared to almost nothing... period... the systems the brokers have can EASILY do this....

SOOO, if you were like my oldest sister who might look at her account one or twice a year you would get screwed out of some possible significant income... heck, probably all my sisters... I just know what my oldest does but I bet the others do not look either...

I know one went to Fidelity because of it...