43 ms·
> Schwab would rather you have cash in your account than be invested in securities Compared to IBKR which gives "benchmark - 0.5%" on your NAV in USD, what doe
by TacticalCoder 3y ago
> Schwab would rather you have cash in your account than be invested in securities
Compared to IBKR which gives "benchmark - 0.5%" on your NAV in USD, what does Schwab give for your USD sitting idle?
- anonu 3y agoCash sweep in Schwab is like 0.5%, it's nothing. But this is how they make their money, turning around and lending at 8%. But you can just as easily buy a short duration Treasury ETF yielding 5%+ or a CD.
- zie 3y agoOr even Schwab MMF's, which are reasonable. It's mostly just the default that's terrible on return.
- tylergetsay 3y agoSchwab gives a similar return, they don't offer any high yield savings
- matwood 3y agoIt's not an automatic sweep, but anyone holding cash at Schwab moves it to something like SWVXX [1] paying ~5% right now. [1] https://www.schwabassetmanagement.com/products/swvxx https://www.schwabassetmanagement.com/products/swvxx
- everybodyknows 3y agoBeware that such a mutual fund buy transaction closes at end of day. A sale of a stock or ETF closes 2-3 days in the future. So if you place both orders concurrently in your margin account, you may find you've borrowed from Schwab for those 2-3 days on margin, at a rate of ~10%. Schwab's order screen will not warn you of this in advance. What happens if you make this mistake in a "cash account" i.e. no margin allowed I do not know and hope not to find out by means of usual accidental carelessness. An alternative to SWVXX is VUSB, which trades with standard ETF timing.