Money markets at Schwab now above 4%, tax-free muni now above 3%

[Coronita]

Looks like schwabnmoney market swvxx is now above 4%.

Also, it looks like the tax-exempt muni are now above 3%

https://www.schwab.com/money-market-funds

The good news for people that did a 30 year refinance at 3% or below keeps getting better and better…

Living off of interest with mich lower risk might be achievable a lot sooner than I thought.

[The-Shoveler]

We are almost 100% short duration treasuries paying over 4% (some as high as 4.8%) in our IRA’s.

Almost no stocks in any account.

At some point will look to move to long term treasuries.

Sleep much better.

[Coronita]

[quote=The-Shoveler]We are almost 100% short duration treasuries paying over 4% (some as high as 4.8%) in our IRA’s.

Almost no stocks in any account.

At some point will look to move to long term treasuries.

Sleep much better.[/quote]

Good move. My net worth is roughly split 25/25/50 pretax investment, IRA+401k, and real estate.

My pretax accounts have less than 25% stock. The rest is in money market and short term CDs. My retirement accounts have more stock index funds and also dividend paying companies in energy and consumer Staples. I have less than 10% exposure in individual tech stocks right now, though I’m slowly buying some of the big name techs that have been beaten down quite a bit in really small amounts….

If things hold up, my 2022 return hopefully will be around 1%. It sucks but better than the negative return the stock markets did this year… In the previous good years of the stock market, I didn’t get the the huge returns others did… In the bad years like this year, I’m not losing the amount the markets are this year. So, I think I’m somewhere in between , being that part of me is risk adverse.

I’m keeping my eyes on longer term treasuries and CDs.

[plm]

One percent return would be great. Huge loss last year, starting to think diversification might be smart as stocks will not always be better than bonds. Will buy more iBonds now that the calendar turned I suppose.

[Coronita]

So…. It seems like schwab has some CD’s at 5%…
Fidelity has some at 5.1%

[Coronita]

Here’s the one from fidelity. Note, some are callable before maturity… (See column labeled “call protected”)

• This reply was modified 3 weeks, 6 days ago by Coronita.

[Coronita]

Unrelated. I bet some of you guys are wondering how I posted an image

I could tell you, but I would have to kill ya….

🙂

• This reply was modified 3 weeks, 6 days ago by Coronita.
• This reply was modified 3 weeks, 6 days ago by Coronita.

[barnaby33]

The mystery only deepens!

• This reply was modified 3 weeks, 6 days ago by barnaby33.
• This reply was modified 3 weeks, 6 days ago by barnaby33.

[gzz]

Is 5% going to be enough to get people to pull money out of the stock market and decrease consumption spending?

I tend to think not.

Inflation expectations are starting to become entrenched. Buy a car and it will probably appreciate more than 5%. And small investors did poorly last year, but memories of easy money remain and I don’t think they will be satisfied with 5% per year with memories of 5% per day runs on meme stocks fresh in their heads.

Perhaps we’ll see interest rate sensitive parts of the economy get hit hard by the Fed again and again, without much effect on most of the economy.

[Coronita]

I have no idea what you mean here. A safe CD is one portion of my entire net worth. Specifically, it’s where I park my emergency cash and my equity that I cashed out refinanced at 3% for 30 years.

It’s not meant to replace long term IRA/401k investments in index funds.

[Coronita]

I should also mention. It’s not just 1 CD. It’s a few of them spread out over different terms + MMA and some treasury funds… Usually you pick a few that matures at varying terms just in case rates keep ratcheting up, like it is now.

[plm]

5% is enough for me to put new savings and dividends earned into bonds (13 week and 26 week tbills) instead of stocks. 401k and current brokerage account is still mostly stock and are long term investments which should grow faster than 5 percent so not going to sell.

Most of the cash in the brokerage account is now swvxx. Also moved most of my bank savings account to 13 week tbill ladder so that is just free money. So just taking advantage of the high rates for now. And when rates go down perhaps in a couple of years, it should be good for stocks again.

[gzz]

I wasn’t speaking about your proclivities but Americans with savings generally.

[Coronita]

What does consumption spending have anything to do with CDs?????

People who binge on consumptive spending in America have virtually no money to be investing or saving. Not following your logic here on why CDs would matter for those class of people

• This reply was modified 3 weeks, 5 days ago by Coronita.
• This reply was modified 3 weeks, 5 days ago by Coronita.

[sdrealtor]

Correct. Most people with the capital to invest in this country are professionally advised or well educated. The general public investors he’s referring to don’t exist to any real extent

[plm]

With all the news about banks going under due to rising rates, Is SWVXX safe? Not sure how rising rates will affect SWVXX.

CDs aren’t that safe any more it seems with the news on Silicon Valley Bank and Silvergate. At least I think FDIC will cover up to 250K but I doubt there is any insurance for Mutual Funds since its not a bank deposit.

I’ve got SWVXX and TBills. Would it be safer to go all TBills although it would be less liquid?

[Coronita]

Stay under the FDIC insurance limits per account per entity. Why wouldn’t they be safe?

[gzz]

There’s chatter Schwab could collapse next, they also have big undeclared and unrealized losses on long bonds.

Their stock dropped 25% in the last two days.

I think a collapse is unlikely but they do seem like they need an equity raise, and announcing this after your stock craters looks bad. The people who got out of SIVB fast got all their money, those that remained are going to get part of their money Monday and then a certificate of claim from the fdic they can sell or hold and receive distributions as the fdic sells off assets.

[plm]

So it’s much worse than I realized. I was just thinking exposure due to SWVXX but if Schwab fails then there is the stocks in the brokerage accounts of Schwab and TD Ameritrade (they merged last year I think but accounts are still separate).

I wonder how it works, would brokerage accounts use your stock equity to loan out money? Perhaps loan out the shares if that is how shorting or buying on margin works.

I thought they just made money on the trade commission and some market maker payments.

So should I get paper certificates and put it under my mattress?

[Coronita]

Swvxx is like a mutual fund it’s not on the balence sheet of Schwab. The issue you need to worry about is if you have cash sitting in your account (for example waiting for 1-2 weeks for a CD settlement date ) you want to make sure the total of your cash sweep in all accounts is under the insured limits of $500k.

https://www.schwab.com/legal/sipc-account-protection

Also the issue with SVB , based on colleagues up there that are CFOs of startup companies is access to the money, not that it’s disappeared. It depends how the company held the funds. For example in most cases the startups use SVB and similar to Schwab they buy MM funds feom other providers such as wells Fargo ,etc. So those funds aren’t on SVBs balance sheet either. But since the FDIC shut the bank down, people can’t access those funds being managed by SVB.The immediate issue is access to those funds are frozen, for many startups, it’s hard to pay short term expenses like payroll .

• This reply was modified 1 week, 4 days ago by Coronita.
• This reply was modified 1 week, 4 days ago by Coronita.

[Coronita]

Correction , I believe the sipc insurance is similar to FDIC , where the limit is $250k per entity. So accpunt held in each individual name is $250k insured, living trusts another I think it’s like FDIC insurance is $250k per beneficiary.

I read through the FDIC insurance rules back in 2010. Haven’t read through the sipc rules completely.

• This reply was modified 1 week, 4 days ago by Coronita.

[plm]

The Securities Investor Protection Corporation (SIPC) was created to protect against the loss of customer assets at brokerage firms. SIPC offers protection of up to $500,000, including a $250,000 limit for cash, if a brokerage firm fails and covers most types of securities, such as stocks, bonds, and mutual funds.

But from what I read it seems like having more than 500K is ok as money/stocks are kept separate. I suppose that means that they can’t take your stocks and cash and do bad things to make money off your assets. So there would not be stuff like FTX occurring.

I suppose banks are different as they are supposed to lend out your money. Surprising how banks can fail since they pay so little interest and loans should earn much more – unless the loans default but that wasn’t the case with SVB. SVB was a lack of liquidity I suppose. If there wasn’t a run on the bank, everyone would have been safe and SVB wouldn’t of had to sell their bonds before maturity for a loss.

[Coronita]

Not financial advice, so do your own due diligence. Here’s all the fine print

https://www.schwab.com/cash-investments

Brokerage products and services are offered by Charles Schwab & Co., Inc., member SIPC. Deposit products and services are offered through Charles Schwab Bank, SSB (“Schwab Bank”); Charles Schwab Premier Bank, SSB (“Schwab Premier Bank”), and Charles Schwab Trust Bank (“Schwab Trust Bank”, “CSTB”) – collectively the “Affiliated Banks”, Members of FDIC.

Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab Funds®, Charles Schwab & Co., Inc. (“Schwab”), Member SIPC, the distributor for Schwab Funds, are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.

*Annual percentage yield.

†Yields shown represent the range of annualized fund yields, reflecting applicable waivers and based on the average income paid out over the prior seven days assuming interest income was not reinvested. These yields represent past performance, which cannot guarantee future results. Where waivers are not reflected, the yields would have been lower. Current performance may be lower or higher than the performance quoted. For more current performance please visit http://www.schwabassetmanagement.com.

‡The Funds’ Ultra Shares have a minimum initial investment of $1,000,000.

§The annual percentage yield displayed includes 3-month to 1-year values.

**Not applicable to Schwab Variable Share Price Money Fund.

Investors in money market funds should carefully consider information contained in the prospectus, or, if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a mutual fund prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.

1. The Schwab Bank Investor Savings Account™, with a minimum balance of $0.01, offers a 0.45% annual percentage yield (APY) as of 12/27/2022. This rate is variable and may change without notice.

2. Based on changes to certain federal regulations made in response to COVID-19, effective May 2020 and until further written notice is provided, Schwab Bank has indefinitely suspended enforcement of provisions in the Schwab Bank Deposit Account Agreement that limit the number of certain types of withdrawals and transfers from Investor Savings accounts to a total of six (6) each monthly statement cycle. This change means that clients may make withdrawals and transfers from their Investor Savings account without limit, and Schwab Bank will not take action to convert or close Investor Savings accounts based on the number of withdrawals and transfers made.

3. Funds deposited at Charles Schwab Bank, SSB are insured, in aggregate, up to $250,000, based on account ownership type, by the Federal Deposit Insurance Corporation (FDIC).

4. Unlimited ATM surcharge rebates apply to cash withdrawals using the Schwab One Visa® Platinum Check Card or the Schwab Bank Visa® Platinum Debit Card at ATM’s where they are accepted. ATM surcharge rebates do not apply to any fees other than surcharges assessed for using an ATM to withdraw cash in local currency from your Charles Schwab & Co., Inc. Schwab One brokerage account or your Charles Schwab Bank, SSB account. Charles Schwab & Co., Inc. and Charles Schwab Bank, SSB make their best efforts to identify those ATM surcharges eligible for rebate, based on information they receive from Visa and from ATM operators. In the event that you have not received a rebate for an eligible surcharge, please call a Schwab One Client Service Specialist at 800-421-4488 or a Schwab Bank Client Service Specialist at 888-403-9000. Charles Schwab & Co., Inc. and Charles Schwab Bank, SSB reserve the right to modify or discontinue this ATM surcharge rebate at any time.

5. If you use your card to withdraw foreign currency from an ATM, or to pay for a purchase with foreign currency, we charge your account for the U.S. dollar equivalent of the transaction. Depending on the specific arrangements that are in place, the exchange rate will be determined by the bank at which you conduct the transaction, the network to which the ATM belongs, or Visa®.

6. The Schwab Mobile Deposit™ service is subject to certain eligibility requirements, limitations, and other conditions. Enrollment is not guaranteed. Standard hold policies apply. Requires a wireless signal or mobile connection. Access to Electronic Services may be limited or unavailable during period of peak demand, market volatility, systems upgrade, maintenance, or for other reasons. Functionality may vary by operating system and/or device. Mobile carrier data charges may apply.

7. May be subject to state, local, and the federal Alternative Minimum Tax. Capital gains are not exempt from federal taxes.

8. Fund expenses and other fees may apply.

9. Certificates of deposit (CDs) from Schwab CD OneSource® are issued by FDIC-insured institutions and are subject to change and system access. Funds are FDIC-insured up to $250,000 per depositor per insured institution, based on account ownership type. Visit http://www.fdic.gov for details. For most CDs, there are no additional commission charges when you buy a CD through Schwab CD OneSource. However, there may be costs and market value adjustments associated with early redemption. CDs available through Schwab CD OneSource typically offer a fixed rate of return, although some offer variable rates. The minimum quantity is generally $1,000 face amount but may vary by offering. CDs may be subject to an early withdrawal penalty.

10. Funds deposited at an FDIC-insured institution are insured, in aggregate, up to $250,000 per depositor, per insured institution, based upon account type, by the Federal Deposit Insurance Corporation (FDIC). CDs you purchase from a particular bank are aggregated with any other deposits you may have with the issuing bank for purposes of determining FDIC insurance coverage (e.g., if you already have deposits of $250,000 with a bank, CDs you purchase from the same bank in the same ownership category may not be covered). Because the deposit insurance rules are complex, you may want to use the FDIC’s Electronic Deposit Insurance Estimator (EDIE) to estimate your total coverage at any particular bank.

11. Not all services are available on retirement accounts or in certain Schwab One accounts (those owned by organizations or in managed accounts).

12. Schwab One Interest and Bank Sweep are the two primary cash features. Money Fund Sweep feature is an additional cash feature available to certain accounts. Please note Schwab One Interest and the Money Fund Sweep feature are not FDIC-insured. As of 12/27/2022, the Annual Percentage Yield (APY) quoted for Schwab One Interest and Bank Sweep is 0.45% with a minimum balance of $0.01; it is quoted at 0.45% for balances over $1,000,000. This rate is variable and may change without notice.

13. If your account is an IRA, withdrawals prior to age 59 ½ may be subject to a tax penalty.

14. Bank Sweep deposits are held at one or more FDIC-insured banks (“Affiliated Banks”) that are affiliated with Charles Schwab & Co., Inc. Funds deposited at Affiliated Banks are insured, in aggregate, up to $250,000 per Affiliated Bank, per depositor, for each account ownership category, by the Federal Deposit Insurance Corporation (FDIC). Securities products and services (including unswept or intra-day cash, net credit or debit balances, and money market funds) offered by Charles Schwab & Co., Inc. (member SIPC) are not deposits or obligations of the Affiliated Banks, are subject to investment risk, are not FDIC insured, may lose value, and are not Affiliated Bank-guaranteed. Charles Schwab & Co., Inc. and the Affiliated Banks are separate entities and are all affiliates of The Charles Schwab Corporation.

15. Schwab One Interest is not a bank account and is not FDIC-insured. Charles Schwab & Co., Inc. is a member of the Securities Investor Protection Corporation (SIPC), which provides up to $500,000 (including $250,000 for claims for cash) of coverage when aggregated with other securities and cash held by you in the same capacity at Charles Schwab & Co., Inc. SIPC coverage protects eligible brokerage assets up to applicable limits in the case of a brokerage firm’s insolvency. It does not protect against investment losses.

16. The Schwab Bank Investor Checking™ account is available only as a linked account with a Schwab One brokerage account. The Schwab One brokerage account has no minimum balance requirements, minimum balance charges, minimum trade requirements, and there is no requirement to fund this account, when opened with a linked Investor Checking account. To learn more about other Schwab Bank checking accounts, please contact Schwab Bank at 888-403-9000.

17. The Schwab Bank Investor Checking™ account, with a minimum balance of $0.01, offers a 0.45% annual percentage yield (APY) as of 12/27/2022. This rate is variable and may change without notice.

18. Online and Mobile bill pay: Requires access to Schwab.com or Schwab Mobile via a wireless signal or mobile connection. Access to Electronic Services may be limited or unavailable during periods of peak demand, market volatility, systems upgrade, maintenance, or for other reasons. Functionality may vary by operating system and/or device.

19. Use of your card through a mobile wallet is subject to the terms and conditions of your Schwab Bank Deposit Account Agreement (which contains information on any potential liability for unauthorized transactions), your Visa Debit Card Agreement, the terms and conditions of the mobile wallet you use, the privacy policy set forth at http://www.schwab.com and the privacy policy of the mobile wallet you use.

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You could lose money by investing in the Schwab Money Funds. All Schwab Money Funds with the exception of Schwab Variable Share Price Money Fund seek to preserve the value of your investment at $1.00 per share, but cannot guarantee they will do so. Because the share price of Schwab Variable Share Price Money Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. All Schwab Money Funds with the exception of Schwab Government Money Fund, Schwab Retirement Government Money Fund, Schwab U.S. Treasury Money Fund, Schwab Treasury Obligations Money Fund and Schwab Government Money Market Portfolio may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Schwab Money Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Schwab Money Funds’ sponsor has no legal obligation to provide financial support to the Funds, and you should not expect that the sponsor will provide financial support to the Funds at any time.

Schwab Variable Share Price Money Fund: You could lose money by investing in the Fund. Because the share price of the Fund will fluctuate, when you sell your shares they may be worth more or less than what you originally paid for them. The Fund may impose a fee upon the sale of your shares or may temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time..

(0822-2F63)

[Coronita]

There’s probably a lot of hysteria and over-reaction. However, if it makes you feel better (like in my case), just stay within the insured limits.

And if you plan on selling some of your money funds to buy CDs through schwab, just be aware that when you buy a CD through schwab, the CD is only actually purchased at the listed settlement date, and you cash will be held as part of the cash sweep feature of your brokerage account until the settlement date.

[plm]

Most of my cash is in 13 week Tbills now so there is no problem staying under the limit. Stocks, there isn’t much you can do about it so those will just always be at risk. Seems like an extremely small risk compared to small and regional banks.

I think I’ll keep the money in swvxx in case there is a buying opportunity in stocks soon. But most likely I think this will blow over without any more damage. It doesn’t seem significant enough trigger a market crash.

[Coronita]

I bought Schwab SCHW, First Republic (FRC), and DPST etf this morning.

Because I don’t feel like going to Vegas to gamble, heh heh.

• This reply was modified 1 week, 2 days ago by Coronita.

[plm]

Good move. Makes sense to buy when low but I’ve never really taken advantage of stuff like that. Just never had the confidence or perhaps the charging skills to know when its going to bottom. I hate gambling even in Vegas. But buying bonds instead is so boring.

[Coronita]

No, it was a pretty stupid thing to do. But then again, I never claimed financial intelligence in my decisions. I just know that I suck at Vegas.

[Coronita]

I’m out of FRC. Really tiny trade, but about 29% gain in one day, I’ll take it… Back to the Vegas tables…, lol.

[plm]

Nice. Now you go gamble it in Vegas. I suppose its a thrill to win. For me I’m just happy if I don’t lose and I don’t bet much so its boring. I don’t see the point in gambling, better odds buying stocks for the long term.

[Coronita]

I hate Vegas actually. But I could use the extra money to pay for gas and tires, lol.

I ended up selling FRC, DPST,and SCHW. Because I forgot I needed to fill up all my cars this month

[svelte]

Looks like the SVB joyride may have been kicked off by a newsletter last month. It possibly put depositors on edge and when SVB decided to sell their bonds and issue stock, that was all it took for depositors to panic and withdraw their funds.

https://www.dailymail.co.uk/news/article-11855685/Silicon-Valley-Bank-185-1-debt-asset-ratio-flagged-February-tech-experts-newsletter.html

[Coronita]

Interesting.

• This reply was modified 1 week, 2 days ago by Coronita.

[Coronita]

Not financial advice, but… given what happened with SVB, this is what I’m doing with my conservative cash account.

I split the cash holding roughly 50/50 between a basket of CDs FDIC insured well below the limit, and a investments into Schwab Money Funds, which all have a 1 day turnaround to cash.

The CD’s have varying terms, mostly 3 or 6 months, some are 1 month and some are 1 year. Anything longer than 3 month, I picked the CD that pays out monthly, instead of at maturity, even if the rate is slightly lower than ones that pay out at maturity.

[Author]

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