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UPDATE 4.4.23: Don’t allow your savings to be swept into an account paying almost nothing in interest. Your Survival Guy writes this morning:
Is your lazy cash sitting around eating all your Easter candy? Murdering Peeps and defenseless chocolate bunnies? Well, after this weekend, that needs to stop. No más. With Fidelity’s Treasury Money Market (FZFXX) yielding close to 4.5%, it’s time to get your lazy cash off the couch. A little spring cleaning, if you will.
If you’ve been living in a cave, and I don’t fault you for that, then you know the village is in an uproar over the banks. This is nothing new to Your Survival Guy, and I hope to you. Since the beginning of time, the “smartest guys” in the kingdom have been reckless with other people’s money. And when the money’s gone, it’s gone.
Read more from YSG here.
Originally posted October 7, 2019.
At The Wall Street Journal, Jason Zweig explains the treatment customers are receiving at Schwab. He writes (abridged):
The term “brokerage” is becoming a misnomer. Firms like Schwab are more like banks than brokers.
In the first half of 2019, Schwab clients moved $58 billion into money-market funds and other higher-yielding choices. But most don’t bother. Even worse, many don’t have a choice because they hold accounts that are required to keep cash at low yields in Schwab’s own bank.
That has been a bonanza for the firm.
Schwab pushed $11.8 billion out of higher-yielding money-market funds into deposits at its own bank in the first half of 2019, according to the company.
As of June 30, deposits at Schwab’s bank totaled $208 billion.
This week, clients were earning between 0.12% and 0.55% on those balances.
When clients invest in Schwab Intelligent Portfolios, its roboadvisory service that offers preselected baskets of ETFs, between 6% and 30% of the money goes into cash.
Schwab doesn’t use money-market funds or short-term Treasury debt, which could earn nearly 2% at recent rates. Instead, it shunts the cash into Charles Schwab Bank, which currently pays 0.55% on the money—and then turns around and lends it out at roughly 2%.
Read more here.
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