Sorry, I have looked extensively but can’t find any other Fool board that I think would be able to guide on this question, and this is a group of people I trust already. Please answer off-board (click the “reply directly by email box below”) – I don’t think this needs to clutter this board.
I routinely have some amount of cash sitting in my brokerage account. Sometimes it’s little, sometimes it’s more depending on what I’ve sold or general market conditions. I try to stay fully invested, but can’t always pull the trigger for one reason or another – I wanted to own CRWD, for example, but was waiting for earnings to have a better sense of things.
This is a regular taxable brokerage account. E*Trade pays me a meager nothing cents each month on the cash, but I know even sitting in an ETF or mutual fund that pays monthly dividends, I’d make something cents. And something is better than nothing… (This is a margin-enabled account, though I don’t use it as such, so it would be ok if the cash coming back out of a fund wasn’t cleared for a day or two and I bought something else ahead of that.)
Anyone have any suggestions for places I can move that money in and out of? Mutual funds seem to all have early withdrawal fees ($49.99), so that seems like a no-go. I found a few ETFs such as BIV, BND, VBTLX, IUSB and others that fit the profile I’m looking for (mostly municipal and corporate bonds, pays out monthly, etc.), but figured I would poll the field first. This is not about timing the market, just about earning /something/ on the cash while it’s waiting deployment.
Again, please reply directly!
Because so many (many more than actually answered my query) also wanted similar information, a very quick summary of what folks told me rather than sending individual emails back to those that asked:
¦ “At Fidelity I keep my cash in FDRXX (Fidelity Government Cash Reserves) that yields about 2%.”
¦ “Interactive Brokers pays 1.9% on idle cash” (Note: that looks to be somewhat true, but also likely dependent on total size of cash+holdings with IB, so YMMV)
¦ “I own BIV along with USHYC and USIBX for cash flow. You might look at BND and HYLD also.”
¦ “You might have a look at SHY. It has a little bit less likelihood of loss of capital in a short time horizon than the bond ETFs you mentioned, I believe.”
I got several “Call ETrade and tell them you’re unhappy” suggestions. Even though I’d already done so twice previously, I called again. Basically, it seems that unless you’re sitting on $500k+ of brokerage account (and I’m not, yet), there are 2 cash sweep options that pay next to nothing (0.05% to 0.45%), and the only difference between them is the FDIC coverage. I have tons of inertia and would rather not leave – plus my employer ESPP and RSU/stock options stuff is already at ETrade, but I threatened to (if only because the commissions are still higher than I want). They’re supposed to call me back this week with “something.” I’m not holding my breath, but we’ll see… ETrade does have a savings account that I could link that supposedly pays 2.1% APY, which is something, but also not optimal.
Thanks to those that gave suggestions. I’m still looking at each of those funds, but I feel like what I really need is a better cash sweep option so I don’t need to care about which fund or figuring out when I need to pull out of some fund because of situation X or Z.