Buy MMF using external account, what brokerages?
Buy MMF using external account, what brokerages?
I want to be able to buy MMF shares by funding from an external checking account. In other words, cut out the extra step of first transferring funds into the brokerage account and waiting for them to clear before putting in the buy order.
I used to be able to do this when I was at Vanguard, but I can’t at Schwab. Does Vanguard still allow this? What about Fidelity or any others?
I used to be able to do this when I was at Vanguard, but I can’t at Schwab. Does Vanguard still allow this? What about Fidelity or any others?
Re: Buy MMF using external account, what brokerages?
I buy VUSXX directly from my checking account. Vanguard is my broker. VMFXX is the settlement fund. You can buy as settlement fund or directly as a money market fund. The settlement fund doesn't have a minimum but if you buy a money market fund there is a $3000 minimum. You can look on Vanguards webpage for a list of their funds.
- dogagility
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Re: Buy MMF using external account, what brokerages?
Many forum members (including me) have a Fidelity Cash Management Acccount (CMA) which features check writing, bill pay, etc like a regular bank.
The money held in the checking account can be invested in any Fidelity MMF and will be automatically withdrawn from the MMF to cover any checks or electronic withdrawals from the checking account.
You might consider using a Fidelity CMA account rather than your current bank for checking account needs.
Make sure you check out my list of certifications. The list is short, and there aren't any. - Eric 0. from SMA
- anon_investor
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Re: Buy MMF using external account, what brokerages?
Fidelity allows this. You can't withdraw the funds right away but you can invest it immediately.MtnTravel wrote: ↑Sat Apr 01, 2023 10:06 pm I want to be able to buy MMF shares by funding from an external checking account. In other words, cut out the extra step of first transferring funds into the brokerage account and waiting for them to clear before putting in the buy order.
I used to be able to do this when I was at Vanguard, but I can’t at Schwab. Does Vanguard still allow this? What about Fidelity or any others?
Re: Buy MMF using external account, what brokerages?
Just mobile deposited our federal refund check into our Schwab joint account Friday. The deposit was approved in about 30 minutes & I purchased SWVXX with the full amount. Very easy & seamless
Re: Buy MMF using external account, what brokerages?
Checks seem to deposit quickly, during the weekday, but if you are trying to move money from an external checking account, you first have to ACH it to the brokerage, wait a day, and then manually buy the MMF. I’d like to skip the ACH/wait step and just “buy” the MMF and have it pull directly from an external account. Sounds like only Vanguard and Fidelity allow this.
Re: Buy MMF using external account, what brokerages?
That’s good to know. So you don’t have to transfer it first? I could place a buy order for $10k of SPAXX, and it would pull the 10k from my external checking account?anon_investor wrote: ↑Sun Apr 02, 2023 6:26 amFidelity allows this. You can't withdraw the funds right away but you can invest it immediately.MtnTravel wrote: ↑Sat Apr 01, 2023 10:06 pm I want to be able to buy MMF shares by funding from an external checking account. In other words, cut out the extra step of first transferring funds into the brokerage account and waiting for them to clear before putting in the buy order.
I used to be able to do this when I was at Vanguard, but I can’t at Schwab. Does Vanguard still allow this? What about Fidelity or any others?
Re: Buy MMF using external account, what brokerages?
Vanguard will show that your money is availbe to invest before the money is in the federal money market settlement account. I do not see much reason to use any MM fund other than that used in the settlement account. I think I read that 99.5% of the money in the settlement account is Federal securities.anon_investor wrote: ↑Sun Apr 02, 2023 6:26 amFidelity allows this. You can't withdraw the funds right away but you can invest it immediately.MtnTravel wrote: ↑Sat Apr 01, 2023 10:06 pm I want to be able to buy MMF shares by funding from an external checking account. In other words, cut out the extra step of first transferring funds into the brokerage account and waiting for them to clear before putting in the buy order.
I used to be able to do this when I was at Vanguard, but I can’t at Schwab. Does Vanguard still allow this? What about Fidelity or any others?
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Re: Buy MMF using external account, what brokerages?
There are a couple of things to be clear on with fidelity:MtnTravel wrote: ↑Sun Apr 02, 2023 7:30 amThat’s good to know. So you don’t have to transfer it first? I could place a buy order for $10k of SPAXX, and it would pull the 10k from my external checking account?anon_investor wrote: ↑Sun Apr 02, 2023 6:26 amFidelity allows this. You can't withdraw the funds right away but you can invest it immediately.MtnTravel wrote: ↑Sat Apr 01, 2023 10:06 pm I want to be able to buy MMF shares by funding from an external checking account. In other words, cut out the extra step of first transferring funds into the brokerage account and waiting for them to clear before putting in the buy order.
I used to be able to do this when I was at Vanguard, but I can’t at Schwab. Does Vanguard still allow this? What about Fidelity or any others?
1) the brokerage account settlement fund is SPAXX (although you can change this)
2) At fidelity you can initiate an ACH pull from a linked bank account and then immediately use that to purchase funds/stocks. I think there is a cap of something like $25000 which becomes available immediately. Most of the time this isn’t a problem.
Assuming you want to buy SPAXX then from a Fidelity standpoint you would just transfer from your bank account and be done. If you wanted to buy a different fund, then you would initiate the transfer and then issue a buy for the fund you wanted but there is no waiting for things to settle out. Buying a different fund is a 2 step process just without the wait.
I point this out because there are some members coming from old mutual fund only accounts who still take exception with the two step process, but it is what it is.
Re: Buy MMF using external account, what brokerages?
Thanks! So with Fidelity, I could initiate a “pull” from my external checking, and those funds would be available right then to trade? Schwab makes you wait at least a day of there’s an extra step. The settlement fund at Schwab is also garbage, so it would be great to just pull it into a settlement fund and be done.PersonalFinanceJam wrote: ↑Sun Apr 02, 2023 8:03 amThere are a couple of things to be clear on with fidelity:MtnTravel wrote: ↑Sun Apr 02, 2023 7:30 amThat’s good to know. So you don’t have to transfer it first? I could place a buy order for $10k of SPAXX, and it would pull the 10k from my external checking account?anon_investor wrote: ↑Sun Apr 02, 2023 6:26 amFidelity allows this. You can't withdraw the funds right away but you can invest it immediately.MtnTravel wrote: ↑Sat Apr 01, 2023 10:06 pm I want to be able to buy MMF shares by funding from an external checking account. In other words, cut out the extra step of first transferring funds into the brokerage account and waiting for them to clear before putting in the buy order.
I used to be able to do this when I was at Vanguard, but I can’t at Schwab. Does Vanguard still allow this? What about Fidelity or any others?
1) the brokerage account settlement fund is SPAXX (although you can change this)
2) At fidelity you can initiate an ACH pull from a linked bank account and then immediately use that to purchase funds/stocks. I think there is a cap of something like $25000 which becomes available immediately. Most of the time this isn’t a problem.
Assuming you want to buy SPAXX then from a Fidelity standpoint you would just transfer from your bank account and be done. If you wanted to buy a different fund, then you would initiate the transfer and then issue a buy for the fund you wanted but there is no waiting for things to settle out. Buying a different fund is a 2 step process just without the wait.
I point this out because there are some members coming from old mutual fund only accounts who still take exception with the two step process, but it is what it is.
Re: Buy MMF using external account, what brokerages?
So why not write a check & then mobile deposit it? For me, that certainly went faster than the ACH transfers in the past. I’m not certain if there’s a max amount allowed by mobile deposit. It seems as though some here want to move $100K instantly, but that’s not an issue for us.MtnTravel wrote: ↑Sun Apr 02, 2023 7:28 amChecks seem to deposit quickly, during the weekday, but if you are trying to move money from an external checking account, you first have to ACH it to the brokerage, wait a day, and then manually buy the MMF. I’d like to skip the ACH/wait step and just “buy” the MMF and have it pull directly from an external account. Sounds like only Vanguard and Fidelity allow this.
Re: Buy MMF using external account, what brokerages?
Yes, if you do an ACH 'pull' Fidelity will allow you to use the funds immediately 'for trade', which means you can buy the money market fund (or whatever security) immediately, but it won't be 'available for withdrawal' for a few days.MtnTravel wrote: ↑Sun Apr 02, 2023 8:52 amThanks! So with Fidelity, I could initiate a “pull” from my external checking, and those funds would be available right then to trade? Schwab makes you wait at least a day of there’s an extra step. The settlement fund at Schwab is also garbage, so it would be great to just pull it into a settlement fund and be done.PersonalFinanceJam wrote: ↑Sun Apr 02, 2023 8:03 amThere are a couple of things to be clear on with fidelity:MtnTravel wrote: ↑Sun Apr 02, 2023 7:30 amThat’s good to know. So you don’t have to transfer it first? I could place a buy order for $10k of SPAXX, and it would pull the 10k from my external checking account?anon_investor wrote: ↑Sun Apr 02, 2023 6:26 amFidelity allows this. You can't withdraw the funds right away but you can invest it immediately.MtnTravel wrote: ↑Sat Apr 01, 2023 10:06 pm I want to be able to buy MMF shares by funding from an external checking account. In other words, cut out the extra step of first transferring funds into the brokerage account and waiting for them to clear before putting in the buy order.
I used to be able to do this when I was at Vanguard, but I can’t at Schwab. Does Vanguard still allow this? What about Fidelity or any others?
1) the brokerage account settlement fund is SPAXX (although you can change this)
2) At fidelity you can initiate an ACH pull from a linked bank account and then immediately use that to purchase funds/stocks. I think there is a cap of something like $25000 which becomes available immediately. Most of the time this isn’t a problem.
Assuming you want to buy SPAXX then from a Fidelity standpoint you would just transfer from your bank account and be done. If you wanted to buy a different fund, then you would initiate the transfer and then issue a buy for the fund you wanted but there is no waiting for things to settle out. Buying a different fund is a 2 step process just without the wait.
I point this out because there are some members coming from old mutual fund only accounts who still take exception with the two step process, but it is what it is.
If you have a Fidelity brokerage account (not CMA) you can have a variety of Government Money Market funds as your default 'core' settlement fund, and if that's the fund you wanted to own anyway, there's nothing further to do. If you have a CMA account (which uses a FDIC bank sweep as it's 'core'), or you want a money market fund that's not one of the Government MMF options, you'll have to make a separate purchase request of the fund - which can be done immediately if the funds are being transferred by initiating the transfer in the Fidelity account pulling money from the bank.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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Re: Buy MMF using external account, what brokerages?
Correct. Note when you go to trade with these unsettled funds you will get a message about avoiding a “good faith violation”. Some people have misinterpreted this as they can’t trade but it is only an informational warning. Fidelity is trying to warn you not to place a buy with unsettled funds and then sell the security you just bought before things settle out.MtnTravel wrote: ↑Sun Apr 02, 2023 8:52 am *snip*
Thanks! So with Fidelity, I could initiate a “pull” from my external checking, and those funds would be available right then to trade? Schwab makes you wait at least a day of there’s an extra step. The settlement fund at Schwab is also garbage, so it would be great to just pull it into a settlement fund and be done.
I hope this helps.
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Re: Buy MMF using external account, what brokerages?
Vanguard still allows mutual fund purchases including money market funds using a linked external bank account as the funding source. It still passes through the settlement fund, but this does not create an extra step for the user. Also can be automated. Best done from the website rather than the app.
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Re: Buy MMF using external account, what brokerages?
With Vanguard, any transfer into the account by default go into the settlement account which is a money market fund. Same with Fidelity brokerage if you select that option for the core account.
With Fidelity Cash Management the core account is an FDIC insured sweep account currently yielding 2.2% which still beats Schwab.
With Fidelity Cash Management the core account is an FDIC insured sweep account currently yielding 2.2% which still beats Schwab.
Re: Buy MMF using external account, what brokerages?
I've been told that Fidelity still offers "mutual fund only" accounts (no brokerage, no 'sweep'.) You can't open them online, have to call and talk to a rep to do it, but if you did that using a money market fund of your choice one could likely bypass all of the 'sweep' transactions that some people seem to have a problem with. It would also bypass the need for SIPC coverage since there's no brokerage involved. Probably wouldn't have the same ATM/debit card access Fidelity offers on their brokerage accounts, and I'm not sure what other functional limitations it might have, but it may be something to look into if someone is that put off by having to go through a brokerage sweep account.
I believe T. Rowe Price still offers direct mutual fund accounts (no brokerage involved) as well, probably a few other mutual fund companies out there that do, but I would be very careful about the fees involved with mutual funds from most fund companies. Vanguard really is/was the leader in that regard, Fidelity and T. Rowe Price have competitive low-fee funds but Vanguard is the leader - and has made owning mutual funds directly through them difficult.
I believe T. Rowe Price still offers direct mutual fund accounts (no brokerage involved) as well, probably a few other mutual fund companies out there that do, but I would be very careful about the fees involved with mutual funds from most fund companies. Vanguard really is/was the leader in that regard, Fidelity and T. Rowe Price have competitive low-fee funds but Vanguard is the leader - and has made owning mutual funds directly through them difficult.
Last edited by JoMoney on Sun Apr 02, 2023 9:46 am, edited 1 time in total.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: Buy MMF using external account, what brokerages?
this past week I used the VG mobile check deposit app to deposit funds into our VMFXX.
VG rates are tops.
The app worked really well.
Funds showed up within a few minutes in our account as a “credit”.
We also received a text and an email within minutes of the deposit.
I logged into the website and the funds showed in our account as “credit”.
The following day the funds were in our account.
Even when I mobile deposit into our Fidelity account, things don’t show up
anywhere close to the speed on VG.
I’m not taking issue or complaining about Fido; they are very good.
Just wanted to share what I think is pretty good service from VG.
Have a great day
VG rates are tops.
The app worked really well.
Funds showed up within a few minutes in our account as a “credit”.
We also received a text and an email within minutes of the deposit.
I logged into the website and the funds showed in our account as “credit”.
The following day the funds were in our account.
Even when I mobile deposit into our Fidelity account, things don’t show up
anywhere close to the speed on VG.
I’m not taking issue or complaining about Fido; they are very good.
Just wanted to share what I think is pretty good service from VG.
Have a great day
- anon_investor
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Re: Buy MMF using external account, what brokerages?
As others have said, SPAXX can be your default core account, so initiating a transfer from your external bank account to Fidelity automatically puts that money in SPAXX and those funds are immediately available to trade.MtnTravel wrote: ↑Sun Apr 02, 2023 7:30 amThat’s good to know. So you don’t have to transfer it first? I could place a buy order for $10k of SPAXX, and it would pull the 10k from my external checking account?anon_investor wrote: ↑Sun Apr 02, 2023 6:26 amFidelity allows this. You can't withdraw the funds right away but you can invest it immediately.MtnTravel wrote: ↑Sat Apr 01, 2023 10:06 pm I want to be able to buy MMF shares by funding from an external checking account. In other words, cut out the extra step of first transferring funds into the brokerage account and waiting for them to clear before putting in the buy order.
I used to be able to do this when I was at Vanguard, but I can’t at Schwab. Does Vanguard still allow this? What about Fidelity or any others?
Re: Buy MMF using external account, what brokerages?
This thread is about to convince me to move everything to Fidelity (or Vanguard, but not sure I want to do that...)
Schwab's sweep and the general way they deal with cash isn't ideal and requires some extra steps, which is unfortunate, but I guess they have to make money somehow.
Schwab's sweep and the general way they deal with cash isn't ideal and requires some extra steps, which is unfortunate, but I guess they have to make money somehow.