Schwab folks! What should you check as soon as possible in your Schwab account? What are Schwab’s core money market fund positions? Which money market funds do we hold in our Schwab accounts & why?
These are the three questions that I’ll be covering in today’s – Schwab money market funds covered include SWVXX, SNAXX, SNVXX, SGUXX, SNOXX, SCOXX, SNSXX SUTXX & Schwab’s Municipal Money Market Funds
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Schwab Money Market Funds vs Bank Sweep: A Guide on How to Buy Money Market Funds
When considering options for short-term investments, money market funds are an excellent choice due to their low risk and steady returns. Schwab, one of the leading financial service providers, offers a range of money market funds that cater to different investment needs. In this article, we will specifically discuss four popular Schwab money market funds, SWVXX, SNVXX, SNOXX, SNSXX, and compare them to the traditional option of Bank Sweep. Additionally, we will guide you on how to buy money market funds.
Schwab offers a variety of money market funds, each with its own investment objective and slightly varying features. Let’s explore the four funds mentioned above and understand their characteristics to help you make an informed investment decision.
1. Schwab Value Advantage Money Fund (SWVXX):
This fund aims to preserve capital and provide current income while maintaining tax-efficiency. It invests in high-quality, short-term instruments such as Treasury bills, commercial paper, and other money market instruments. SWVXX offers a low expense ratio and aims to keep its net asset value (NAV) stable at $1.00 per share.
2. Schwab Retirement Government Money Fund (SNVXX):
SNVXX focuses on capital preservation and current income for retirement accounts. It invests primarily in U.S. government obligations, including Treasury bills, notes, and bonds. It also aims to maintain a stable NAV of $1.00 per share and offers a competitive expense ratio.
3. Schwab Retirement Money Fund (SNOXX):
SNOXX seeks to provide liquidity and a high level of current income consistent with the preservation of capital. It primarily invests in short-term, high-quality instruments issued by domestic and foreign issuers. Like other Schwab money market funds, SNOXX aims to maintain a stable NAV of $1.00 per share.
4. Schwab Treasury Obligations Money Fund (SNSXX):
This fund focuses on current income consistent with the preservation of capital and liquidity. SNSXX invests primarily in obligations issued or guaranteed by the U.S. Treasury. It aims to maintain a stable NAV of $1.00 per share.
Now that we have explored the Schwab money market funds, let’s compare them to the commonly used Bank Sweep option. Bank Sweep is a service offered by brokerage firms that automatically sweeps idle cash from your brokerage account into a bank account, typically offering modest interest rates.
While Bank Sweep is convenient, money market funds offer a superior option for short-term investments. Money market funds provide diversification, professional fund management, higher yields, and a stable NAV, making them a more attractive choice for investors compared to traditional bank accounts.
To buy money market funds, follow these steps:
1. Open a brokerage account:
If you don’t have one already, open a brokerage account with Schwab or any other brokerage provider of your choice. Provide the required information and complete the account setup process.
2. Research and choose a money market fund:
Consider your investment objectives, risk tolerance, and other factors while selecting a money market fund. The Schwab website provides detailed information on each fund, including historical performance, expenses, and other relevant data.
3. Fund your brokerage account:
Transfer funds from your bank account to your brokerage account to have available capital for investing in money market funds.
4. Place an order:
Once your brokerage account is funded, log in to your account and navigate to the trading area. Enter the symbol of the money market fund you wish to buy (SWVXX, SNVXX, SNOXX, or SNSXX) and specify the number of shares you intend to purchase. Review and confirm your order.
5. Monitor and manage your investment:
Regularly monitor the performance of your money market fund and make adjustments as needed. Schwab provides tools and resources to help you track your investments conveniently.
Investing in money market funds can be a smart move for short-term investments, offering stability, liquidity, and competitive returns compared to traditional bank accounts. Schwab’s range of money market funds, like SWVXX, SNVXX, SNOXX, and SNSXX, provide options tailored to different investment objectives. By following the simple steps outlined above, you can begin investing in money market funds and potentially reap the benefits of these safe and reliable investment vehicles.
As of August 12, Fidelity's SPAXX 7 day yield 4,96%, Schwab's SWVXX 7 day yield 5.23%.
FWIW — I was curious as to what happens if you sell a fund, eg SWVXX, before the 15th of the month — do you get a dividend for the month? I think the answer is yes, based on below verbiage from the prospectus. The key is that dividends are DECLARED on a DAILY basis, but PAYABLE on a MONTHLY basis.
"Each fund declares a dividend every business day, based on its determination of its net investment income. The funds pay their dividends on the 15th of each month (or next business day, if the 15th is not a business day), except that in December dividends are paid on the last business day of the month. If your daily dividend is less than $0.01, you may not receive a dividend payment. To receive a dividend distribution, you must be a registered shareholder on the date that dividends are declared."
I have money sitting in my savings until the market corrects a bit more. I plan to transfer it to my investment account to purchase SNSXX for the time being.
What about E-Trade. Any tip on that platform?
SNSXX is taxable at federal level, right?
I value the 1-2 day liquidity in these funds over the slightly higher rate of a 3-6 month T-Bill or CD (from a good solid bank). I'm willing to pay .5% for that so I don't miss some opportunity like silver crashing into the teens. Wish it was zero days like Fidelity though.
I opened the Schwab account in June 2023. My account doesn't mention bank sweep but just says cash balances, then two intersecting boxes, then Rates .
Clicking on Rates it mentions the 0.45% what a Scam.
Thank you for the information on how to get higher returns.
Excellent video. Very informative and easy to understand.
I was an TDAmeritrade account holder that was moved to Scwab a few months ago. The next to nothing you talk about in interest is a lot more than I was getting at TDAmeritrade. Anyways I am watching this video to move some of my cash in a Roth and my taxable account to one of these funds. Thanks!
If you hold for only 7 days, then you sell, do you earn any interest?
Thanks
how do you find the rate of these money market funds?
what would happen to these money market funds if the US gov. defaults on debt or the dollar collapses? what risks are there with these funds?
You do a great job
Jennifer, I always go with SWVXX Value Advantage Money. It has the best yield with $1. Better than the government money funds Ultra shares.
I learn something new with each video I watch. Trying to figure out what to do with a daughter's lump sum settlement – and this video (and others) was very helpful. Thanks!
I almost didn't watch this video because I thought I knew all about my money fund choices. After watching, I switched my taxable brokerage accounts at Schwab from SWVXX to SNSXX immediately! In NJ, the tax savings will pay for my Super-SuperSaver membership and then some. Thank you!
I'm with Ameritrade, which will be migrating to parent company Schwab accounts. Their target is to migrate everyone by year end. I'm discouraged to hear and confirm the low interest sweep accounts. Thanks for sharing that! I also have a Fidelity brokerage for our health savings accounts and was able to follow your directions to change my core sweep account there. Thanks for that help too!
Are the SNSXX dividends taxed as qualified dividends, ordinary dividends or as interest? Thanks for the great information.
I live in California and I bought snoxx. I still have to pay state tax on it? Snoxx contains only T-bill, right?
Your channel is just awesome. I’ve learned more from you than anyone else. Thank you
Do u have a formula to calculate the maximum quantity amount of T-bills (in even thousands of dollars) that I can afford to buy? I like to put my order in for the maximum quantity that I can afford (using all the money in my ROTH account, in full thousands), but right now I have to guess how much that will really cost.
Can you do a video on how to transfer accounts from Schwab to Fidelity? Can this even be done with a retirement account? Thx!
I used to place my cash in SWVXX but moved to SNSXX during SVB & First Republic debacle, because on Schwab's site it says SWVXX's liquidity ("Measure of a money market fund's ability to meet shareholder redemptions, stated as a percentage of total money market fund assets, and calculated for one business day.") is only around 40% while their treasury money market funds have liquidity of 100%. 40% doesn't seem to be safe enough in case of a bank run. Also, I don't think Schwab advertises this but if you sell cash secured puts in your Schwab account, you can use their money market funds as cash collateral, which is pretty nice as it earns interest while you are holding the position.
yes. Please do Vanguard ETrade on same subject.
Good video. I'm in NC where the state tax is a flat 4.99%. I have a 401k at Schwab. Treasury bills I buy on Treasury Direct are not subject to this tax. But it sounds like if I buy with Schwab then they will be subject to the state tax?
Thank you for sharing. Helpful video.
Could you do a video on BOXX ETF ? Seems like the best option for cash and risk free / OCC backed. Thanks !! Love your channel.
Effective July 3 2023 the current interest is 4.67%
I use SWVXX because I live in Florida where there is no state income tax. Schwab is very customer friendly. They also allow you to use the cash in the money market fund as collateral so I can sell cash-secured puts and still make good interest on my cash.
How or where do I find that SNSXX is State tax exempt?
I know you will be coming out with a similar video dealing with Vanguard Money Market accounts, but off hand which Vanguard MM is similar to Schwab Value Advantage MM?
Often enough I'll have 10K in Schwab cash sweeps between investments. Thanks to you I can now move it into a money market and make some decent $$$ for the short term. Thank you !!!!
Margin FTW
Option buying doesn’t require you to sell the money market shares they will put them on hold but you still get the almost 5 percent