First disclosure...I own 100 share of Schwab. I have been praising their name on the boards here, for basic individual investors (not day traders). So I am sitting with just over $9,000. in our sweep trust account, (into Schwab Bank)...Earning less that .005. Sick I know... I look on their website (and called the 800 number) concerning buying a 3-9 month US Treasure....Simple basic thing. The minimum they offer is $50,000. I do not like the choices they give for CDs...Some no name bank (that Schwab gets a kickback for investing with). In these troubled times, I want safety with some income. I look at a Goldman Sacks Banks CD with a decent yield (at Schwab). The CD doesn't start earning interest till about May 5!! Schwab is using the float for a long time before they even start the clock!!! I know my Fidelity sweep accounts earns over 4%, so I don't even think about holding and waiting to reinvest. At Schwab, what my wife and I have done with our Roth IRAs, is if we have one or two grand, we will just buy a cheap CD and gain the extra income. It is not reported for tax purposes...So no big whoop. But for right now, I feel stuck between a rock and a hard place... PS Yeah, I know I can do TIPS (which I may do)...
New issued treasury bills minumium investment is $1k a bond, in every brokerage I came across. For $9k you can buy 9 bonds. Sweep cash is always earning the least because it is more like a liquidty support than a product.
My extra cash at Schwab is in SNSXX which currently yields 4.28%. It has no transactions fees but there's a 24 hour holding period when you sell it. It's a fund that invests in U.S. Treasuries. No minimum to invest.
Don't get your point. You are pooling with other noncompetitive bids customers, it is guaranteed filled. In a single auction, a bidder is capped at 10 million in noncompetitive bids. Therefore even Schwab or Fidelity retail customers pool can't exceed 10 million.
%% Sounds like a blessing in disguise, no 3-6 mo gov debt for you or CDs. NOT really a kickback-thats illegal, Cabin111. They have some higher paying gov money market/ but looks like the best deal is thier private sector money market, $1 minimum pays 4.44% or more . I looked @ all they hold in that mm, maybe a better deal then Fidelity[SCHW Value Advantage Money Market, have to buy or sell by 3CST to get credit that day/end of day] Most likely able to out earn a locked in cd this year..........................
But who sweeps your cash automatically nightly from your brokerage like interactive Brokers ? It pays near the highest stand alone money mkts out their .Schwab you have to manually move . Does fidelity automatically sweep nightly to high yield accounts ?
My point was just the point I made, it was worded in plain English. Don't always behave as if someone is attacking you. Aside the fact that anyone who buys less than the notional amount (priced accordingly of course) is in effect not receiving a bond but an account entry that he or she owns a fractional share sliced up by the broker or their agent, not the government. Also, the ownership is not held in the client name but the brokers name. I just provided some additional color to how this works.