SNOXX
Charles Schwab Family of Funds - Schwab Treasury Obligations Money Fund
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Fund to park money Schwab (SWVXX, SNVXX, SNOXX, SNSXX)
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I've always seen Vanguard funds for long-term DCA "buy periodically and sell never" part of a portfolio and it's made sense to hold them in their own account at Vanguard to avoid all transaction fees. And for idle money at Schwab - so long as you don't need it instantly - I think SNOXX (treasury money market fund) is a decent place to park it.
Interesting! If you are using Schwab, I am on the research tab, under Money Market Funds and I only see the SWVXX under “Prime Money Funds”, where is the USFR and SGOV located? I clicked on ETFs and typed SGOV, and it says it’s an “ultrashort bond”, Does that mean it’s a bond or ETF? Is this like an iBond or TIPS? Do you get a return on these like the Money Market Funds? Is there a reason you prefer to buy the short term treasury ETFs in addition to the SWVXX? I am curious why you don’t choose Government and Trrasury Money Funds like SNVXX, SNOXX, SNSXX, or the money market ETF like SGVT? All of these have a 7 day yield.
Having some money in ETFs, such as SNOXX, that average 4% is a way that that person is "invested" but can easily convert that money over to dry powder for buying a dip.
Stick what you have left into SGOV, or SNOXX, or TBIL, or whatever. And find another job, any job (almost any) to get some income, to stabilize the situation. At your age you are just at the beginning of many opportunities.
$5/month is not a bad deal to cover after death costs. I suggest having $500-$1,000 in a savings account in case of an emergency, but the actual amount is up to you. I had to take my daughter’s hamster to emergency once and it cost $500! I suggest saving 6-9 months of your monthly expenses in a T-Bill or money market fund. Start out slowly and you’ll eventually get there. I’m in California and T-bills are exempt from state/local taxes and as are money market funds as shown below: • Vanguard Treasury Money Market Fund (VUSXX) • Fidelity Treasury Only Money Market Fund (FDLXX) • Schwab Treasury Obligations Money Fund (SNOXX) There are pros and cons to both so do a bit of research
USFR. I switched from SNOXX (Schwab version of SPAXX) to that for similar reasons. Been happy so far. If seeing green instead of red in your portfolio is important to you, buy towards the beginning of the month.
I’m in SWVXX, SNVXX and SNOXX ….. there’s a few more with better returns but require $1,000,000 initial investment. I’ll be there soon 😎.
So if you have money in bond funds like SNOXX should you be concerned?
Last two years I’ve been writing cash secured puts with some success. I made over $50,000 each year. This year is rougher. Got put several issues and am now writing calls against those positions. I do not have a large portion of my portfolio in this endeavor as I am also a dividend investor and have a fair amount of SNOXX. If you won, enjoy that trip because money is meant to be enjoyed for what it can do for your life and those close to you.
SGOV (avialable through any brokerage) is currently at 5.25%. Schwab Money Market funds SWVXX and SNOXX are at 4.48 and 4.34%. Fidelity has similar money market funds. There are actually a lot of options to generate better than 4% returns. Webull is geared toward beginners and I understand you don't have a lot of experience investing, but honestly, get your money into a real brokerage. Both Schwab and Fidelity have advisors that will help you, for free. A lot of people like Vanguard also.
The Fed announced in late 2021 that they would be raising interest rates “higher for longer”. Only a moron would have invested in a bond etf in 2022. T-bill laddering or a MMMF tied to short-term treasury instruments (like SNOXX) would have earned them 4-5% on their money over the past two years.
The expense ratio definitely plays in MMF yield. Vanguard VUSXX ER 0.09%, 7 day yield 5.28% Schwab SNOXX ER 0.34%, 7 day yield 4.99% Fidelity SPAXX ER 0.42%, 7 day yield 4.97% Higher ER means less yield to you. The quoted yield is after the ER is deducted. You don't subtract it out again to compare yields. There is no correlation to bank HYSA. Banks have their expenses too, but the amount is not disclosed or known. All you need to compare is the stated yields. Bank and MMF yields are driven by different factors. MMFs may not always be better than HYSA. They were not when the Fed rate was at 0%. At that time banks were paying \~0.5% and MMFs were \~0.05%.
It’s a money market mutual fund… it is a mutual fund that buys financial instruments. For example I am in SNOXX, which invests in short term treasuries. Fairly safe 5% yield.
I like SNOXX - schwab short term treasury fund + reinvest dividends. Currently yielding ~5%.
Are you sure SNOXX isn't the one?
It says it’s all in SNOXX
SNOXX is a money market fund paying over 5% right now. They pay the interest monthly. You would get over $400/month. It’s state tax free in Maine. I’m not sure about other states. I also like JEPQ and JEPI. Both funds run by JP Morgan paying around 8% in dividends. They pay monthly also. One follows the Nasdaq the other the S&P.
Or Money Market funds that exclusively hold US Federal Government issued debt like tbills/notes/bonds (but NOT government backed debt). Same State tax exemption, more liquidity. Some Schwab funds for example: SNSXX (US Treasury money fund) dividends are State tax exempt but SNOXX (Treasury obligations money fund) is only partially exempt (biggest holding (40+%) isn’t) and SNVXX (Government money fund) isn’t at all (or an extremely small percentage). Basically, you want to see “Treasury Debt” on the books, not “Repurchase Agreement”. Other securities (like ETFs) that hold Treasuries can have State tax exempt dividends but are likely to have capital gains/losses considerations as well.
It’s true that they’re only telling you of their successes, probably exaggerated also. I look at investing a different way. I mostly invest in dividend paying stocks. I track my dividends. It’s more of a buy and hold strategy. I keep some cash liquid like in a fund SNOXX. It’s paying over 5% currently. When there’s a downturn in the market, I buy, mostly more dividend paying stocks. There are a couple dividend paying funds out there. JEPI and JEPQ both run by JP Morgan. Both paying over 8%. I also keep all dividends and spend them on living expenses or just to go out and have fun with. Even if you start small, I’d recommend taking the dividends and going out to eat or fill up your gas tank. It feels good to have some corporations paying for you to do something fun. You can also choose which stocks to buy with the dividends instead of having them automatically reinvested in the same company that paid the dividend.
There is no reason you need money in a checking account for emergencies. Your HYSA account can be withdrawn just as fast if you have it linked with a checking account. Since you have severely underperformed in your stock picking, you should just put it all in 1 to 3 low-cost index fund so you can get at least average market returns. You basically have $192K that can be turned into cash in a day or two. And depending what kind of retirement accounts, you have that to draw on for emergencies plus any credit you might have. Might be cheaper to have insurance for actual large cost emergencies and put the cash to better yielding investments like those index funds which on a long-term average should yield a nominal 10% or compounding $19k a year. I would have enough money in the checking account to hold 1 to 2 months of normal monthly expenses. Actual emergency funds in the HYSA or SNOXX. Then everything else into index funds. Should you somehow use up the checking account and emergency funds, you can look at taking out a loan or going into your investment/retirement account and see which option is the cheapest rate for additional cash.
First, you have $85k just sitting in cash. Since you said SNOXX is taxable, then that tells me it's in a regular brokerage. If so, then move that money into SNOXX so it's all together, and you're getting the 5% on that amount. I have SWPPX in my portfolio too and it has been good to me. A lot of people would recommend going 100% into a S&P index fund, so if you decided that's what you wanted to just continue to add to SWPPX, then it wouldn't be the worst idea. People are also recommending QQQ/QQQM too. I do have QQQM in my portfolio as well, and I don't have any complaints about it.
Don't waste it on a car, put it into an index fund or SNOXX
You can buy a short-term treasury ETF that does what SNOXX does, but they have no minimum and very low expense ratios. Here are a few: [TBIL](https://www.ustreasuryetf.com/etf/tbil/) [TFLO](https://www.ishares.com/us/products/260652/ishares-treasury-floating-rate-bond-etf) [BUXX](https://www.strivefunds.com/buxx)
New to investing and I have a decent amount of cash sitting in a checking account, not earning interest. I've been thinking about moving it all to Schwab and putting it all in SWVXX but wondering if it would be better to spread it among other funds such as SNOXX, SNVXX. In Texas so don't think Tax-Exempt funds would be beneficial. When investing in Money Market Funds is there a general consensus regarding multiple vs one?
I recommend Roth IRA's for almost everyone so that is a fantastic choice. I prefer managing my Roth IRA myself, but I'm actively interested in investing. I put a lot of time into research and management. A cookie cutter setup might be better if you don't want to put in the time, but it would depend on what that set up is. You could run it by people, scrutinize it somewhat. Some are better than others. If you want to manage your Roth IRA yourself, it's not as simple as buy and forget. The simplest would be to put money in each year and then buy a single index fund, but it might be better to buy a few different things and regularly rebalance. Rebalacing takes time and effort, but it can increase your returns. It can allow you to profit from market volatility. Rebalancing will return more in a volatile market, but less in a market with steady gradual growth. Aggressive index funds like those tracking the S&P or Nasdaq are volatile enough that investors come out ahead with rebalancing if you do it properly. The more different things you buy, the more work and more difficult to do properly rebalancing will be. You can do a really simple setup by putting 90% or so of your portfolio in a single index fund and then leaving the rest in as high-yielding a cash-equivalent as you can find. I currently am using SNOXX, the mutual fund, for that purpose. I don't like recommending people to start playing with individual stocks unless they have additional money they're comfortable gambling with, and/or they know something about an industry. My dad worked in the utility industry for years, and had a good intuition for it. As a result, even long after he had moved into other industries, he picked a lot of individual utility stocks. He did a fantastic job; he beat the index of utilities with all but one of his picks. Most people can't do this. You need knowledge, wisdom, and need to put in the time and research. If you think you can do it, pick a sector of the economy you know something about. To give you an idea of the level of knowledge you need to beat indices, when I talk to my dad about utility stocks, he knows their area of service, rates of population growth in those areas, the regulatory environment, and things like how many small utilities there are that might be bought up. He knows a bit about how well-run each company is, and he has an opinion on whether he thinks a company buying up utilities is better- or worse-run than the companies it is buying up. He has picked stocks primarily based on his belief that a company is well-run and has potential to buy up smaller companies that are worse-run. This then leads to growth that exceeds the expected growth rate based on population growth alone. It's pretty deep, and I don't know enough to do the sort of research he does in this sector, so I don't pick individual stocks in that sector. > Should I be looking at the Roth IRA in another way? How I view my Roth. I just put money in it every year, I try to max out my contribution every year I can. I am now 43 and around this year I started looking at the amount in it and projecting where it would be when I retire, and I finally was like...wow...if I stopped putting money into it today, and keep managing it the way I have, I will be comfortable in retirement no matter what. I could blow all my money and I'd still be able to get by in retirement. That's a nice feeling. I also know that I am not going to blow the rest of my money because I have a lot more money *not* in my retirement account. So I think I'm gonna be pretty wealthy in retirement and it's gonna be nice to enjoy that much money that has been growing tax-free. I have a lot of unrealized capital gains in the rest of my investments and it hurts at tax time if I sell too many in one year. That's the main point of a Roth IRA. Yeah, it's a safety net, but...it also can be a way of making yourself really wealthy in retirement. Then you can do all sorts of stuff. Fund your grandkids college education, leave major gifts to charities or non-profit organizations or causes you care about? Maybe even start some sort of business in retirement and hire people to run it and not have to worry about bank loans or investors to provide capital. That's what I'm thinking of.
Are you putting all your assets into these two, or leaving anything in something safer and/or more cash-equivalent? Putting all your money into aggressive things isn't necessarily the highest-yielding strategy long-run because you need to factor in rebalancing. For example, if you keep some cash, and then regularly rebalance so that the portion of each holding, including the cash, is the same, this will make you automatically buy low and sell high in the course of your rebalancing, without having to research to time the market. It is also nice to have some cash on hand in case you see an opportunity you want to jump on, without having to sell your index funds if the market is down at the time. If you want a relatively safe cash equivalent, you could look at something like SNOXX (mutual fund) which currently pays around 5%. It invests mostly in treasuries. If you are wanting something a bit more volatile that does not tend to vary with the market, you could look at GOVT which is a leveraged fund investing in treasuries, but with a floating price. It tends to go up when rates go down, and down when rates go up. Because rates usually vary somewhat independently from the market, it can be a decent rebalancing tool, while paying a modest return (not as high as SNOXX currently, but its price will go up if rates go down at some point so it can grow not only through its dividend but also through capital gains. If rates go down, SNOXX will pay out less and the price will stay constant.) If you want a more aggressive stock that would be diversifying somewhat, maybe look at ARCC. It's a closed-end fund that lends out to smaller businesses that are not included in any stock indices. It pays over 9% dividend currently. It is high risk, I'd say much higher risk than an index fund. If its earnings drop, its price will drop precipitously. However it has done well in the long-run. It can be good both for a long-term hold, and for rebalancing, which will take advantage of its volatility.
I haven’t messed around with money market funds before. What advantage does the SNOXX money market fund have over a T-Bill? 4 week T-Bills are shooting at 5.25-5.3% and the SNOXX looks like it’s returning 5.02% and has a net expense ratio of .34%.
Why are you messing with Treasury securities when you can buy money market funds for over 5% right now. I'm at Schwab, so I use either their SNOXX or SWVXX. The former is 100% U.S. government debt, the second a tiny bit looser on what it holds.
Right now money markets are great. Charles Schwab SWVXX or SNOXX. Earning a little over 5%. Ultimately stocks are the best long-term investment, but long-term means 10 or 20 years time frame.
You could try a treasury/government money market fund like SNVXX or SNOXX
I use Schwab Treasury Obligations Money Fund – Investor Shares (SNOXX) at Chuckies
Roughtly speaking VMFXX at vanguard is equivalent to SPAXX, not exactly same pretty close. Higher yield as well probably due to lower expense ratio. I am not as familiar with Schwab but I think SNVXX or SNOXX are probably the closest ones. For the record vmfxx has a yield of 5.3% presently while snoxx and snvxx have 5.06 yield.
You should open a corporate brokerage account. There are daily liquid money market funds that are yielding somewhere in the range of 5% right now. SWVXX or SNOXX are examples at Schwab. If you ever need the cash it can be transferred to your business checking within about 2-3 days.
SWVXX and SNOXX paying 5% right now
SNOXX or SWVXX for normal amounts. SCOXX for $1M+ minimum
SNOXX at 5.06% and SCOXX at 5.2% but you’ll need more than a few bucks for that one. Yields change every 7 days
Bank rates move around all the time as well, just not as fast as MMFs. They will generally have their ceiling at the federal funds rates, which right now is setting the floor for short term rates at 5.25-5.5%. They can be lower depending on how desperate the bank is for depositors (higher the rate, higher the desperation). Schwab has decent MMF rates, a decent trading platform, and a meh banking platform (in terms of rates, feature-wise it's okay). SNOXX would be the "closest" to an FDIC insured MMF. Closest because it's all government obligations, just not necessarily FDIC insured. You can't use their MMFs as a sweep account, which kinda sucks. Vanguard has the best MMF rates (due to having the lowest ERs), and also an FDIC backed sweep option called vanguard cash plus. Their trading platform blows, so if you're anything but a buy and hold investor, it's probably best to keep away. Fidelity has MMF rates around the same as Schwabs, and you can use their MMFs as a sweep account. Fidelity has a pretty good trading platform (better than Schwab's but not by much). In short. If you're lazy, just stick with Schwab. It will be fine. If you want the best rates, and you don't do a lot of trading, consider moving to Vanguard. If Schwab's lack of MMF sweep is bothering you, but otherwise you're happy, move to Fidelity.
* Max out a **Roth 401k**, for every year that you remain employed. Ignore advice to contribute to a traditional account; it's based on bad math and bad logic, and doesn't apply to high earners with long runways like yours. * Max out a Roth IRA now and in each future year. Use the backdoor method as necessary, and first do a Roth conversion on any existing traditional IRA funds. * Convert any traditional 401k money to Roth dollars at the earliest opportunity, i.e. when doing a rollover upon changing employment. * HYSA doesn't make much sense when you can get a bit better returns on money market funds. There are some backed by government debt which are extremely safe (SNOXX is one example off the top of my head). Just link a taxable account to your bank account in case you need funds, and consider the MMF to be your core position. * Personally, I would stick a good portion, at least, of your money in dividend and dividend-growth stocks. * Dividend payers outperform growth stocks and the broad market over time, absent tax drag. * A property constructed dividend portfolio is highly inflation- and recession-resistant, and we're facing a likely recession. * You can locate qualified dividends in your taxable account, along with *dividend growth* stocks, to minimize negative effects of taxes during your earning years. Dividend growth stocks and funds grow the yield per share at a faster than normal rate, so initially tax bills can be small and later income can be large. Regarding dividend growth, a quick sketch based on past performance of SCHD, a popular dividend-growth fund, assuming you started with $200k in a taxable account and added $60k a year of earnings, all in SCHD, with a 15% tax rate on qualified dividends and an average of 2.5% inflation: * After 10 years your taxable account would be worth $3.15M and you'd be making $156k in annual dividends, inflation-adjusted; * After 20 years your taxable account would be worth $10.6M and you'd be making $757k in annual dividends, inflation-adjusted; and * After 30 years your taxable account would be worth $37.5M and you'd be making $3.9M in annual dividends, inflation-adjusted. Note that I'm not advocating putting all your eggs in one basket, but the calculations help show the exponential slow burn of the dividend-growth strategy, which results in stratospheric returns given enough time and with low starting yields minimizes taxes at the beginning. The picture gets much rosier in a non-taxable account such as an IRA, as you can imagine. Shelter as much as you can, as early as you can.
You can get higher rates with extremely low risk than those CDs, if you care to. I would take that 1/3 and lock in steady higher rates for longer. Passive indexing with growth stocks works until it doesn't. The problem is what they call "lost decades", like we had in the 1970s and 2000s. During those periods (and in general, over time) value and in particular dividend-paying stocks outperform. There are a lot of dividend-paying stocks on sale right now, but also likely to be even more on sale due to the impact of high rates (driving down equity ownership, leading to a stock-market recession that's equally likely). So I'd strongly consider locking in some enhanced yields right now, but also holding some dry powder for a bit. The good news is that money-market funds backed by government debt (I use SNOXX) are in the same ballpark as CDs, with no termination penalties. I'd consider these funds for your dry powder in the short term. In terms of growth, I think funds like SCHD give the best of both worlds: stock-price appreciation roughly mirroring the SP500 during bull markets, but with a much higher rate of dividend growth. Dividend growth is like a slow burn that goes exponential a decade-plus down the road, and it works even during lost decades. So the question is, what is your goal? Is it to get income from that nest egg with low risk under all market conditions, in light of the currently extremely risky situation? Or is it to bet on stocks always going up, i.e. that we're going to have consistent bull markets like we had during the last 10-15 years?
Right now it's wise to build up a cash position in a money market fund backed by government debt, such as SNOXX. If already significantly in cash, recession-resistant businesses which pay solid dividends would be a fine choice. Once the inevitable crash hits, for taxable a fund blend mixing value (SCHD) with tech recovery, avoiding megacaps, would be reasonable.
What happens to treasury-backed funds like SNOXX if there's a default?
how does this affect treasury-backed funds like SNOXX or SNSXX that I already own? Does the yield go up?
I’m not going to read your essay but to answer your question: When interest rates are at (close to) zero, people will borrow money and “invest” in anything, inflating prices since demand will increase for everything. For the regular saver, he’ll get penalized since inflation will make his saved money worth less. What can he do? Invest the money but there will be nothing safe anymore. Low interest rates sucks. Finally you can make 5% APY with low risk. Be it a savings amount (FDIC insured like CFG or NewTek) or Money Markets (SNOXX treasuries fund at Schwab). Many other options are available. With all the money printing during COVID, inflation won’t disappear so soon.
That's a lot of slicing and dicing to manage and keep track of with a lot of high fee actively managed funds. All the actively managed funds are red flags. I only looked up FDSCX. It has an annual management expense of 0.93%. I recommend a three fund portfolio of low fee index funds - a total US market fund (FSKAX/FZROX 70%), a total ex-US market fund (FTIHX/FZILX 30%), and a total bond fund if you feel the need FXNAX. The funds with Z in the name are zero management fee versions of the Fidelity funds. The total market index funds include small, mid, and large cap growth and value funds. The MMF is fine, or SNOXX if you want it with more treasury bonds.
That is good to know about how that works in a margin account. I may request margin approval now. I have had a couple of times where I didn’t want to wait for settlement but didn’t want to rack up a violation. With Schwab it doesn’t happen automatically but I haven’t had any issue buying securities with 0 settled cash and just money in a MMF (SNOXX). My cash balance goes negative for the day but I just sell the amount i need from the MMF that day or the day after and I am good. This is in a cash account.
At Schwab MMF I use settle same day (SNOXX) and stocks settle in T+2 days so you won’t have an issue since the MMF will settle before the settlement of the stock purchase. I don’t know if it is the same at Fidelity though.
I’ve been parking extra cash outside of my HYSA EF in SNOXX MMF with Schwab currently averaging 4.53% on 7 day yield as well as brokered treasury bills (3 month is back over 5%). This is my short to mid term growth strategy. Hard to beat ROTH IRA and maxing 401k for long term for preferential tax treatment. Anything else I’m putting in my brokerage with broad index ETFs. Set and forget.
Not all MMMF are the same, you can find some that only invest in government backed securities and they will yield a little less . Example schwab has both SNVXX and SNOXX that only invest in government back assets so they wouldn't have the risk of others that might invest in corporate paper. However as you said they will pay slightly less interest .
https://www.schwab.com/money-market-funds SWVXX for yield SNOXX for safety
I like SNOXX because it's pure US treasury debt/repo.
SNVXX holds commercial bank repos, agency debt (mortgage securities), Fed repos, affordable housing bonds, in addition to treasuries. If you click on holdings you can see the list. SNOXX holds commercial bank repos, Fed repos, and treasuries. These funds are going to generate a higher yield than just owning treasuries because by definition any instrument that is not a treasury will have to pay a premium to treasuries which are risk free. Are these instruments risk free? No, not 100% risk free like treasuries, they have some small amount of credit risk, meaning risk of default. If the paper they bought was issued by SVB or Signature or FRC for example, well that paper is now at risk of default. If you want a 100% risk free fund then buy SNSXX. If you want a slightly higher yield but don't mind taking some small amount of credit risk, then the other funds might be an option. In reality, if some of that paper defaults, your fund will probably not decrease in value, just the overall yield will be dragged down by the defaulted bonds. The other risk is that the fund puts up gatekeeping to prevent liquidity issues, so the fund may be restricted in terms of withdrawals. if there are widespread problems with defaults. This is a low probability scenario but possible.
Thanks! I have another question if you don’t mind. I see there are also SNVXX and SNOXX. One is a government money market fund, the other an obligations treasury fund. They both have higher yields than SNSXX. Are they just as risk free? I’m not familiar with the differences. Here is the list of all the money market funds. https://www.schwabassetmanagement.com/products/money-fund-yields
My guy, I’m 99% sure that’s because your fidelity cash sweep is held in an uninsured money market fund that’s yielding closer to the market rate. Being fidelity it’s probably a pretty safe MM fund but you should probably verify anyway to make sure you’re ok with it. I keep my TDA cash in SNOXX and get a higher rate
SWVXX is a Prime fund that holds commercial paper and bank CDs - not worth the 0.15% higher yield to me. SNOXX and SNSXX hold Treasury bonds and Treasury obligations - much safer.
Hi, I have my kid's college fee money (\~50K$) is in Charles Schwab current account. I need it in next 9 to 12 months. I am evaluating the options to park it in money market account or others. Any suggestions please? MM options available are: SWVXX, SNVXX, SNOXX and SNSXX. thank you
Thanks! Some follow-up questions. Seemingly similar to your approach- I just want to go after US Treasuries. I see several different funds that list treasuries in their name but clearly have different tickers. (SNOXX, SNSXX, SNVXX, SWVXX) They have similar 7-day yield but I don't quite know the difference between each fund. Wondering if you've already done the research there? I'm pulling up each prospectus now but see that SWVXX has the most AUM by a long-shot. So clearly there is some preference there by most investors. I see that the dividends are also paid out the 15th for everything- but if I only hold a few days, do I get any payout? For a MM fund, is similar as if every day was an ex-div day for a traditional stock holding? I'm unsure of how this thing works :)
Money market funds end in double XX. Plus LMMDX holds muni's so you have benefit and account for its tax advantages to be competitive with taxable money market funds. I use TDA. Their highest non-institutional MMF offering is SWVXX prime at 4.27% or SNOXX treasury at 4.03%.
SEC yield is about what you would get if you invest right now. The dividend yield quoted is generally for the trailing twelve months (TTM). Since interest rates started going up starting early last year the TTM yield is not very relevant for making a decision about depositing in a MMF right now. Before the Fed started raising interest rates early last year MMF yield was close to zero. Are you aware that SNAXX has a minimum initial investment of $1,000,000? Schwab has other MMFs with lower initial minimum, e.g. SNOXX with no minimum. BND and MMFs are significantly different creatures for different purposes. MMFs are managed to hold the share price at exactly $1 all the time. There will be no capital gains or losses. MMFs yield changes rapidly with the prevailing short term yields. BND has an average effective maturity of 8.9 years. That means the they are still holding a lot of old low yield bonds. As such, BND share price is moderately influenced by current yields. In a rising interest rate environment, such as we are in now and expect to be in though 2023, share price declines. In the past year BND share price lost 12%. BND is no substitute for a MMF for short term investing. You can lose a lot more money in capital loss than it pays in dividends. BND can be a good bond allocation investment for a longer term without expecting to withdraw, like about 10 years. SGOV and BIL short term bond ETFs are closer to overall MMF performance. Their share price is not very volatile with changes in prevailing interest rate changes.
Move your account to Vanguard or Fidelity where you can buy fractional ETF shares. SCHD is \~$77. One of the S&P500 ETFs may be below $100 per share. Exercise your web search fu and see if you can find it. Put the rest in a Schwab money market fund until you accumulate enough to buy more shares. SNOXX is one of their basic MMFs. It is currently paying 4.01%.
SGOV is not a money market fund. The major difference between the 3 money market funds that you mentioned is that SWVXX is what's known as a prime money market fund. A prime money market fund includes investments in corporate paper and bank CDs and other non-government debt. Both SNOXX and SNVXX are government money market funds so their investments are restricted to US government agency debt, treasuries, and related government issued paper. In general, a prime money market fund will have a higher yield due to have a slightly more risker mix because of the corporate debt. However, like all money market funds, prime money market funds are also designed to "not break the buck".
Normally 10% cash. Been selling since Jan. Stopped mid yr ish I guess. I nibbled around 3600. Will again. Looking to load up below 3500. At 32% cash. Have $600k in SNOXX earning 3.15% (is okay-highly liquid no load no fee st treasury mm). Have $200k in high interest CD. $250k in investment acct to trade. Another $200k in high interest savings making 3.00% -3.50%. So yes I have dry powder. But I am 59, retired for 5 yrs and thus preservation of capital is key. Have passive income up to $115k with dividends and interest. But I will add to positions. May take 6 more months as times get tougher and earnings revisions are lowered, more layoffs occur, savings continue to dwindle rapidly. We are just at the beginning of rate increase impact and rate increases are still ongoing. It takes 6-9 months for a rate hike to filter through economy. Patience and Discipline.
No downsides to short term t-bills except lack of liquidity (not easy to get out early and quickly, if you ever decided you wanted to). An easier and more liquid option would be money market funds like SWVXX, SNOXX, SPAXX, etc, which are getting around 3.5% annualized right now and will be another 0.5% after the next Fed meeting in mid December.
Money markets r paying well rn. 3.4% in Schwab’s $SNOXX
I'm not sure how someone would trade these who doesn't use a Broker from USA. You may have to call and ask. There are two different classes of funds I'm aware of that are similar in effect: 1) Money Market Mutual Funds (SWVXX, SNOXX, SPAXX, as some examples, but there are many). These generally track the overnight Fed rate, which is presently at 3.75 - 4%, and will be 4.25+% in December. But they have expense ratios of about 0.3-0.5%, so they yield about 3 - 3.5% annualized right now. 2) Short-term Bond ETFs (SGOV, BIL are the two examples I'm aware of). These are ETFs which track the rates of 1-3 month bonds. They will therefore likely get to a slightly higher terminal rate, but are slower to get there, so they presently yield about 3% annualized right now. I am personally presently invested in SWVXX, SPAXX, and SGOV. But I don't pay any fees to trade these. I would go with the options that were free to me if these were not.
I was just looking at the sweep account. They are making tons of money on everyone’s cash at 40bps. https://www.schwab.com/money-market-funds Might have to manually sweep into SNOXX at 2.76% less 0.34% exp ratio.
If one were crazy concerned about default of the underlying companies, there are funds like SNOXX which are money market funds based entirely on short-term treasuries and government repurchase agreements. SNOXX is at 1.98% annualized as of 8/31/22, and should remain roughly 0.34% behind the Fed rate going forward.