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Since a few days I am having a lot of cash lying around in my Schwab account. Thanks to a post of carolsharp I was reminded that cash now gets interest again. A quick look at Schwab and I decided to put it in "Schwab Money Funds" as the easiest short-term option (or 30-day-CD's maybe?), tried to buy their "Schwab Value Advantage Money Fund® ' Investor Shares (SWVXX)" and got this error message:

"This account is restricted from Mutual Fund trading online ... speak with a registered representative who will assist you with offshore Mutual Fund Trading"

I can call, but not used to American bank practices and with often having problems to understand Americans on the phone I want to ask here: Why restricted? And what to do now with my cash (apart from the obvious answer "Give it to me")?

I don't have the answer to your specific question, but you may have the option of actually purchasing T-bills rather than any fund. 3 months or 6 months or whatever...both of those are yielding over 5.5% right now. Call them and try placing a buy order.
You'll get a great yield, and certainly won't have a problem with liquidity if you want the money before maturity.

Once upon a time I asked Interactive Brokers about this. They said they don't really promote it, and there wasn't (at the time) a way to do it on line, but they said "sure we do it--just call".

Jim

Although I use one of the Schwab government MM funds, buying and selling is like any other mutual fund.

If you had uncleared funds or were trading a very large amount they might have wanted to have a chat I suppose.

I'm with Jim on the Treasury buys. Schwab Treasury trading is fast, easy and will get you 25-50 bps over SWVXX depending on the term you pick. Use the "Research" button for Bonds and Fixed Income. You can make your purchase right from that screen. CDs too if you prefer.

I'm with Jim on the Treasury buys.
3 or 6 months is too long. Max 30 days fixed. I want to be completely flexible without the risk of having to sell before maturity. That's worth more to me than the last %.

You can make your purchase right from that screen. CDs too if you prefer.
Directly after my previous post I tried to buy CD's. Similar error message. Seems I have to call them.

3 or 6 months is too long. Max 30 days fixed. I want to be completely flexible without the risk of having to sell before maturity. That's worth more to me than the last %.

You're right that the rate won't difference won't be meaningful, but there is no need to worry about "risk" selling before maturity.
That time frame is so short that the market price change with interest rate changes (if any) is negligible.

Most people holding "cash" tend to go for 3 months. Including Berkshire, I think.

I'd probably worry more about the hassle to remember to reinvest the proceeds on maturity. The shorter the term, the more you have to do it : )

Jim

In Vanguard and Fidelity you can have brokage cash automatically saved in money market fund that is currently earning 5-5.2%.

I called Schwab: Non-US customers can neither buy Schwab Money Funds nor CD's, only T-Bills (or some kind of other funds he mentioned).

I usually park short term cash in SGOV (iShares® 0-3 Month Treasury Bond ETF)

In Vanguard and Fidelity you can have brokage cash automatically saved in money market fund that is currently earning 5-5.2%.

Which at the beginning of my US brokerage "career" in 2000 then was the same. Cash automatically went into money market funds, so I didn't had to care about cash lying around useless. But that was not Schwab then but another broker (I forgot the name). That one at some point (2002? 2003?) got rid of international clients. I was forced to transfer all to another broker which in 2005 I think was taken over by Schwab. I think to remember Schwab also had that automatic money market feature then. So either the laws governing Non-US clients or Schwab's policy regarding those must have changed.

I usually park short term cash in SGOV (iShares® 0-3 Month Treasury Bond ETF)
I just tried. Result:

"Client has legal residence in EU country and is not eligible to purchase US registered ETFs and ETNs. For questions, contact Global Services at 1-415-667-8400"

Aaaaah!
I thought the US is a capitalistic country, selling everything to everyone if the price is right, as the world's #1 weapons exporter servicing dictators and military regimes - but I can't buy an ETF nor CD (ok, I am not a dictator)?
I give up => T-Bills.

3 or 6 months is too long. Max 30 days fixed. I want to be completely flexible without the risk of having to sell before maturity. That's worth more to me than the last %.

If 3 months is too long for you, you can also buy 30-day T-bills. I bought some a couple of weeks ago. But I've mostly been buying 3-month T-bills through Schwab. It's a great option currently--the yields are higher than Schwab's money market funds and there are no fees, unlike Schwab's MM funds (which have a somewhat surprisingly high expense ratio).

If 3 months is too long for you, you can also buy 30-day T-bills.
Done! I bought mostly 3 months, but also 2 and 1 months T-Bills.
Thanks to all!

Isn't there a dollar minimum to buy treasuries and its set really high, like $1mm or more? That's what I see on the TDAmeritrade at least. What is the minimum at Schwab?
(Ironically, my TD accounts will be Schwab accounts shortly. Conversion in November.)

"Client has legal residence in EU country and is not eligible to purchase US registered ETFs and ETNs...
...
Aaaaah!
I thought the US is a capitalistic country...

That is a bit bizarre.
I have never before heard of a problem for non-US-persons buying US domiciled ETFs or ETNs. Heaven knows I've done it enough in the past, though not lately.
Having looked into it very briefly, apparently it isn't against any US rule, but rather it is forbidden to EU residents by EU rules. Eurofolks have to buy UCITS.

It is forbidden by the US for non-US persons to buy US mutual funds, but that's a different regulatory regime.
I have managed to do it, but it ain't easy.
I had a "wealth management" bank (translation: huge fees) at the time, and they bought it for me...probably under their own name.

Jim
(in Europe, but not the EU)

Isn't there a dollar minimum to buy treasuries and its set really high, like $1mm or more? That's what I see on the TDAmeritrade at least. What is the minimum at Schwab?

Nope. $1000 increments. Some in the secondary market the seller has minimum quantities like 100 or 500 @$1000 each.

Isn't there a dollar minimum to buy treasuries and its set really high, like $1mm or more?

I think that might apply if you were a bank that was a primary dealer.
For mere humans, it's different. Minimum $100 at TreasuryDirect, at a guess it might be something like $1000 through a broker??

Jim

but rather it is forbidden to EU residents by EU rules. Eurofolks have to buy UCITS.

FWIW, if you really want to buy US exchange traded funds/notes, this article claims to discuss a few ways around the problem that might be worth investigating.
https://www.expatfinance.us/general/us-etfs-in-eur...

For example, snip:
"The EU restrictions on US-ETFs does not affect to sale of options on the respective ETFs. Therefore, a European broker can allow European retail investors to buy and sell options (put and call options) on US-ETFs. Typical options expire weekly, monthly or quarterly and there exist options for most major US-ETFs. Therefore, European investors could sell cash-covered in-the-money put options shortly before their expiration, which are almost certain to be exercised. This leads to an indirect purchase of the underlying US-ETF in multiples of 100 shares (as each option contract requires the purchase and sale of 100 shares). This approach is a bit cumbersome, but perfectly legal and in full compliance with current EU regulation. "

Jim

Dima: Isn't there a dollar minimum to buy treasuries and its set really high, like $1mm or more?

Jim: Minimum $100 at TreasuryDirect, at a guess it might be something like $1000 through a broker??

It was a bit more complex than Rayvt and Jim wrote and what you say, Dima, from my experience a few hours ago is absolutely correct for many T-Bills you buy at Schwab. At the Schwab website you select which maturities you are interested in, say the ones maturing between now and Dec 2023. You then get a list of all T-Bill's maturing in that intervall. Then for a newbie like me it gets complicated. So complicated that my first tries to buy failed with "Not enough cash in this account" because I didn't understand the system and tried to buy for 10x the cash I actually had.

So I had to call and was explained how it works: In the table of T-Bills there is a row called "Min". As I was told on the phone that's the minimum number of "Units" you must buy and that each unit consists of 10 pieces = 10 T-Bills, with a "Face Value" of $100 each.

For many T-Bills "Min" is 1000 (units), so you have to buy at least 1000x10=10000 pieces (T-Bills) for their current price which mostly is a bit below their Face Value, say for example $99.5. That makes 10000x$99.5 and therefore $995000, in other words: Your $1mm, which for the many of them therefore indeed is the minimum amount to buy.

Nevertheless for many the number of "Min" units has 3 or less digits:
- Mostly it's 100, 250, 300, resulting in for example 250x10x$99.5 = $250000
- For a minority it's even lower: 20, 30, 50, 75, resulting in for example 30x10x$99.5 = $30000
- For very few it's even 1 and therefore the minimum to buy those is 1x10x$99.5 = $995. But those are very rare.

Cash automatically went into money market funds, so I didn't had to care about cash lying around useless.

If my memory serves me correctly, this was the same for US customers up until the spring of 2020. Up until then I was able to have my cash sweep vehicle set to a TDAmeritrade money market fund. During the pandemic lock downs there were some concerns of money market funds 'breaking the buck' and I believe it was shortly after that they took away the auto sweep functionality. I have no idea why Vanguard and Fidelity still allow it and TD/Schwab do not. The vagaries of the US retirement savings system, and general laziness, means I have accounts at all four.

I honestly didn't pay too much attention to it at the time because I had all my cash in government backed accounts. Money market accounts were useless with near zero rates. As rates increased I moved cash to SWVXX because it was easy. The really frustrating thing for TD account holders is that you can only buy/sell SWVXX on the Schwab website, it cannot be done in the mobile app. That should all work itself out once all accounts transition to the Schwab platform, I hope.

Jeff

FYI-I'm in Fidelity's MM Fund-Premium Class sweep- 5.17%(FZDXX). The Wealth mgr. they're related to me months ago that FZDXX was their best option for Cash/MM and what he would choose for himself.

I have a bunch of cash at both Fidelity and Schwab (401k). I decided to put it all in money funds that are Treasury Only. For Fidelity, I use FDLXX, and at Schwab, I use SCOXX. I'm probably overly conservative, and may sacrifice a bit of yield going with all Treasuries, but I wanted safety plus liquidity to move fast when equities are attractive.

When I looked up FZDXX, it told me I needed a $100,000 minimum. So, good for concentrated cash savings but not so much for those of us with less cash around and who move in and out of some investments. It has a .3 expense.

The other option mentioned FDLXX had no minimum but a .46 expense. Just noting what I saw when I looked into it. Are these high expenses for funds never to return more than a few % a year?

SD

The 7 day yield is NET of expenses. So what you get is the quoted yield, which is competitive and safe. T-Bill purchases may inch out a bit more in yield but quite frankly, I'll pay the little extra for fast liquidity, and more importantly, the ease and simplicity of someone else actively picking and choosing all the various short term durations. The aforementioned processes described just seem a bit more complicated for most of us on here. For me, it's just a temporary parking space for my cash until I pull the trigger on any near term downdrafts on equities. I don't plan to leave it there forever.

Money market funds usually pay monthly, the annual compound rate is actually higher than the quoted 7 days yield. T-bills usually pay at the end of the duration.

Buying treasuries on the secondary market from brokerages can confuse some people. When you select a fixed income/bond/treasury trade it displayed bonds and their maturity, yield, etc. it does often show a high minimum but in most cases you can buy as little as 1 bond. A bond's price is usually shown something like 97.64 but the actual price is $976.4 since par is $1000.00. Depending on the brokerage, usually there is a way to see the price of buying smaller quantities. At Fidelity it is called Depth of Book and when you click it it shows prices for various quantities.

I've purchased and sold quite a few over the last 18 months. Recently I had to sell a bunch to pay for a house and the process was pretty easy. I'm not a fan of Treasury direct so I don't use it much and prefer to buy most bonds (maybe not TIPS, although I don't really own any of them) on the secondary market which is quite efficient.

Although I'm sure there are many reasons, one reason mutual fund don't allow purchase by foreigners is the headache of dealer with foreign securities laws. Also there is an proof of identity you have to go through.

Treasury Direct isn't the hassle it used to be. But I've another reason to use them. I would never put all my assets in any one shop. I realize that the chances of Fido or Vanguard or Schwab having financial problems is very low, but if what I want for that portion of my port is cash, then 8 week Treasuries directly invested in TD are pretty likely to still be there when stuff hits the fan and I need the cash. It really depends on how you want to spread your risk.
Rgds,
HH/Sean

Nice MyMoneyBlog article on Schwab Cash Sweep Otions

Schwab Cash Sweep Options ' Increase Yield 10X, Updated September 2023 ' My Money Blog

One note, the Schwab options only have returns for increments of monthly holds from mid month Ex-Dividend till pay date a month later. The outside ETF's increase in value during the month and drop at the end as their dividend is paid. For holds expected to be less than a year the advantage is with the outside ETFs.

RAM

Correction; Talked to Schwab rep this evening and he said that for money funds even though the price is always shown as $1.00 throughout the Month your return would overall return would be the given rate for the total days including dividends. As I have some money in a couple of them I'll be able to verify this in a couple of months. Wondering if it's possible that they are monitoring this site because they called me and asked if I had any concerns shortly after posting here.

RAM

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