Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?
Agreed, the role of advisors can only be overlooked, but not denied. I remember in early 2020, during covid-outbreak, my portfolio worth around 300k took a slight fall, apparently due to the pandemic crash, at once I consulted an advisor in order to avoid panic-selling. As of today, my account has yielded big fat yields, and leverages on 7-figure, only cos I delegate my excesses right.
this is huge! mind if I look up the advisor that guides you please? only invest in my 401k through my employer for now, but enthused about diversifying my investments for a prosperous financial future
Sophia Maurine Lanting is the analyst that helps me. She has a large following and is easily found online. Investing with her has been a different ball game entirely so different from the stale methods of managers I’ve worked with in the past. last year was my best ever because I'm over 1m which I really never thought I could reach at the start of the year.
Thank you for this tip. It was easy to find your coach on web. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
Opened my Fidelity CMA about 3 years ago, before I retired. Nice to be able to move $ from HSA, 401k, Roth’s. Bill Pay works great too. Kept my Credit Union account for local access and backup. Thanks for spreading the news on this.
I use CMA and keep a local bank for a few reasons. 1) when I need to deposit some cash and i want to go inside the bank to do so (for safety reasons). 2) I use Zelle pay a lot. Fidelity doesn't have it. 3) I use cashier's checks on occasion, 4) Great if you want 1's, 5's, 10's, 20's, 50's, 100s or any combo of cash for any reason. Also getting rid of that jar of change. You can't put coins in an ATM. There is always a low balance in my brick and mortar checking account because most of it is transferred to my CMA where it is parked until invested etc.
I started using the Fidelity CMA at the beginning of the year. It is great. They just added the option to have your core position invested in SPAXX. It was originally only FDIC. Very easy to log into your account and switch between SPAXX or FDIC. My understanding is you can do this at any time. Thanks for the video Rob.👍
@@johnsmith1953x From my understanding, and based on their site, Fidelity’s cash management account has no account fees or minimum balance requirements. To the best of my knowledge, banks generally do not charge inactivity fees but may charge fees if your account balance falls below a certain minimum. Assuming you have a Fidelity account or plan to get one, you will likely be investing as well. Therefore, your brokerage account will generate some revenue for them.
Thank you for this. You resolved my analysis paralysis in looking for a high yield savings account and actually improved the current way I do things and solved problems I didn't know I had. Created the CMA. Rolled my HSA into Fidelity where I can actually invest it and maxed out the family contribution for 2025. Opening a Roth IRA there will be next. And lots of options left to save, invest, and pay, all in one easy place. Thanks again for the content.
We started the move to a Fidelity CMA about a week ago for many of the reasons you listed. I did get some good information from this video about the pros and cons. Thanks for the video.
Thanks for a most comprehensive explanation of the fidelity cash management account. I have been using this for years and find it as you said a very convenient and at the same time enjoying today's high interest rate environment without any restrictions of amounts or liquidity. I do use it as a checking account for certain more high-end purchases. The one feature customers need to know is that unlike a checking account at your local bank you will be able to see the amounts that were honored from the checking feature however you cannot see to whom they were made out. So, when using the S PAXX account as a checking account you need to keep a separate record of who the checks were made out to. What I do is make a copy of the check for reference later on.
I am able to see an image of the cancelled checks online in my CMA account. Is that what you are referring to? If you are referring to having the payee show up in the ledger than I don't know of any bank that does that but I don't keep up with the latest features.
Great video, I've done this a few years back and enjoyed the 4.97 but also been doing it long enough to see zero percent. Love it though and have set up several friends and family with this setup.
I just moved out of our US Bank checking account earlier this year into the Fidelity CMA. Everything has been great so far, direct deposits, debit card, check writing. I also have it set up to auto-transfer from our CMA to our Roths once a month, and then auto-invest that money into our core Roth holdings. Super easy, barely an inconvenience!
Good video. One thing you didn’t mention is that you can buy brokered CDs in the CMA while using SPAXX as the core holding. The CDs pay a bit more, you can ladder them out, plus you can get FDIC insurance that way. I’ve been doing that for the past year and it’s worked great.
I can do the same on my fedality brokerage account as well. All my cash is also kn spaxx, i don't see much different other than you don't have a debit card. If it can setup auto pay and disposit pay check then i will use it.
@@eile4219 fidelity is pure ass. Especially if you trade anything other than stocks and options. Don’t like it at all. The last straw is the bond platform. Basically stealing money from customers.
Agree with Rob entirely, last year we consolidated all of our various IRA and 401K accounts to Fidelity and switched our primary checking and cash management over also so I can manage it all in Fidelity. It is working out well.
I started doing this as soon as Fidelity Cash Management started offering SPAXX. I basically have $1500 in my big bank checking account and the rest of the cash is in here. Makes paying my mortgage so much easier, because of the interest i earned. So now if your mortgage is less that 5% you might as well let the cash sit in here until the interest rates go down, then you can do a lump sum payoff on the mortgage. EDIT: Of course you still have to make your minimum monthly payments.
Every crash/collapse brings with it an equivalent market chance if you are early informed and equipped, I've seen folks amass up to $1m amid economy crisis, and even pull it off easily in favorable conditions. Unequivocally, the collapse is getting somebody somewhere rich.
I do not disagree, there are strategies that could be put in place for solid gains regardless of economy or market condition, but such execution are usually carried out by investment experts with experience since the 08' crash.
The issue is people have the "I want to do it myself mentality" but not equipped enough for a crash, hence get burnt. Ideally, advisors are reps for investing jobs, and at first-hand encounter, my portfolio has yielded over 300% since 2020 just after the pandemic to date.
i'm blown away! mind sharing more info please? i am a young adult living in Miami where i've encountered several millionaires, and my goal is to become one as well.
NICOLE ANASTASIA PLUMLEE' is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Hey Rob I have been using the Fidelity cash management account for a while now. Love it !! Also the debit card is great to. Any fees usually get reimbursed within 48 hours. Also using the debit card at the atm at the CVS Walgreens or 7 eleven there is not a fee taken out. Good luck
I did this a few months ago. Works great. I still use bank credit cards for as many bills as possible. At the first of the month I transfer all extra cash into the brokerage account write my checks for the due date. I transfer the money back to the checking account the day before.
Rob noted the one issue of not being able to deposit cash in any ATM. We solved this by keeping our local credit union checking account open, and deposit cash into that account and then transfer over to Fidelity. Relatively simple to set up and do.
These days, I would never go with just one place, especially a pseudo-bank. CMA is fine, but keep a credit union or bank account open as well. Our credit union has been great, and provided the signature guatantees I needed when inheriting brokerage accounts.
*_Same here! I also have my Charles Schwab account linked for that, and the "Full View" feature is awesome to be able to aggregate (link) your other financial accounts, to get a full financial snapshot._*
Did this years ago. Love what it does for me. My view is that all money should be actively invested or actively paying off bills. Fidelity makes it easy to do this. I do have a relationship with a smaller local bank for some of the limitations you mentioned, otherwise I dont really use a bank.
Expensive relative to an index fund, but you're getting a lot of utility for that expense, considering you're doing well to find a free checking account paying more than 0.1%. If someone has a similar account for less expense, then obviously that would be great.
Only downside is if you receive cash and need to deposit it. May want to keep a regular bank acct open as a means of depositing the cash. Can be setup to have overdraft protection from your brokerage acct. The level of service from Fidelity staff is super!
Rob, having all of our accounts through one platform has been my go-to for years. Fidelity happens to be that platform for me too. My quarterly distributions to bridge SS are deposited into my CMA and the free BillPay handles the monthly mortgage payment. I haven’t given up accounts and local brick and mortar banks, but you did give me something to think about. Cheers!
Rob, thanks for bringing this into focus for me. I'm in the middle now of establishing an account and getting things set up. I compared Vanguard's offering, their Cash Plus account, but it pales in comparison to the Fidelity product. I'm test-driving the Vanguard account as well, but signs don't point to 'yes' so far for that.
Thank you for this video! I've had a Fidelity CMA for years and I didn't know SPAXX was an option! I just switched my core position via the robot that came up to help when I clicked "Customer Service" at the top left of the screen. It took less than a minute. I plan to check back on the SPAXX vs FDIC rates annually, but for now SPAXX is a no-brainer for me.
A SPAXX plus not mentioned is a percentage (41% in 2023) of the dividends are exempt from state and local taxes for those in states with income taxes and allows such exemptions (some states the percentage needs to be at least 50% to qualify, or something like that).
This was a good video. Fidelity's debit card is really good for atm usage when traveling outside the U.S., because of no foreign transaction fees on the withdrawn amount. I have first hand experience with it. Also, the default of getting a high interest rate on sweep money is also really good.
That's not what fidelity discloses para 2.5.3: "For each foreign transaction, there is a foreign transaction fee (currently, 1% of the transaction for non-US dollar transactions), which may be included in the amount charged to your account. This charge may apply whether or not there is a currency conversion. You won't see the 1% seprately, it's included when Visa does the conversion from foreign to USD that is deducted from your Fidelity account.
@@hanwagu9967 Compared to Schwab will the conversion rate work out to be the same? They also use Visa for conversion rates. Somewhat confusing in the fine print?
@GG-tw6xu BTW, I have Scwab's debit card too. This is also a great atm card for non-U.S. ATM's. The weakness may be that your sweep money doesn't get a high interest bearing money market fund.
@hanwagu9967 I did a first hand analysis of what was charged in usd for a withdrawal, compared to the currency received. Whatever it was, I thought it was very fair and reasonable. Not much, if anything, was made on the currency bid-ask spread.
Not a bad idea. Wife and I have capital one 360 savings. 4.50% and it's directly linked to the checking and credit card. Also capital one uses ATMs at CVS and Walgreens so you can access cash almost everywhere.
@@rob_berger Rob, what prompted you to do this now and not sooner? Did something occur with your other bank or are you simply going for the interest rate now that SPAXX is core position?
I bank with capital one too! Honestly, it's one the only good big brick and mortar banks. Most of the other big banks still only offer you pebbles to the dollar.
We did the exact same thing last year for the same reasons. We keep a no-fee small balance at our local bank to have a local bank if we ever need their services. Only issue we've had is kicking ourselves for not moving the money sooner. Someone mentioned SPAXX fees are higher than comparable fund at Vanguard. Also, the FTSE 3-Mo Treasury Bill has consistently beat SPAXX. But to me, it was a great alternative to having more money at checking account at the local bank, paying near zero.
Thanks for this. I have a balance in the CMA but as dry powder for investing. Did not realize there were checking and debit card features. Will definitely look into it.
We have used FDRXX for our CMA for years instead of SPAXX. It has a little lower Exp. Ratio, and the same or slightly higher yield. About the same composition.
Rob. I did this years ago. Well worth it. Keep in mind that you can do everything in a brokerage account that you can in a cash management account. In addition you can but whatever investments you want. I converted all my cash management accounts to brokerage account and closed them.
Yes, ATM with debit cards, checks, and you can auto pay your 2% cash back credit card to this brokerage account as well. One-stop-shop and we really like it.
No need for a cash management, account, you can run mostly everything through their brokerage account. 4.96% on uninvested cash, check writing, direct deposit, etc...only not a debit card and bill pay options. I like to keep banking and investing accounts separate.
You actually can get a debit card for a regular brokerage account. I opened a Fidelity Brokerage account to use as my regular checking account and ordered a debit card to go with it, works perfectly fine. Can order checks too
I think it’s a great idea to keep these accounts separate. If a bad actor gets access to any of your accounts they have access to all your accounts. I’m in the bank fraud business and have been seeing very sophisticated account takeovers. Don’t do routine banking where the bulk of your assets are..
@@DonaldConceicao Agree 100%!!!!!! Too many people don't stop and think of the risk they might be subject to. Keep your banking in a separate account with no automatic tie to your investment account.
Thanks for the content. Tried this account recently. Things were going well until after a month the account was locked. They needed a picture of wife’s social security card to proceed. We don’t have that, and the effort seems not worthwhile as there are many financial institutions that have no such requirement.
100% spot-on. I already had my retirement monies there (401(k), Traditional IRA, Roth IRA, HSA, taxable investing ). Then added credit card, then realized....no ATM fees via Fidelity Cash Mgmt checking? Done. Now everthing is in Fidelity. Also checking can be FDIC cash core account (or MMA SPIC covered). Thanks Rob for confirming what I had already done a few years ago.
I've been keeping all of the cushion in my regular checking acct invested in a 4 week treasury bill so that I have the option of taking some of it back out of the treasury bill if I need to. Thats been working great this year.
Thanks for covering this. We minimize what we have in our local bank and charge all we can on charge cards to get benefits there. Vanguard money market is holding our funds for retirement needs.
Like others have mentioned, I was also considering moving my emergency funds into a CMA, and the shared info was definitely helpful in calming the concerns 👍🏾👍🏾
Retirement is now more difficult than it was in the past. I've been saving for a long time instead of investing, and right now I only have about $400K. considering all the inflation, i'm thinking of investing in stocks, i dont just have idea on market strategies.
At a point like this, when the pressure is already on you to retire, its best recommended you seek the services of an adviser, as this allows you make smarter investing decisions.
I'm intrigued by this. I've searched for financial advisors online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
Finding financial advisors like Melissa Terri Swayne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Great video! I have been with Fidelity for years. I have had a great experience with their customer support. Instead of trying to explain how good Fidelity is, I will just share your video.
Your main fee is the expense ratio on the money market fund. Try comparing the expense ratio there to Vanguard for a comparable fund. For example, the expense ratio of VMFXX is just .11% so Fidelity is overcharging (.42%) on its default core position expenses fee to deliver "free" checks, debit cards, no FX fees spending overseas, ATM fee refunds, etc. I have been a Fidelity customer for years but for every 100k in money market you are probably paying 200 to 300 USD per year extra in expense ratio fees for these perks. You can buy actual T-bills for larger sums to minimize these expense fees.
For a money market fund, the expense ratio doesn't matter it's the yield. That's why Fidelity mmf funds have lower yield compared to Vanguard is the higher expenses. If you're fine with the yield then that is what matters. I don't know why anyone would hold 100k in cash anyway. I keep enough cash to cover 2 month of expenses in FDLXX and the rest of my liquid cash/emergency funds are in t-bills.
@@javiert9766 In this case these two money markets are substantially similar so the expense ratio is what mainly drives the difference in yield. Different stat to find the same conclusion. Fidelity SPAXX at 4.96% (ex. .42%) 7 day and Vanguard VMFXX at 5.39% (ex. .11%). Just like if you had 2 total stock market index funds, if they both are equivalent in management, ease to trade, etc the expense ratio will be the driving force between them.
@Rob Berger still think this is a good idea given Fidelity now won't let you spend your money for 3.5 weeks once it is EFT or deposited by check electronically? Apparently one can invest it during the 3.5 week hold but can not otherwise spend it or use it to pay bills. That seems like the opposite of what a CMA is for (bill paying)... SMH.
My experience exactly. I made a post then saw yours. I started an account on 1-15-24 and have been moving funds since. I have an account balance of over $90K but only $266 is available today. The website says 11-08-24 is the release date. I cannot even use the funds to buy Mutual Funds from Fidelity. I called yesterday and that was a nightmare dealing with their useless AI telephone service. Eventual I got a real person but had to be transferred.
I love my Fidelity CMA and have had it for 7+ years. They are free to open and no fees. Between my wife and I, we have 5 CMA’s, each with a different purpose. Individual checking (x2), joint savings (spaxx & VOO), Mortgage for house direct deposit and bills), and Joint checking for our monthly household expenses. Great if you like automating your budget using multiple accounts!
I did this last year and don't regret it for a second. I do keep a checking account with my local credit union for the rare times I need to handle cash
Owned a Fidelity 401K for over 25 years, now IRA. SPAXX is their default automatically set for cash transactions in both. I have transfer accounts setup but have been thinking about checking into debit or checking. Timely video, thanks. BTW- if this election goes in the wrong direction that FDIC insured account might come in handy.
We invest with Fidelity, bank with a Credit Union, and have considered moving our banking to a Fidelity CMA. One concern is that if a Fidelity CMA is hacked, could investments be swept away with the unauthorized withdrawals? Also, who would be the point of contact for unauthorized activity, Fidelity or UMB?
I think these accounts should be separate . If a bad actor gets access to any of your accounts they have access to all your accounts. I’m in the bank fraud business and have been seeing very sophisticated account takeovers. Don’t do routine banking where the bulk of your assets are.. Just my opinion.
My Fidelity debit card had 3 fraudulent purchases last week, 2/3 purchases were denied but an $87 purchase went through. Now it's being investigated. I just received a new card.
@@richj011Reason #1 on why I will never use a debit card. There is no or in best cases very limited consumer protection against fraudulent use and most worrisome is that money is transferred out of your account the instant a purchase is transacted. Unlike a credit card where money transfer is regulated/controlled by you, the credit card user. Under current consumer protection laws, the lion share of risk of fraudulent usage is the burden of the credit card issuer and not the consumer.
The problem with SPAXX is that the expense ration is 0.47%. Something like a short term t-bill fund (e.g., SGOV 1-3 month treasuries) is much cheaper (.09%) and it has a higher yield (5.19% right now). You can’t use that as your core holding, but outside of your “checking account” cash, there are better options.
Hey Rob, I have been trying out the CMA as well and following Fidelity's subreddit, some are complaining UMB Bank is unjustly denying there fraud claim and not acting in good faith, and Fidelity aggressively locking customers accounts, perhaps you could do a follow video on that?
Hi Rob, Thanks for the video. How about other institution with similar product. For example I have accounts with Vanguard , any review on Cash Managment account with Vanguard.
Vanguard cash plus is not as robust: 1. No debit card option 2. No option for paper checks 3. Funds must be transferred to the FDIC option to pay bills 4. Newer and some payees may not be supported yet 5. No ability to withdraw cash 6. FDIC is the only settlement/core position option
All nice until you need to get some cash in non-standard amounts ($5, $10, etc.), need a notary while traveling, use Zelle, etc. I keep enough in Wells Fargo to get no fees. Transfer any extra to Vanguard for better MM rates. WF has banks in almost every city in the west and I have used services many times while traveling to get cash, manage rental properties, and hard money loans.
Concur. Also no cashier's checks, and while Fidelity debit cards have no fees, practically every ATM will charge you a 3% fee, regardless. I keep $500 in bank account just in case I need cash. And I make a ACH direct deposit once each month to avoid bank service fees. Link Fidelity to your bank and you can transfer funds back and forth with only on business day delay.
@@don951 unless the ATM owner codes the transaction fee differently. I've come up with problem with my regular bank that reimburses all atm fees, but there are operators that code the atm fee that does not register as such.
I have a Fidelity HSA and my core account is in their FDRXX. It is yielding 5.10% (1year) with an Expense Ratio of .38%. FDRXX is the older version of SPAXX with similar results. Perhaps a bit better.
@@sknorling Checks yes, but cash no. My small town's businesses are almost exclusively cash-only. Thankfully I spend most of the cash that I get, but it's a pain having to keep it around since it's losing money by not being an account.
@@abluelark yeah, I guess if I had that situation I would probably open up a free local credit union account just to deposit the cash and then electronically transfer to fidelity to get the higher interest rate on any idle cash. Not quite as convenient.
I had this account but my rent could not direct debit from the account and I was charged a bad-check fee from my Landlord. Fidelity had no comment and did not offer to cover the bad check fee (something an actual bank will do). Good idea in concept but if there’s hiccups with their wonky direct debit system you’re on your own for any bad check fees you incur. Heed my warning.
Yes! I recently did the very same thing because the monthly return on my small pile in the brokerage account was shockingly good. 20% of current pay goes into the brokerage for the "crash" days, which are pretty frequent these days but the best buying opportunity. I noticed the monthly dividend on my holding and realized my everyday account at the branch place is not working for me anymore.
Shouldn't you also take into account the expense ratio? As of this writing, the expense ratio for SPAXX is 0.42%. I just think that it's worth mentioning the expense ratio to factor in your overall rate of return since the expense ratio does lower the actual yield.
Fidelity mentions this for the 7-day yield: "It is the Fund's total income net of expenses, divided by the total number of outstanding shares" It looks like the expense ratio is already taken into account.
This is the state of America right now everyone is out to sell you out to the next corp. He knows he could have and should have mentioned that - but for the good of his own pocket and Fidelity commercial he didn’t -
Im not sure how I got to your video but thank you, I switched my core holdings from Fidelities FDIC to their SPAXX. I didn't have much as most are in index funds but still I want the most I can get.
This is more seamless than Schwab but I keep all my idle cash in SWVXX 5.14% yield, 0.34% exp ratio. I do have to "sell" to cash then transfer to checking if necessary, but rarely is this an issue.
I love this account and use it. Particularly like it for withdrawing cash internationally. Fees are reimbursed and exchange rate has always been very close to market rate.
Yup. 👍. Have already done so. 99% of my financials go through them, and the cash management account. Granted I have a bank check account where one, just one, service provider automatically takes payments. I travel butt tons, and seriously want that service to never be interrupted. Note that I also receive a small discount in allowing them access.
Seems like a good recommendation. Did it 20 years ago ! 1% past interest income for those that didn’t know better ? Best move I ever made. Be sure if one transfers that they are reputable and provide the service one needs.
I also moved to the CMA at the beginning of the year. I keep a low balance in the account, and have the bulk of our cash in a taxable brokerage account at Fidelity in T-Bills and MMF. I am retired, and prefer to transfer cash in manually when the CMA balance gets too low.The transfer is instant. I do not use the Cash Manager Tool as I think it is asking for trouble. Probably that old '60s paranoia, but the thought of a fraudulent debit or ATM transaction would keep me awake I night, so no auto-transfers. Otherwise, I am very satisfied with the CMA and how it works with my taxable brokerage account.
The distress for banks was a farce; what we have experienced in the past 2 years is a result of a system that has worked incredibly well. The Fed just had to tighten credit to cool the economy.
*What about the Fed lending program for banks that was said to ease financial tensions after the domino effect from Signature and Silicon Valley bank?*
*Yeah, that sufficed, but what really helped the economy was rising immigration that helped even out the mismatch between open jobs and people looking for work.*
*I agree. Rising productivity is manna for central banks, allowing faster growth without inflation because each hour of work yields more goods and services at the same cost.*
Good review and i like my CMA account, too. Another con is that you cant transfer to and from the CMA from other banks. I have to send cash go my Roth, then transfer it to the CMA.
Rob/community... I watched the whole video but still struggle to understand this: Why is this more advantageous than a HYSA with 5+% APY I can get at many banks? Is it the frequency of compounding? Sorry if ignorant/dumb question...
Ease of access. I have an HYSA with Cap One and it can take 5 days or so for money to be moved in or out. With the CMA, there’s no delay to get access. Time=Money.
The difference is this serves as a checking account for paying bills, credit cards, writing checks, etc. Savings accounts are limited in how many withdrawals per month and check/debit card access.
You can automate investments in Other money market Funds. Just set up a recurring investment in the CMA into That money market fund and it will just liquidate whatever money market fund you are using to buy more of that money market fund. So if you have a direct deposit set up with your CMA you can auto invest in whatever “core position“ you want.
Am I missing something? Don’t you have to report all these buy/sell transactions as tax events? What about capital gains taxes? Seems like too much overhead to just pay monthly bills using mutual funds right?
You would report the interest same as a bank account. Except that you would not be subject to state taxes on a US Treasury money market fund. The tax events are for capital gains on stocks and bonds. It might be possible to have a capital gain on a money market account but I've never heard of it. It is possible to have a loss on a money market account but it would require extraordinary circumstances like Russian troops invading Washington, DC.
No, because they are fixed $1. Theoretically, if it broke the buck ($1), it could be a loss, but it's not a capital loss for deduction purposes. The only thing you would report is what is on your 1099-DIV for the unqualified dividends earned, so they are taxable as ordinary income.
@@tim71pos Some of the SPAXX dividends earned may or may not be subject to state and local taxes, depending on your state. SPAXX does not meet the threshhold for US securities to exempt in states like CA, CT, and NY. Since only a portion of SPAXX is US securities, not everything for other states may be exempt either.
OTOH, that 4.96% is net of fees, correct? So it’s really paying 5.38% or so. Please correct me if I’m wrong. I was hoping Rob would touch on this in the video but he didn’t.
@@arthurvino I think you’re incorrect. Reading further into the comments, the yield is indeed net of fees. So the gross yield is 5.38% as I stated and the net yield is 4.96%
Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?
as most investing-related questions, the answer is, it depends.. my best suggestion is to consider advisory management
Agreed, the role of advisors can only be overlooked, but not denied. I remember in early 2020, during covid-outbreak, my portfolio worth around 300k took a slight fall, apparently due to the pandemic crash, at once I consulted an advisor in order to avoid panic-selling. As of today, my account has yielded big fat yields, and leverages on 7-figure, only cos I delegate my excesses right.
this is huge! mind if I look up the advisor that guides you please? only invest in my 401k through my employer for now, but enthused about diversifying my investments for a prosperous financial future
Sophia Maurine Lanting is the analyst that helps me. She has a large following and is easily found online. Investing with her has been a different ball game entirely so different from the stale methods of managers I’ve worked with in the past. last year was my best ever because I'm over 1m which I really never thought I could reach at the start of the year.
Thank you for this tip. It was easy to find your coach on web. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
I did this when I retired 3 years ago. It is great and customer service is always top-notch.
Opened my Fidelity CMA about 3 years ago, before I retired. Nice to be able to move $ from HSA, 401k, Roth’s. Bill Pay works great too. Kept my Credit Union account for local access and backup. Thanks for spreading the news on this.
Yes... I have had a Fidelity Cash Management Account for years - Love it.
I use CMA and keep a local bank for a few reasons. 1) when I need to deposit some cash and i want to go inside the bank to do so (for safety reasons). 2) I use Zelle pay a lot. Fidelity doesn't have it. 3) I use cashier's checks on occasion, 4) Great if you want 1's, 5's, 10's, 20's, 50's, 100s or any combo of cash for any reason. Also getting rid of that jar of change. You can't put coins in an ATM.
There is always a low balance in my brick and mortar checking account because most of it is transferred to my CMA where it is parked until invested etc.
You can link your Fidelity CMA to Venmo
You can link your Fidelity acct info in the Zelle App.
I started using the Fidelity CMA at the beginning of the year. It is great. They just added the option to have your core position invested in SPAXX. It was originally only FDIC. Very easy to log into your account and switch between SPAXX or FDIC. My understanding is you can do this at any time. Thanks for the video Rob.👍
Not sure when they introduced Fidelity Bloom but their core position with any money sweep in was in SPAXX
DO they have inactivity fees?
If so, how much for how long?
@@johnsmith1953x From my understanding, and based on their site, Fidelity’s cash management account has no account fees or minimum balance requirements. To the best of my knowledge, banks generally do not charge inactivity fees but may charge fees if your account balance falls below a certain minimum. Assuming you have a Fidelity account or plan to get one, you will likely be investing as well. Therefore, your brokerage account will generate some revenue for them.
@@johnsmith1953x no inactivity fees
Thank you for this. You resolved my analysis paralysis in looking for a high yield savings account and actually improved the current way I do things and solved problems I didn't know I had.
Created the CMA. Rolled my HSA into Fidelity where I can actually invest it and maxed out the family contribution for 2025. Opening a Roth IRA there will be next. And lots of options left to save, invest, and pay, all in one easy place.
Thanks again for the content.
Uncanny! I was just sitting down at my computer to do this and my subscription alarm goes off on my phone and it's Rob doing the same dang thing!
Haha me too. I did a double take since I just did the same yesterday. Glad to see it’s Berger approved
Incredible, same here 😂
Same here
I emailed him about this and got the response about the new video! :)
Same, today.
We started the move to a Fidelity CMA about a week ago for many of the reasons you listed. I did get some good information from this video about the pros and cons. Thanks for the video.
in case anyone's wondering, in this cash management account, on the first market day of every month is when the interest posts and it accrues daily
Thanks for a most comprehensive explanation of the fidelity cash management account. I have been using this for years and find it as you said a very convenient and at the same time enjoying today's high interest rate environment without any restrictions of amounts or liquidity. I do use it as a checking account for certain more high-end purchases. The one feature customers need to know is that unlike a checking account at your local bank you will be able to see the amounts that were honored from the checking feature however you cannot see to whom they were made out. So, when using the S PAXX account as a checking account you need to keep a separate record of who the checks were made out to. What I do is make a copy of the check for reference later on.
I am able to see an image of the cancelled checks online in my CMA account. Is that what you are referring to? If you are referring to having the payee show up in the ledger than I don't know of any bank that does that but I don't keep up with the latest features.
My bank has an image of the check in the ledger.
Great video, I've done this a few years back and enjoyed the 4.97 but also been doing it long enough to see zero percent. Love it though and have set up several friends and family with this setup.
I agree with you Rob. So far, we've been VERY pleased with our accounts at Fidelity!
I just moved out of our US Bank checking account earlier this year into the Fidelity CMA. Everything has been great so far, direct deposits, debit card, check writing. I also have it set up to auto-transfer from our CMA to our Roths once a month, and then auto-invest that money into our core Roth holdings. Super easy, barely an inconvenience!
Oh really!😂
Moving out of your US Bank checking account earlier this year into the Fidelity CMA is TIGHT!
will not take Zelle if you need it. I pay most of my contractors with Zelle now. Come on Fidelity!
does fildeity do direct deposits 2 days early or a day early I don't see it on there website
for paychecks
Rob. I made the same change a few months ago and haven't looked back. Works very well. Thanks for the video!
Good video.
One thing you didn’t mention is that you can buy brokered CDs in the CMA while using SPAXX as the core holding. The CDs pay a bit more, you can ladder them out, plus you can get FDIC insurance that way. I’ve been doing that for the past year and it’s worked great.
Should have bought a T-bill and bond ladder instead.
@@investmentanalyst779Just use an ETF instead altogether like USFR.
Very interesting! Thank you for sharing
I can do the same on my fedality brokerage account as well. All my cash is also kn spaxx, i don't see much different other than you don't have a debit card. If it can setup auto pay and disposit pay check then i will use it.
@@eile4219 fidelity is pure ass. Especially if you trade anything other than stocks and options. Don’t like it at all. The last straw is the bond platform. Basically stealing money from customers.
Agree with Rob entirely, last year we consolidated all of our various IRA and 401K accounts to Fidelity and switched our primary checking and cash management over also so I can manage it all in Fidelity. It is working out well.
Ok... I'll agree with Rob entirely.
I started doing this as soon as Fidelity Cash Management started offering SPAXX. I basically have $1500 in my big bank checking account and the rest of the cash is in here. Makes paying my mortgage so much easier, because of the interest i earned. So now if your mortgage is less that 5% you might as well let the cash sit in here until the interest rates go down, then you can do a lump sum payoff on the mortgage.
EDIT: Of course you still have to make your minimum monthly payments.
Would your lender charge you the late fee and hurt your credit score?
@@lalaC959 I have never had a late fee in my life, so why does that matter?
Hey how much can you withdrawal ?
@@gaelreyes3346 I have never withdrawed. I just transfer the cash to my big bank checking account. and then withdraw from that ATM instead.
Every crash/collapse brings with it an equivalent market chance if you are early informed and equipped, I've seen folks amass up to $1m amid economy crisis, and even pull it off easily in favorable conditions. Unequivocally, the collapse is getting somebody somewhere rich.
I do not disagree, there are strategies that could be put in place for solid gains regardless of economy or market condition, but such execution are usually carried out by investment experts with experience since the 08' crash.
The issue is people have the "I want to do it myself mentality" but not equipped enough for a crash, hence get burnt. Ideally, advisors are reps for investing jobs, and at first-hand encounter, my portfolio has yielded over 300% since 2020 just after the pandemic to date.
i'm blown away! mind sharing more info please? i am a young adult living in Miami where i've encountered several millionaires, and my goal is to become one as well.
NICOLE ANASTASIA PLUMLEE' is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I just curiously searched her up, and I have sent her an email. I hope she gets back to me soon. Thank you
Rob Berger the great financial educator of our time. Picking up the slack that public education misses. 👍
Hey Rob I have been using the Fidelity cash management account for a while now. Love it !! Also the debit card is great to.
Any fees usually get reimbursed within 48 hours. Also using the debit card at the atm at the CVS Walgreens or 7 eleven there is not a fee taken out. Good luck
The fee is only for foreign countries. Obviously there isn't a fee in a CVS in America
I did this a few months ago. Works great. I still use bank credit cards for as many bills as possible. At the first of the month I transfer all extra cash into the brokerage account write my checks for the due date. I transfer the money back to the checking account the day before.
Rob noted the one issue of not being able to deposit cash in any ATM. We solved this by keeping our local credit union checking account open, and deposit cash into that account and then transfer over to Fidelity. Relatively simple to set up and do.
These days, I would never go with just one place, especially a pseudo-bank. CMA is fine, but keep a credit union or bank account open as well. Our credit union has been great, and provided the signature guatantees I needed when inheriting brokerage accounts.
I agree with keeping both accounts as a backup
This is the way. Also a nice way to get a cashier’s check when you need one.
I do the same as Christin stated. Plus... I just opened an HSA account.
*_Same here! I also have my Charles Schwab account linked for that, and the "Full View" feature is awesome to be able to aggregate (link) your other financial accounts, to get a full financial snapshot._*
Did this years ago. Love what it does for me. My view is that all money should be actively invested or actively paying off bills. Fidelity makes it easy to do this. I do have a relationship with a smaller local bank for some of the limitations you mentioned, otherwise I dont really use a bank.
Rob, thank you for the information, but don’t forget to mention the 0.42% fee for keeping your money in this fund.
Expense ratio is already factored into the yield
EDIT: That is worth noting though, pretty expensive fund
Expensive relative to an index fund, but you're getting a lot of utility for that expense, considering you're doing well to find a free checking account paying more than 0.1%. If someone has a similar account for less expense, then obviously that would be great.
@@CodaBroda factored in meaning we earn 4.96% less the fee of 0.42%?
@@wilma6235 Yield is 4.96%, would be 5.38% without the fee. Makes sense since Vanguard’s (VMFXX) yield is 5.25%, it only has a 0.11% expense ratio
@@wilma6235 Yes. The 7 day yield is taking into account the expense ratio. I think of this as essentially the price we pay for liquidity in the CMA.
Only downside is if you receive cash and need to deposit it. May want to keep a regular bank acct open as a means of depositing the cash.
Can be setup to have overdraft protection from your brokerage acct.
The level of service from Fidelity staff is super!
Rob, having all of our accounts through one platform has been my go-to for years. Fidelity happens to be that platform for me too. My quarterly distributions to bridge SS are deposited into my CMA and the free BillPay handles the monthly mortgage payment. I haven’t given up accounts and local brick and mortar banks, but you did give me something to think about. Cheers!
This video has caused me to move my checking account to Fidelity and I'm very happy with the results (way more interest!) so far. Much appreciated!
Rob, thanks for bringing this into focus for me. I'm in the middle now of establishing an account and getting things set up. I compared Vanguard's offering, their Cash Plus account, but it pales in comparison to the Fidelity product. I'm test-driving the Vanguard account as well, but signs don't point to 'yes' so far for that.
Thank you for this video! I've had a Fidelity CMA for years and I didn't know SPAXX was an option! I just switched my core position via the robot that came up to help when I clicked "Customer Service" at the top left of the screen. It took less than a minute.
I plan to check back on the SPAXX vs FDIC rates annually, but for now SPAXX is a no-brainer for me.
A SPAXX plus not mentioned is a percentage (41% in 2023) of the dividends are exempt from state and local taxes for those in states with income taxes and allows such exemptions (some states the percentage needs to be at least 50% to qualify, or something like that).
This was a good video.
Fidelity's debit card is really good for atm usage when traveling outside the U.S., because of no foreign transaction fees on the withdrawn amount. I have first hand experience with it. Also, the default of getting a high interest rate on sweep money is also really good.
That's not what fidelity discloses para 2.5.3: "For each foreign transaction, there is a foreign transaction fee (currently, 1% of the transaction for non-US dollar transactions), which may be included in the amount charged to your account. This charge may apply whether or not there is a currency conversion. You won't see the 1% seprately, it's included when Visa does the conversion from foreign to USD that is deducted from your Fidelity account.
@@hanwagu9967 Compared to Schwab will the conversion rate work out to be the same? They also use Visa for conversion rates. Somewhat confusing in the fine print?
@GG-tw6xu BTW, I have Scwab's debit card too. This is also a great atm card for non-U.S. ATM's. The weakness may be that your sweep money doesn't get a high interest bearing money market fund.
@hanwagu9967 I did a first hand analysis of what was charged in usd for a withdrawal, compared to the currency received. Whatever it was, I thought it was very fair and reasonable. Not much, if anything, was made on the currency bid-ask spread.
@@sunchips5 Was that analysis comparing equal amounts withdrawn at the same time of day using a Schwab ATM card versus the Fidelity card?
Not a bad idea. Wife and I have capital one 360 savings. 4.50% and it's directly linked to the checking and credit card. Also capital one uses ATMs at CVS and Walgreens so you can access cash almost everywhere.
Capital One also has an excellent mobile app.
@@rob_berger Rob, what prompted you to do this now and not sooner? Did something occur with your other bank or are you simply going for the interest rate now that SPAXX is core position?
Capital One is currently at 4.25%
I bank with capital one too! Honestly, it's one the only good big brick and mortar banks.
Most of the other big banks still only offer you pebbles to the dollar.
@@krisskogs2532Everbank savings is at 5.05%...just combine with free credit union checking for best of both worlds 😊
We did the exact same thing last year for the same reasons. We keep a no-fee small balance at our local bank to have a local bank if we ever need their services. Only issue we've had is kicking ourselves for not moving the money sooner. Someone mentioned SPAXX fees are higher than comparable fund at Vanguard. Also, the FTSE 3-Mo Treasury Bill has consistently beat SPAXX. But to me, it was a great alternative to having more money at checking account at the local bank, paying near zero.
I did this several months ago. I'm very happy with my decision.
Thanks for this. I have a balance in the CMA but as dry powder for investing. Did not realize there were checking and debit card features. Will definitely look into it.
We have used FDRXX for our CMA for years instead of SPAXX. It has a little lower Exp. Ratio, and the same or slightly higher yield. About the same composition.
How did you do that ?
Rob. I did this years ago. Well worth it. Keep in mind that you can do everything in a brokerage account that you can in a cash management account. In addition you can but whatever investments you want. I converted all my cash management accounts to brokerage account and closed them.
ATM use?
Yes, ATM with debit cards, checks, and you can auto pay your 2% cash back credit card to this brokerage account as well. One-stop-shop and we really like it.
I have never justified the need for a separate CMA. I can do the same things with my Fidelity brokerage account.
No need for a cash management, account, you can run mostly everything through their brokerage account. 4.96% on uninvested cash, check writing, direct deposit, etc...only not a debit card and bill pay options. I like to keep banking and investing accounts separate.
Why not use a CMA with the debit card locked unless you need it?
Good point.
You actually can get a debit card for a regular brokerage account. I opened a Fidelity Brokerage account to use as my regular checking account and ordered a debit card to go with it, works perfectly fine. Can order checks too
I think it’s a great idea to keep these accounts separate. If a bad actor gets access to any of your accounts they have access to all your accounts. I’m in the bank fraud business and have been seeing very sophisticated account takeovers. Don’t do routine banking where the bulk of your assets are..
@@DonaldConceicao Agree 100%!!!!!! Too many people don't stop and think of the risk they might be subject to. Keep your banking in a separate account with no automatic tie to your investment account.
Thanks for the content. Tried this account recently. Things were going well until after a month the account was locked. They needed a picture of wife’s social security card to proceed. We don’t have that, and the effort seems not worthwhile as there are many financial institutions that have no such requirement.
Opened one two months ago, I wanted a second checking account to keep from commingling funds. Has worked great.
I'm telling your wife 😂
@@johnbrown1851for all we know that could be the wife lol😂
100% spot-on. I already had my retirement monies there (401(k), Traditional IRA, Roth IRA, HSA, taxable investing
). Then added credit card, then realized....no ATM fees via Fidelity Cash Mgmt checking? Done. Now everthing is in Fidelity. Also checking can be FDIC cash core account (or MMA SPIC covered). Thanks Rob for confirming what I had already done a few years ago.
I've been keeping all of the cushion in my regular checking acct invested in a 4 week treasury bill so that I have the option of taking some of it back out of the treasury bill if I need to. Thats been working great this year.
Doing the same
Welcome to the club. Been doing that for years. Wish I had done that even earlier...
I’ve been using the fidelity CMA for years. Works great though the bill pay could be better.
Thanks for covering this. We minimize what we have in our local bank and charge all we can on charge cards to get benefits there. Vanguard money market is holding our funds for retirement needs.
I have been using it for years, never looked back.
Me too
Like others have mentioned, I was also considering moving my emergency funds into a CMA, and the shared info was definitely helpful in calming the concerns 👍🏾👍🏾
Retirement is now more difficult than it was in the past. I've been saving for a long time instead of investing, and right now I only have about $400K. considering all the inflation, i'm thinking of investing in stocks, i dont just have idea on market strategies.
Do you plan on retiring before 59?
That is what determines it for me. I switched to cash flowing assets because I wanted to retire early.
At a point like this, when the pressure is already on you to retire, its best recommended you seek the services of an adviser, as this allows you make smarter investing decisions.
I'm intrigued by this. I've searched for financial advisors online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
Finding financial advisors like Melissa Terri Swayne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Great video! I have been with Fidelity for years. I have had a great experience with their customer support. Instead of trying to explain how good Fidelity is, I will just share your video.
Your main fee is the expense ratio on the money market fund. Try comparing the expense ratio there to Vanguard for a comparable fund. For example, the expense ratio of VMFXX is just .11% so Fidelity is overcharging (.42%) on its default core position expenses fee to deliver "free" checks, debit cards, no FX fees spending overseas, ATM fee refunds, etc. I have been a Fidelity customer for years but for every 100k in money market you are probably paying 200 to 300 USD per year extra in expense ratio fees for these perks. You can buy actual T-bills for larger sums to minimize these expense fees.
Keep 2 months of expenses in the Fidelity CMA and other cash at Vanguard
So there is a catch. I thought this all sounded too good to be true.
@@jeffb.2469 He was comparing Fidelity cash management to a traditional checking so it was a 100% fair analysis.
For a money market fund, the expense ratio doesn't matter it's the yield. That's why Fidelity mmf funds have lower yield compared to Vanguard is the higher expenses. If you're fine with the yield then that is what matters. I don't know why anyone would hold 100k in cash anyway. I keep enough cash to cover 2 month of expenses in FDLXX and the rest of my liquid cash/emergency funds are in t-bills.
@@javiert9766 In this case these two money markets are substantially similar so the expense ratio is what mainly drives the difference in yield. Different stat to find the same conclusion. Fidelity SPAXX at 4.96% (ex. .42%) 7 day and Vanguard VMFXX at 5.39% (ex. .11%). Just like if you had 2 total stock market index funds, if they both are equivalent in management, ease to trade, etc the expense ratio will be the driving force between them.
Had one for a year. Excellent experience so far!
@Rob Berger still think this is a good idea given Fidelity now won't let you spend your money for 3.5 weeks once it is EFT or deposited by check electronically? Apparently one can invest it during the 3.5 week hold but can not otherwise spend it or use it to pay bills. That seems like the opposite of what a CMA is for (bill paying)... SMH.
My experience exactly. I made a post then saw yours. I started an account on 1-15-24 and have been moving funds since. I have an account balance of over $90K but only $266 is available today. The website says 11-08-24 is the release date. I cannot even use the funds to buy Mutual Funds from Fidelity. I called yesterday and that was a nightmare dealing with their useless AI telephone service. Eventual I got a real person but had to be transferred.
I love my Fidelity CMA and have had it for 7+ years. They are free to open and no fees. Between my wife and I, we have 5 CMA’s, each with a different purpose. Individual checking (x2), joint savings (spaxx & VOO), Mortgage for house direct deposit and bills), and Joint checking for our monthly household expenses. Great if you like automating your budget using multiple accounts!
I did this last year and don't regret it for a second. I do keep a checking account with my local credit union for the rare times I need to handle cash
Owned a Fidelity 401K for over 25 years, now IRA. SPAXX is their default automatically set for cash transactions in both.
I have transfer accounts setup but have been thinking about checking into debit or checking. Timely video, thanks.
BTW- if this election goes in the wrong direction that FDIC insured account might come in handy.
We invest with Fidelity, bank with a Credit Union, and have considered moving our banking to a Fidelity CMA. One concern is that if a Fidelity CMA is hacked, could investments be swept away with the unauthorized withdrawals? Also, who would be the point of contact for unauthorized activity, Fidelity or UMB?
I did the same thing now that saving rates at banks are dropping. Thanks for the Member Banks tip. That was very helpful.
been using this for years. Awesome account.
I have done this for a few years now. Love it!
I think these accounts should be separate . If a bad actor gets access to any of your accounts they have access to all your accounts. I’m in the bank fraud business and have been seeing very sophisticated account takeovers. Don’t do routine banking where the bulk of your assets are.. Just my opinion.
My Fidelity debit card had 3 fraudulent purchases last week, 2/3 purchases were denied but an $87 purchase went through. Now it's being investigated. I just received a new card.
@@richj011 Did they side in your favor and gave you your $ back indeterminately?
@@richj011Reason #1 on why I will never use a debit card. There is no or in best cases very limited consumer protection against fraudulent use and most worrisome is that money is transferred out of your account the instant a purchase is transacted. Unlike a credit card where money transfer is regulated/controlled by you, the credit card user. Under current consumer protection laws, the lion share of risk of fraudulent usage is the burden of the credit card issuer and not the consumer.
This is the best account I’ve ever opened ! When I moved to Asia I get all my ATM fees rebated and their customer service is Amazing !!
The problem with SPAXX is that the expense ration is 0.47%. Something like a short term t-bill fund (e.g., SGOV 1-3 month treasuries) is much cheaper (.09%) and it has a higher yield (5.19% right now). You can’t use that as your core holding, but outside of your “checking account” cash, there are better options.
The yield is shown after expenses, so that's why you should focus on when comparing funds
Hey Rob, I have been trying out the CMA as well and following Fidelity's subreddit, some are complaining UMB Bank is unjustly denying there fraud claim and not acting in good faith, and Fidelity aggressively locking customers accounts, perhaps you could do a follow video on that?
Wealthfront's cash account is 5% APY and covers up to $8m in FDIC insurance by spreading it through multiple partner banks
You did a really nice job here. I have been a Fidelity customer for years and your presentation gives me much food for thought.
Hi Rob, Thanks for the video. How about other institution with similar product. For example I have accounts with Vanguard , any review on Cash Managment account with Vanguard.
Vanguard cash plus is not as robust:
1. No debit card option
2. No option for paper checks
3. Funds must be transferred to the FDIC option to pay bills
4. Newer and some payees may not be supported yet
5. No ability to withdraw cash
6. FDIC is the only settlement/core position option
I have had a Fidelity Cash Management account for years. It used to be called Smart Cash Account, a name I preferred over the current one.
All nice until you need to get some cash in non-standard amounts ($5, $10, etc.), need a notary while traveling, use Zelle, etc. I keep enough in Wells Fargo to get no fees. Transfer any extra to Vanguard for better MM rates. WF has banks in almost every city in the west and I have used services many times while traveling to get cash, manage rental properties, and hard money loans.
All good points.
Concur. Also no cashier's checks, and while Fidelity debit cards have no fees, practically every ATM will charge you a 3% fee, regardless. I keep $500 in bank account just in case I need cash. And I make a ACH direct deposit once each month to avoid bank service fees. Link Fidelity to your bank and you can transfer funds back and forth with only on business day delay.
@@kkesq11You've misunderstood. Fidelity reimburses ATM fees charged by other banks. I made the switch years ago and have loved it.
@@don951 unless the ATM owner codes the transaction fee differently. I've come up with problem with my regular bank that reimburses all atm fees, but there are operators that code the atm fee that does not register as such.
Everyone needs a brick and mortar (wells, boa, chase) just in case, but majority of your cash should be held in an online money market account.
Fidelity hit a home run with their CMA. Nothing like that in the market. Amazing product.
I have a Fidelity HSA and my core account is in their FDRXX. It is yielding 5.10% (1year) with an Expense Ratio of .38%. FDRXX is the older version of SPAXX with similar results. Perhaps a bit better.
Thank you for this easy-to-understand explanation of the Fidelity cash management issue. it was very helpful to me.
I’ve been doing this for years now! The only thing I can’t do is deposit cash.
But you can electronically deposit checks from your phone
@@sknorling Checks yes, but cash no. My small town's businesses are almost exclusively cash-only. Thankfully I spend most of the cash that I get, but it's a pain having to keep it around since it's losing money by not being an account.
@@abluelark yeah, I guess if I had that situation I would probably open up a free local credit union account just to deposit the cash and then electronically transfer to fidelity to get the higher interest rate on any idle cash. Not quite as convenient.
I wouldn't see this as much of an obstacle..unless you're Tony Soprano.
I have the FCM account… mine is the fdic insured core position. I do buy some SPAXX as well since it lets you have both in that account.
I had this account but my rent could not direct debit from the account and I was charged a bad-check fee from my Landlord. Fidelity had no comment and did not offer to cover the bad check fee (something an actual bank will do).
Good idea in concept but if there’s hiccups with their wonky direct debit system you’re on your own for any bad check fees you incur. Heed my warning.
I may be wrong but I recall I had to apply or turn on something for auto debit feature. I've never had any issues at all.
I use it to hold 2-3 months of funds that I will use to transfer back to my main checking account for business loan payments.
Yes! I recently did the very same thing because the monthly return on my small pile in the brokerage account was shockingly good. 20% of current pay goes into the brokerage for the "crash" days, which are pretty frequent these days but the best buying opportunity. I noticed the monthly dividend on my holding and realized my everyday account at the branch place is not working for me anymore.
Shouldn't you also take into account the expense ratio? As of this writing, the expense ratio for SPAXX is 0.42%. I just think that it's worth mentioning the expense ratio to factor in your overall rate of return since the expense ratio does lower the actual yield.
You're correct!
Fidelity mentions this for the 7-day yield: "It is the Fund's total income net of expenses, divided by the total number of outstanding shares"
It looks like the expense ratio is already taken into account.
This is the state of America right now everyone is out to sell you out to the next corp. He knows he could have and should have mentioned that - but for the good of his own pocket and Fidelity commercial he didn’t -
@@catchyovibe Kamala is going to save us!!!!!
Im not sure how I got to your video but thank you, I switched my core holdings from Fidelities FDIC to their SPAXX. I didn't have much as most are in index funds but still I want the most I can get.
Yeah I didn't even know you offered this option. Did they send out an email?
Just opened mine! Thanks for your insight and all the good comments below, Rob!
This is more seamless than Schwab but I keep all my idle cash in SWVXX 5.14% yield, 0.34% exp ratio. I do have to "sell" to cash then transfer to checking if necessary, but rarely is this an issue.
I do the same. Seems to me the only difference is that we have to manage the funds into and out of SWVXX. Only takes one business day though.
I love this account and use it. Particularly like it for withdrawing cash internationally. Fees are reimbursed and exchange rate has always been very close to market rate.
Rob, great information. Will definitely consider this.
Yup. 👍. Have already done so. 99% of my financials go through them, and the cash management account. Granted I have a bank check account where one, just one, service provider automatically takes payments. I travel butt tons, and seriously want that service to never be interrupted. Note that I also receive a small discount in allowing them access.
Can you covers Vanguard’s cash management account? Compare the two
Not even in the same league. NFL versus high school football.
Seems like a good recommendation.
Did it 20 years ago !
1% past interest income for those that didn’t know better ?
Best move I ever made.
Be sure if one transfers that they are reputable and provide the service one needs.
Fidelity Cash Management is head and shoulders better and any current bank checking account.
I love this account! I've had it for 20 years without issues and lots of perks
Remember, FDIC only has funds to cover 1% of deposits.
So if S_it hits the fan, FDIC OR NOT, you won’t get your money back
Yep
This is false. Patently false. You really shouldn’t make posts about things about which you have no clue.
@@Pelican5077 People always want to doom and gloom instead of using reality.
I also moved to the CMA at the beginning of the year. I keep a low balance in the account, and have the bulk of our cash in a taxable brokerage account at Fidelity in T-Bills and MMF. I am retired, and prefer to transfer cash in manually when the CMA balance gets too low.The transfer is instant. I do not use the Cash Manager Tool as I think it is asking for trouble. Probably that old '60s paranoia, but the thought of a fraudulent debit or ATM transaction would keep me awake I night, so no auto-transfers. Otherwise, I am very satisfied with the CMA and how it works with my taxable brokerage account.
The distress for banks was a farce; what we have experienced in the past 2 years is a result of a system that has worked incredibly well. The Fed just had to tighten credit to cool the economy.
*What about the Fed lending program for banks that was said to ease financial tensions after the domino effect from Signature and Silicon Valley bank?*
*Yeah, that sufficed, but what really helped the economy was rising immigration that helped even out the mismatch between open jobs and people looking for work.*
*I agree. Rising productivity is manna for central banks, allowing faster growth without inflation because each hour of work yields more goods and services at the same cost.*
Exactly and many of us don't know where to invest our money so we invest it on wrong place and to the wrong people
Good review and i like my CMA account, too. Another con is that you cant transfer to and from the CMA from other banks. I have to send cash go my Roth, then transfer it to the CMA.
The expense ratio for SPAXX is 0.42% 😮
VMFXX is 0.11%
The yield is after the expense ratio. I am not going to cry over 0.28% difference when fidelity makes it a lot easier to use the account.
Right and the equivalent expense ratio for your bank account is probably 5 percent
The yield is net of expenses.
@@DonaldConceicaoplease explain what that means
Hi Rob! Should one park our emergency fund in this type of account? Thank you for all your videos!
Rob/community... I watched the whole video but still struggle to understand this:
Why is this more advantageous than a HYSA with 5+% APY I can get at many banks? Is it the frequency of compounding?
Sorry if ignorant/dumb question...
Ease of access. I have an HYSA with Cap One and it can take 5 days or so for money to be moved in or out. With the CMA, there’s no delay to get access. Time=Money.
I personally don’t like the .42 expense ratio. I like .1-.25 for MM. How do you justify it?
@@mgallegos4708 makes sense thank you
The difference is this serves as a checking account for paying bills, credit cards, writing checks, etc. Savings accounts are limited in how many withdrawals per month and check/debit card access.
@@briandadude very helpful
You can automate investments in Other money market Funds. Just set up a recurring investment in the CMA into That money market fund and it will just liquidate whatever money market fund you are using to buy more of that money market fund. So if you have a direct deposit set up with your CMA you can auto invest in whatever “core position“ you want.
Yes this should work for Fidelity money market funds.
It does not work for money market funds. Not all products are eligible for automation. It does not work. @@briandadude
It does not work. Try it. Fidelity will tell you that mm is not eligible. @@briandadude
Am I missing something? Don’t you have to report all these buy/sell transactions as tax events? What about capital gains taxes? Seems like too much overhead to just pay monthly bills using mutual funds right?
I have had the cash management account for a few years. You only report interest earned unless you trade stocks/bonds in it.
NAV is always one. No gains, no loses in theory.
You would report the interest same as a bank account. Except that you would not be subject to state taxes on a US Treasury money market fund. The tax events are for capital gains on stocks and bonds. It might be possible to have a capital gain on a money market account but I've never heard of it. It is possible to have a loss on a money market account but it would require extraordinary circumstances like Russian troops invading Washington, DC.
No, because they are fixed $1. Theoretically, if it broke the buck ($1), it could be a loss, but it's not a capital loss for deduction purposes. The only thing you would report is what is on your 1099-DIV for the unqualified dividends earned, so they are taxable as ordinary income.
@@tim71pos Some of the SPAXX dividends earned may or may not be subject to state and local taxes, depending on your state. SPAXX does not meet the threshhold for US securities to exempt in states like CA, CT, and NY. Since only a portion of SPAXX is US securities, not everything for other states may be exempt either.
Thanks for this easy to understand and informative video. You consistently put out the best financial videos in the TH-cam space.
@@joeburns3302 Rob is great. Jennifer Lammer too.
Don't forget the .42% expense ratio. Better to use Fidelity brokerage CDs that have none. You should find comparable rates.
OTOH, that 4.96% is net of fees, correct? So it’s really paying 5.38% or so. Please correct me if I’m wrong. I was hoping Rob would touch on this in the video but he didn’t.
Can a brokerage CD be used as a checking account? NOOO
@@speedlever no, not net. Subtract .42 from 4.98, so around 4.57% after expenses
@@speedleverit's net of fees
@@arthurvino
I think you’re incorrect. Reading further into the comments, the yield is indeed net of fees. So the gross yield is 5.38% as I stated and the net yield is 4.96%
I really enjoyed the lesson on the 2 funds! Thank you.
I got Vanguard for everything no need to switch. Plus Vanguard rates are higher.
Vanguard's money market is one of the best, if not the best, available today.
And a horrific customer experience. :)