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  • Julie Skye

Client email sent out today at 4:24

I'm sorry to send two emails in one day, but I wanted you to understand what you are looking at when you get a SWVXX confirmation from Schwab...or when you see it on your statement! I'm also sorry the formatting doesn't carry from my email to this blog post!


One of the ways I increase your annual income is by investing in various dividend and interest-bearing securities that can be called, as a group, Fixed Income Securities: money market funds; jumbo-money-market-funds; government bonds; corporate bonds; municipal bonds and dividend paying stocks.


It may be a bit tongue in cheek, but my goal is to replace your work salary with your portfolio “salary” so you can walk away from an actual paycheck. Anything I can do to increase your income with NO risk is a good deal for you!

Fixed Income also helps soften the volatility that stocks bring to your portfolio…as the more you have in fixed income, the less your portfolio will decrease when the stock market goes down.


The Rule of Thumb I use when determining how much cash to hold in your money market funds is a function of when you will need to withdraw funds to meet a large purchase OR when your work scenario is more uncertain than usual. Other rules of thumb you are probably familiar with:


Have 2 years’ worth of living expenses

AND

Don’t take market risk if you might need any of your investments in the next 6-12 months

You may have noticed that every time I send out an email or newsletter, I ask if you will need money in the next 3-6 months: this is why! It takes time each month to monitor what is in your Schwab Sweep Account to determine if I need to buy (you get a confirmation from Schwab when I do this) and I don’t want to risk I’ve moved to what is a 1-DAY “Lockup” if I suspect you might be moving money around.

Cash I don’t think you will need in the near tearm goes into SWVXX…Schwab Value Advantage. What is Schwab Value Advantage? Below are the different sorts of money market options. Take a few minutes to become familiar with the names as you will see them on your monthly statements.


If you look below in the 2nd column from the left, you will see Schwab Purchased Money Funds, and this means I have to put in a buy. There is no commission or other costs and all it takes is 1 day to make it ready if you need it it or I want to invest it! But look at how much more you earn…1.02% to 1.69%. Click and drag to enlarge! today it is 1.53%

Pay special attention to the far two right columns: and the rates paid in the SWEEP…the light blue bar in the middle of the columns: .06%-.30%!!!


(see email...pic doesn't copy!


So, what is a Schwab Sweep account and why do I work so hard to keep money you need OUT of it? Uninvested cash in your brokerage and retirement accounts11 Uninvested cash earns interest12 and is readily accessible for purchasing investments and managing daily expenses.


Offered through Schwab brokerage and retirement accounts

0.06% - 0.30% APY12Easy access to ATMs worldwide, online bill pay, free standard checks, and other cash management featuresImmediate access to funds for buying most investmentsBank Sweep deposits are eligible for FDIC insurance.13 Schwab One Interest balances are eligible for SIPC coverage.14


Pay special attention to your monthly statement: be sure to log on and review it when Schwab sends you the email it is available. When you see x and z you won’t find the legend til almost the last page of your statement…


So…make it a habit to see what your Sweep is paying…or NOT paying…and what Schwab Value Advantage IS paying…which is in the section titled

Investment Detail - Money Market Funds [Non-Sweep]


Schwab One® Account of Schwab has provided accurate gain and loss information wherever possible for most investments. Cost basis data may be incomplete or unavailable for some of your holdings.


Please see "End-notes for Your Account" section for an explanation of the codes and rates, middle of your statement.

Account Number ********

Statement Period December 1-31, 2019

Page 7 of 18

Investment Detail - Money Market Funds [Non-Sweep]

Fund Name Price Current Yield %

Schwab Value Advantage SWVXX $ 1.0000 1.53% (YAY!!!! THE GOOD NEWS)


I always email when I’m buying or selling stocks or funds but sometimes, I’ve got a limited time to get everyone’s buys in…and I simply run out of time: I may not always send you an email when I’m just buying this “Jumbo Money Market.”


If you DO see a trade come in, especially a large one, and I have not emailed you with a heads up…before you reach out to me, first look to see if the buy is Schwab Value Advantage SWVXX…and you’ll know what I bought!


Hope this helps you with what I consider a very important bit of portfolio management.

Also, on days like today...when there is lots going on...be sure to check my Skye Advisors LLC Facebook page: https://www.facebook.com/skyeadvisors/

or


my Skye Advisors website blog posts: https://www.skyeadvisors.com/blog

Best,

Julie

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