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Doing Business with Fidelity (Not Schwab)

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Yesterday Schwab reported third-quarter earnings. During the three months ending Sep. 30, the e-broker made 70 cents a share up from 64 cents a year earlier while revenue increased $132 million to $2.71 billion.

Guess where the money was made?

“For Schwab, net interest revenue made up 60% of overall revenue during the September quarter,” reports the WSJ.

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Do you know what net interest revenue is? It’s when Schwab lends your cash out, keeping the profit for itself.

“Schwab and other e-brokers make a significant portion of their profits by sweeping cash daily from customers’ brokerage accounts into the firms’ banking arms,” explains the WSJ.

If you have an account with Schwab and you have money in cash then consider moving it to Fidelity. With Fidelity you’ll earn a lot more by investing that money in a money market rather than letting Schwab use your cash for their own profit.

Read more here about why Charles Schwab has always been about Charles Schwab.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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