Your Survival Guy

Preparing your investments and family for when disaster strikes.

Disclosure

  • Home
  • Your Survival
    • EMP Threat
    • Tucker Explains
    • Newport Gas Outage
    • Water
      • Emergency Water Storage
      • Let There Be Water
    • Get Your Gun and Your Training Now
    • Satellite Phones
    • Navy SEAL Survival Kit
  • Your Money
    • Coronavirus Infects Stock Market
    • Looking for a Better America
    • You Invest, They Win
    • Where to Keep Your Cash
    • Paris
    • How to Buy a Boat
    • Dead or Alive? The Future of Long-Term Investing
    • Is Vanguard too Big?
    • Cryptocosm and Life After Google
    • The Last Intelligence Report
    • The Truth Behind the S&P 500
    • RAGE Gauge
    • How Many “Retirees” Will Keep Working?
    • Your Retirement Life
    • You’ll Love This if You’re Dreaming of an Active Retirement Life
  • Weapons
    • Self Defense
    • Every Family Should Own at Least One Shotgun: Here Are Three
  • About Me
    • Preparing for Times Like These
    • My Videos/Pics
    • Music
      • RIP Neil Peart: You Will Always Be Remembered as a “Modern-Day Warrior”
  • You
    • Our Cabin on Kodiak, Alaska
    • If You Are in Pain, this May Help. It Helped Me.
    • How to Save for a Grandchild
    • FIRE! Financial Independence, Retire Early
    • Compound Interest
    • Arithmetic of Portfolio Losses
    • Maximum Portfolio Withdrawal Rate
    • An Efficient Frontier
    • Retirement Compounders
    • Counterbalanced Total Returns
  • Survive & Thrive
    • April 2021
    • March 2021
    • February 2021
    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • April 2018
    • March 2018
    • February 2018
    • Welcome

Shouldn’t Your Money Be Treated Well?

August 23, 2019 By E.J. Smith - Your Survival Guy

By Jakub Krechowicz @ Shutterstock.com

If you choose to do business with a firm, shouldn’t you be treated well? Fidelity has chosen to automatically sweep customers’ cash into higher-yielding accounts, rather than stick it in low yielding bank accounts like most of the company’s competitors. Advantages like this are why I do business with Fidelity. Earlier this month Fidelity explained its decision to offer its customers accounts that earn up to 47 times those of its competitors’, writing:

  • Customers Opening Brokerage & Retirement Accounts Automatically Directed to Higher Yielding Cash Options, While Retaining Choice
  • This Investor Cash Automatically Earns 47x More than TD Ameritrade, 10x More than Charles Schwab and 27x more than E*TRADE Cash Sweeps1
  • One Year Later, Industry-Disrupting Fidelity ZERO Index Funds Grow to Nearly $6 Billion in Assets

Fidelity Investments®, the largest retirement and brokerage firm with nearly $8 trillion in total client assets, today announced it has challenged conventional industry practices by automatically directing investors’ cash into higher yielding options available for brokerage and retirement accounts as well as providing product choice – all without any minimum requirements.

Fidelity’s approach is contrary to typical industry practices of defaulting customers’ cash into a low-yielding product – often at an affiliated bank – with no other option in what the industry calls a “cash sweep.” Recent customer research shows that many investors don’t focus on the rate paid on their cash when they open an account and, too often, they don’t take action later. Fidelity has made it easy for customers by automatically giving them the higher yielding option at account opening, while also providing other investment options for those customers who prefer it.

With Fidelity’s commitment to providing investors with unparalleled value and choice, cash investments at Fidelity could earn 47x more than TD Ameritrade, 10x more than Charles Schwab, and 27x more than E*TRADE cash sweeps (see table below).

Yield as of 8/5/2019
(Yield may vary due to market conditions)

FIDELITY

SCHWAB

E*TRADE

TD AMERITRADE

Government Money Market Fund
7-day yield

Default Sweep APY

1.91%

0.18%

0.07%

0.04%

Figures show yield as of 8/5/19 (Yield may vary due to market conditions) see Fidelity.com for more recent yields; The Fidelity fund yield is the average amount earned by the fund after expenses over the past 7 days, annualized as of the website published date indicated. The default sweep APYs are sourced from each firm’s website as of date indicated assuming a $10,000 investment with a comparable brokerage account. APY is the amount of total interest earned on a bank product in one year. See additional important comparative details below.

“Some firms have removed the option of a higher yielding money market fund as an option for their cash sweep, thereby forcing investors to take additional steps to get a better rate for their cash,” said Kathleen Murphy, president of Fidelity Investments’ personal investing business. “By offering choice at account opening and directing cash into the higher yielding option when investors don’t make a choice, we are once again ensuring clients receive more value with Fidelity. It is unfortunate that millions of investors lose out on having money in these accounts earn more for them based on current industry practices.”

The chart below demonstrates hypothetically how an investor’s cash invested in a Fidelity money market fund compares with prevailing sweep accounts annually, based on current published yields.

Fidelity
Investments
1.91%

TD Ameritrade
0.04% – 0.07%*

Charles Schwab
0.18%

Fidelity 
Government 
Money Market 
Fund

7-Day Yield

Default Sweep APY

Earned
Annually

Earned
Annually

Annualized Lost
Opportunity

Earned
Annually

Annualized Lost
Opportunity

$10,000

$191

$4

$187

$18

$173

$50,000

$955

$25

$930

$90

$865

$100,000

$1,910

$70

$1,840

$180

$1,730

Current yield as of 8/5/19. (Yields may vary due to market conditions.) Examples are hypothetical, for illustrative purposes only, and are a simple calculation of the annualized yield assuming each level of investment. *For TD Ameritrade: .04% for $10,000, .05% for $50,000 and .07% for $100,000

If an investor thinks about this for the long-term, the lost opportunity would be in the tens of thousands of dollars.

“We continually focus on providing greater value to our customers. And today’s announcement builds on a long record of disrupting industry practices to benefit investors, including the introduction of Fidelity ZERO Funds, the price cuts on our index funds and our removal of investment and account minimums on retail brokerage accounts,” said Murphy. “Fidelity is committed to enhancing the value we can provide our customers and not simply following industry practices that just don’t benefit investors.”

In 2018, Fidelity announced several groundbreaking enhancements to deliver significant value to investors. Since then, customers have saved an estimated $31 million from Fidelity’s index fund repricing and the removal of domestic money movement fees.i In addition, investors are taking advantage of Fidelity’s ZERO Index Funds with assets growing to $5.7 billionii while the overall index funds assets have grown to $519 billion (up 25% since 7/31/18). Fidelity continues to build on that industry leading offering with the recent launch of five equity index funds priced lower than comparable Vanguard and some of the lowest cost target date index funds.2

1 As of August 5, 2019.
2 Net expense ratios as of 8/6/19. Source: Morningstar

Read more about Fidelity here:

  • This Money Market Fund is Paying 47 Times More than its Competition
  • Fidelity is Boston and Boston is Fidelity
  • Fidelity Investments: Why it’s #1
  • My Personal View on Fidelity Investments for You
  • Identity Fraud on the Rise: Here’s Fidelity’s Customer Protection Guarantee
  • Fidelity Investments: 6 Simple Habits to a Better Life
  • 196,000 Millionaires Agree That This Is the Place to Keep Your 401(k)
The following two tabs change content below.
  • Bio
  • Latest Posts
My Twitter profileMy Facebook profileMy Instagram profile

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 Zilldjians. 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 and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com
My Twitter profileMy Facebook profileMy Instagram profile

Latest posts by E.J. Smith - Your Survival Guy (see all)

  • Be Dangerous: Biden’s Progressive Puppeteers’ E.O. Gun Grab - April 9, 2021
  • It’s as Simple as 4%? No, Not Anymore - April 9, 2021
  • One Word Explains the Worth of Your Neighbors’ House - April 8, 2021
  • Your Survival Guy Stock: Witness This Dividend Miracle - April 7, 2021
  • Why Your Life Before COVID Isn’t Coming Back - April 6, 2021

If you enjoyed this post, email it to a friend:

  • Email
  • Print
  • Facebook
  • LinkedIn
  • Twitter
  • WhatsApp

Related Posts

Trending

  • Biden Tax Hikes: I’m Here to Help, But Only if You’re Serious
  • Be Dangerous: Biden’s Progressive Puppeteers’ E.O. Gun Grab
  • One Word Explains the Worth of Your Neighbors’ House
  • Constitutional Carry: Another State Chooses Second Amendment Freedom
  • Biden Prepares First Wave of Assault on Second Amendment With Executive Orders
  • April RAGE Gauge: Are Your Bond Funds Dead or Alive?
  • You Need To Be Dangerous: Democrats Want You Harmless
  • You're Telling Me Friends Ask You This Question
  • Your Survival Guy Stock: Witness This Dividend Miracle
  • It’s as Simple as 4%? No, Not Anymore

YOUR SURVIVAL GUY MUST READS

  • Why Vanguard is too Big: Part III: BOND ALERT
  • A Tax Saving, Money Making, Idea for Your Grandchildren
  • The Great Reset: Meet the Climate Czar and His War: Part VI
  • Are You Ready for January’s Great Reset?
  • If You Flee Don’t Die Here
  • New Update! Why Vanguard is Too Big: Part IX: It’s NOT Different this Time
  • Antifa MAGA March Violence Despicable
  • Valuations Reminiscent of Dot-Com Crash in 2000: Part II
  • LA Bureaucrats Told to Back Off Unscientific Shutdown of Outdoor Dining
  • How Can You Make Money in Your Sleep? Read on…
Only if You’re Serious
Second Amendment
See Who's Missing the Boat
Find Freedom in America
Great Reset
Financial Independence, Retire Early
Richard  Young Reports
Why Fidelity is Number One
The Best States for Survival
Pandemic Creates Virtual Panopticon
Emergency Water Storage
You Invest, They Win
Escape the City
How You Can Save Money for Your Grandchild
Why Vanguard is Too Big for YOU
Money 101
Island Life
Smith Family Robinson

Copyright © 2021 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.