*Investors Blog*
- Thread starter Warstud
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From what I understand it’s the same thing that has happened to other institutions. Schwab has huge amounts of money in bond funds and ETFs and also other companies invest in those vehicles as well. Rising interest rates have hurt bond funds.
Spiking inflation and the raising of rates to combat that inflation is the crux of the problem industry wide.
One difference between Schwab Bank and SVB is that Schwab caters to a more general audience. SVB had a high percentage of high net worth depositors.
Schwab’s $7 Trillion Empire Built on Low Rates Is Showing Cracks
On the surface, Charles Schwab Corp. being swept up in the worst US banking crisis since 2008 makes little sense.
www.bloomberg.com
I agree low rates for too long was a very bad idea and now has consequences.
Everything back to normal today in the markets and nothing to worry about….
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I have a self directed TD Ameritrade account, that goes back to ameritrade, that is now owned by Schwab. Its under the FDIC limit in the sweep account. Still thinking of moving it - I just don't need the trouble? Maybe e-trade or fidelity?Schwab’s $7 Trillion Empire Built on Low Rates Is Showing Cracks
On the surface, Charles Schwab Corp. being swept up in the worst US banking crisis since 2008 makes little sense.
I agree low rate for too long was a very bad idea and now has consequences.
Between my wife and I we have 3 accounts (actually 5 - but two accounts are just for moving money for IRAs) with TD and have various with Fidelity as well. I have nothing against TD/Schwab but I'm considering moving the TD accounts just for the ease of all in one place. Fidelity's ease of use and interfaces are all good, few complaints over the last several years I have had accounts with them. The suite of account types offered thru Fidelity makes it easier for a one stop shop too IMO if that is a down the road consideration.
Zee09
$200 Site Donor 2022
I squeezed a box of tic tacs out of BLND today....
I would not worry about Schwab but just be vigilant. Schwab is not isolated in this bond environment.
No trouble, not more than anyone else. What I am saying is don’t rely on the media to make decisions just because Schwab is the media news item of the day doesn’t mean it’s less secure than the other companies that you mention.
In fact, it may be way more secure than the other companies mentioned
I agree. It’s interesting that E-Trade was mentioned. They went through a lot twenty some years ago. It took them a long time to recover from that.
@SC Maintenance FYI - if you do move and choose Fidelity, might as well take advantage of the promo they have and pick up an extra $100. (Not a reason to move IMO but just passing it along if you do it anyway).
Special offers | Fidelity
Take advantage of special offers when opening an eligible Fidelity account. Limited time only.
www.fidelity.com
Hate 'em. Had them for years. Sold me an annunity. Annunities are for people that need to spread money out over time to make sure they have enough. I am not a good candidate... Ultimately my fault, but I dumped them for Schwab.
I agree and Fidelity has a nice little hack to earn interest on checking. You can open a cash management account (no fees, unlimited ATM withdrawals with no fees, check writing) and a brokerage account. CMA is your ATM, check writing, ACH source and it overdrafts to the brokerage account which you can deposit checks into with the app. You can set your core investment in the brokerage to be one of the money markets (SPRXX) which is currently paying about 4.5% or you can manually buy (SPRXX) which is paying 4.88%. When a check, ATM, ACH comes into the CMA, it auto-liquidates the brokerage account and immediately funds the CMA. Obviously, this only works well when MM are paying high yields. When they are not I keep all my money in the CMA to simplify the process. Since I'm always going through the CMA for checks, ACH, and ATM I don't need to change anything other than just deposit money into the CMA instead of the brokerage account.
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I have no relationship with any Fidelity branches - they are paid to sell. Fidelity works great if you are totally self-directed.
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I get a call now about once a year from TD Ameritrade, whenever a new account manager gets my account. I just tell them that I am 100% self directed and have been for a couple decades. I am polite, and I think they appreciate me telling them politely there wasting their time.
My 401k has a "nested brokerage" account (can't remember the actual name) with TD Ameritrade that allows me to buy anything I want within my 401k. Most of my 401k is in VTSAX which is just part of their standard 401k offering and I haven't tried this feature yet (we just switched to this new 401k) but I have a TD Ameritrade account for it. I'll have to look around a little more at TDA.
SC,
I had a guy from TD Ameritrade calling me telling me about ____ company offering a bond with such and such coupon rate….
He called me on 3 separate occasions and I really didn’t like someone cold calling me after he saw my cash holding and sounded like a slithering snake on the phone.
I had a guy from TD Ameritrade calling me telling me about ____ company offering a bond with such and such coupon rate….
He called me on 3 separate occasions and I really didn’t like someone cold calling me after he saw my cash holding and sounded like a slithering snake on the phone.
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I'm pretty sure almost nobody is a good candidate for an annuity. If there was no such thing as inflation then maybe there might be a rare case when one could be considered.
Annuities are great for the company and salesman who sells them. If my Fidelity Account Executive even looks like he is going to suggest an annuity, I shoot him a look that says I have killed men for lesser offenses. He has wisely picked up on the look. Just say no to drugs, annuities, timeshares, front loaded mutual funds, whole life, and managed accounts.
Almost universally not worth it and definitely one of the most abused financial instruments.
CDs are basically "fixed annuities" ... and some CDs offer a one time "rate bump" of the interest rate when rates increase. I'd take a short term CD at 5-6% right now over trying to outsmart the volatile stock market.
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