Fidelity To Offer SPAXX As A Core Position In Cash Management Accounts Beginning Next Week.

[braumeister]

I must be old school. My "cash management" is done at the bank. Money that goes to Fidelity or any brokerage is for investment. What am I missing?

Just another way to do a bit of banking.
Go beyond banking with Fidelity Cash Management

 

[audreyh1]

I just did it too. Thanks to @RetiredAndLovingIt for the mention.
I've had a Fidelity CMA for years and really like it, but I've always had a large part of it in SPAXX anyway. This will just let me keep all of it there.
Two differences: More interest and no FDIC coverage. But for the amounts most of us keep there, the lack of FDIC shouldn't cause any loss of sleep.

Right. If you want to park a chunk in FDIC or otherwise US govt-backed funds, short-term CDs and T-bills are good options.

SPAXX is a govt MM fund anyway, so you’re well covered.

 

[bluelight]

Thanks for the info. I have a few thousand that I keep in that account for use for foreign ATM Debit card transactions. I'll have to check with Fidelity if there is any downside if I change it over from a cash acct.

 

[foxcreek9]

I must be old school. My "cash management" is done at the bank. Money that goes to Fidelity or any brokerage is for investment. What am I missing?

Mostly earned interest.

 

[calmloki]

Log in to Fidelity will let you change the core position for any account. Replace X12345678 in the URL with your actual Fidelity account number. You do not have to have any funds in the core position.

Thanks! Had changed one fido account, but no cash in the other - nice quick and easy way of getting that one changed as well.

 

[Sunrise_Ray]

What I was told a couple weeks ago is that it can become your sweep account since it yields really good, and it will not need any manual intervention. So, you make that your sweep default, move all cash into that account, and then as you buy and sell stocks, or get direct deposit of paycheck / other stuff into the account, it will go directly into it.

I have not tested that it work, although in the meantime, I moved all of my cash into that account. The After-Tax Yield on it is mouth watering for sure.

Ken

 

[audreyh1]

Thanks for the info. I have a few thousand that I keep in that account for use for foreign ATM Debit card transactions. I'll have to check with Fidelity if there is any downside if I change it over from a cash acct.

No downside IMO, will still be seamless. Until now we had all in the CMA parked in FDRXX and got ATM cash overseas recently, they just pull from any MM fund.

 

[mrfeh]

I would like to start using Fido's CMA, as we already have our brokerage account there, however...

I use aggregators (previously mint, now empower) to watch our checking and savings accounts. I do not have aggregators linked to our investment accounts because I don't want to share those credentials with a third party.

Anybody know if there is a way to have different credentials for a Fido CMA than your brokerage account? I'm guessing the answer is no, but thought I'd ask.

Thanks.

 

[MarieIG]

I put the change in on DH's Fidelity account as he was complaining about not getting enough interest.

 

[MarieIG]

I would like to start using Fido's CMA, as we already have our brokerage account there, however...

I use aggregators (previously mint, now empower) to watch our checking and savings accounts. I do not have aggregators linked to our investment accounts because I don't want to share those credentials with a third party.

Anybody know if there is a way to have different credentials for a Fido CMA than your brokerage account? I'm guessing the answer is no, but thought I'd ask.

Thanks.

I don't know, although would assume that you could call and obtain an answer. It could be that you need the same credentials to transfer from one account to another. When I log into Fidelity, I bring up all my accounts simultaneously, although the different accounts have different numbers . . .

 

[mrfeh]

I don't know, although would assume that you could call and obtain an answer. It could be that you need the same credentials to transfer from one account to another. When I log into Fidelity, I bring up all my accounts simultaneously, although the different accounts have different numbers . . .

For folks that have the same security concern that I do...just got off the phone w/ Fido and this is possible. It requires a phone call, but they can do it.

 

[audreyh1]

I would like to start using Fido's CMA, as we already have our brokerage account there, however...

I use aggregators (previously mint, now empower) to watch our checking and savings accounts. I do not have aggregators linked to our investment accounts because I don't want to share those credentials with a third party.

Anybody know if there is a way to have different credentials for a Fido CMA than your brokerage account? I'm guessing the answer is no, but thought I'd ask.

Thanks.

Fidelity offers their own aggregator.

 

[Another Reader]

Fidelity offers their own aggregator.

I must have missed that. Where is it located?

 

[audreyh1]

I must have missed that. Where is it located?

I know that you can add external accounts to your Fidelity view. I haven’t used it.

 

[mrfeh]

I know that you can add external accounts to your Fidelity view. I haven’t used it.

Yeah, tried using Full View...didn't like it.

 

[Mark1]

This was announced on their Reddit page and also on statements a couple of months ago. I don't keep a lot of uninvested cash in there but good to know as it will almost double my interest. People are also requesting that they add the option of FDLXX for those of us in high taxed states.
Here is the link to the announcement and subsequent discussion.

https://www.reddit.com/r/fidelityinvestments/comments/1dghhdr/announcing_a_new_core_position_option_for_your

Thanks for the information. It was an easy change and although I usually only keep a relative small balance within my FCM account (`maybe $4,000), it still represents another $80 a year in interest. Thanks..

 

[B0bL0blaw]

I must be old school. My "cash management" is done at the bank. Money that goes to Fidelity or any brokerage is for investment. What am I missing?

the only thing you're really missing is not having to schlep to a physical bank! but if it works for you don't give it a second thought. personally, i like banking online, and appreciate having my brokerage, checking, and credit cards all consolidated at fidelity. it is simpler for me. it doesn't hurt that fidelity has a sweet 2% cash back credit card that deposits all cash back directly into the brokerage.

 

[Another Reader]

the only thing you're really missing is not having to schlep to a physical bank! but if it works for you don't give it a second thought. personally, i like banking online, and appreciate having my brokerage, checking, and credit cards all consolidated at fidelity. it is simpler for me. it doesn't hurt that fidelity has a sweet 2% cash back credit card that deposits all cash back directly into the brokerage.

I don't schlep to the bank, unless I need a few bucks from the ATM. I have the Fido credit card, which is a good product. Cash back goes to the brokerage account. Full View is not as useful as Empower. So I think I understand the options now, right?

 

[nassa]

Rather than SPAXX, I use FDLXX (Fidelity Treasury Only Money Market Fund) for cash because I live in a state that taxes income and I can deduct a much larger portion of the distributions, which were 90.39% from U.S. govt securities in 2023. But, as the OP mentioned this is not a default core position choice so I must manually purchase shares of the fund, which is a bummer.

After I purchase it, it works just like any core fund; any purchases or withdrawals will automatically deduct from FDLXX, but this is only the case if my core fund balance is $0.00. Fidelity's order of withdrawals is to pull from the chosen core fund first and then any remaining balance from other money market funds in your account.

If I used SPAXX, my state tax deduction would have been 41.18% of distributions. So, FDLXX is better for me from a state tax perspective.

Fidelity Tax Equivalent Yield Calculator

Taxable-Equivalent Yields for Individual Bonds

Fidelity's 2023 Percentage of Income from U.S. Government Securities-

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/TY23-GSE-Supplemental-Letter.pdf

 

[euro]

I just did it too. Thanks to @RetiredAndLovingIt for the mention.
I've had a Fidelity CMA for years and really like it, but I've always had a large part of it in SPAXX anyway. This will just let me keep all of it there.
Two differences: More interest and no FDIC coverage. But for the amounts most of us keep there, the lack of FDIC shouldn't cause any loss of sleep.

I used the same approach (i.e had a SPAXX position within the CMA account all along). Just switched it all to SPAXX - thanks for starting the thread!

 

[Healthy Lifestyle]

Rather than SPAXX, I use FDLXX (Fidelity Treasury Only Money Market Fund) for cash because I live in a state that taxes income and I can deduct a much larger portion of the distributions, which were 90.39% from U.S. govt securities in 2023. But, as the OP mentioned this is not a default core position choice so I must manually purchase shares of the fund, which is a bummer.

After I purchase it, it works just like any core fund; any purchases or withdrawals will automatically deduct from FDLXX, but this is only the case if my core fund balance is $0.00. Fidelity's order of withdrawals is to pull from the chosen core fund first and then any remaining balance from other money market funds in your account.

If I used SPAXX, my state tax deduction would have been 41.18% of distributions. So, FDLXX is better for me from a state tax perspective.

Fidelity Tax Equivalent Yield Calculator

Taxable-Equivalent Yields for Individual Bonds

Fidelity's 2023 Percentage of Income from U.S. Government Securities-

https://www.fidelity.com/bin-public.../documents/TY23-GSE-Supplemental-Letter.pdf[/

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Rather than SPAXX, I use FDLXX (Fidelity Treasury Only Money Market Fund) for cash because I live in a state that taxes income and I can deduct a much larger portion of the distributions, which were 90.39% from U.S. govt securities in 2023. But, as the OP mentioned this is not a default core position choice so I must manually purchase shares of the fund, which is a bummer.

After I purchase it, it works just like any core fund; any purchases or withdrawals will automatically deduct from FDLXX, but this is only the case if my core fund balance is $0.00. Fidelity's order of withdrawals is to pull from the chosen core fund first and then any remaining balance from other money market funds in your account.

If I used SPAXX, my state tax deduction would have been 41.18% of distributions. So, FDLXX is better for me from a state tax perspective.

Fidelity Tax Equivalent Yield Calculator

Taxable-Equivalent Yields for Individual Bonds

Fidelity's 2023 Percentage of Income from U.S. Government Securities-

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/TY23-GSE-Supplemental-Letter.pdf

How are the % state tax exemptions accounted for when filing your taxes?
Is it identified on your 1099?

 

[mrfeh]

How are the % state tax exemptions accounted for when filing your taxes?
Is it identified on your 1099?

No. You need to be aware of this as the tax filer and enter the deduction yourself.

 

[Dtail]

Yeah, tried using Full View...didn't like it.

Same here. Just use an aggregator concept manually only for the FIDO calculator.

 

[nassa]

http://

How are the % state tax exemptions accounted for when filing your taxes?
Is it identified on your 1099?

No, in my experience this is a manual calculation the taxpayer must be aware of and do themselves, similar to the foreign tax credit. Directions for how to do the calculation are at the top of the first page in the PDF document I linked to in my prior post (#44).

Looking at my 2023 Fidelity 1099, there's no mention of the % of distributions from govt. obligations. When tax time rolls around, I have to hunt and find that PDF document on the Fidelity website as they don't send it and don't refer to it anywhere.

For Vanguard, where I had a brokerage account in 2022, on the 1099 I do see they show the % of govt. income for a fund I was invested in buried at the end on the same page where they provided the foreign tax credit information. But, one still needs to do the math to come up with the credit amount.

I use TurboTax and discovered that even though the automated walkthrough asked me for the amount of the self-calculated US govt obligations credit as part of the federal return process, it did not apply it to my state return. I had to manually add that on the form.

 

[madatrub]

Good post. Changed mine today.