What to know about money market funds
Running Point and its chief investment officer, Michael Ashley Schulman, CFA were quoted by U.S. News & World Report in an article — by reporter Tony Dong, “5 Best Charles Schwab Money Market Funds” — regarding efficient and effective money market funds on the Charles Schwab platform.
Cash and cash equivalents
Consider your financial goals and needs when choosing between CDs and other alternatives for your cash like money markets, savings accounts, and government bonds (T-Bills and Treasuries). If you seek easy access to your money and want to make withdrawals, a money market might be a solid choice and may offer you a higher interest rate than most bank savings or checking accounts.
If you are unsure about what to choose, consider seeking advice from a multifamily office or fiduciary who can provide you with personalized recommendations based on your financial goals and risk assesments.
More than a million dollars?
If using a Schwab money market and investing more than $1 million, know that Schwab has sister funds to its main money market funds that have a slightly higher yield for those that can initially purchase $1 million or more.
Quoted article excerpts are below:
“Ask whether you’re seeking to maximize yield from your money market fund and therefore are comfortable with it investing in more exotic short-term asset-backed securities and commercial paper, or want to focus on a ‘risk-off’ style safety with a concentration on U.S. government-backed securities,” says Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
“Consider what is inside your money market fund – i.e., what the money market invests in,” Schulman says. “For example, Treasury bill income is not subject to state income tax, whereas some of the higher yielding money market accounts that invest in short-term corporate securities will be, which can make a noticeable after-tax income difference for people in high tax states like California or New York.
“If paying taxes is the main concern, then you may want a municipal money market fund where the majority of income won’t be subject to federal income taxes,” Schulman says. The Schwab fund to pick for this role is SWTXX, which like the previous options also charges a 0.34% expense ratio, but otherwise differs in notable ways when it comes to tax efficiency.
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-24-10