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ETrade/Sweep Options?

Discussion in 'Off-Topic' started by theGringo, Mar 6, 2011.

  1. theGringo

    theGringo Member

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    Can any of our investment gurus put this into layman's terms?

     
  2. NHDaveK

    NHDaveK Member

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    I use Fidelity but I think they are referring to the same thing,your sweep account is where funds are added or removed when trades are made.With the current small interest rates in MM's (under .10) I don't think its a big deal which one you chose.My trading account (sweep) varies a good bit but I have been adding to PFF (ETF I shares Preferred )to get the 7% interest (do your own DD it does carry more risk the the MM 's) when it gets in the 5 figures,then put in a stop loss.
    Hope that helps some.
     
  3. mogarbage

    mogarbage Member

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    I've never heard any broker offer stop loss on sweep accounts.
    Sweep accounts can be thought of as a piggybank that earns interest vs the investment half
    Say you carry a balance of $20k in your broker account.
    Of this $20k, at any 1 time, you only like to have 50% invested, or $10k.
    So, what you do is place the $10k you will not invest into the sweep account, and use the other half for your positions.
    Whereas, if you put $10k into stock, and left the other half in the same broker account, it would gain 0 interest.
    You can transfer back and forth, though some institutions do regulate the frequency.

    Commerical accounts interchange the use of sweep and zero balance. The daily transactions sweep nightly, usually from the zero balance account, and reconciled all at once. This allows higher daily balances, decreases fraud, and allows commercial accounts the ability to accrue interest.
     
  4. NHDaveK

    NHDaveK Member

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    Mogarbage,
    Never said it was a stop loss on sweep accounts-please reread my post.I suggested that the very low interest rates that are offered in MM (sweep accounts) are not "my" choice (once I get over 5 figures),I move it into a higher (7%) rate ETF (,presently, PFF)and put in a close stop.Again,do your own DD first,but the interest rate for even small amounts like your example is so low (.10 or lower) you should look at other options.
     
  5. mogarbage

    mogarbage Member

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    Yep, I read it wrong. Trying to clean gun, reply to thread, and catch some news all at once.
     
  6. kurtb

    kurtb NES Member

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    every night they do a "cash" sweep in which the firm takes all of the funds it can (for its investors and itself), and sweeps them into an overnight commercial paper "loan" to another company looking for a super short-term investment. Commercial paper usually has a maturity of only days and the longer the term, the higher interest. However, in your case they are talking about overnight sweeps I would assume because you will probably want your money avaialble the next day to invest (maybe). If you dont use it to invest in somehting else, it will be "swept" again the next night for another commerical paper loan, etc, etc. You dont earn much interest but its better that just having it sit their.
     

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