Best Schwab Money Market Fund to Invest in 2021

Best Schwab Money Market Fund

Investors find money market funds attractive because they come without unnecessary load or burden, such as entry charges or exit charges. Investors only prefer to invest substantial amounts of cash in money market funds for a short-term period because such funds are not suitable for long term investment goals like retirement planning.

What Is a Money Market Fund?

Money market funds are also referred to as money market mutual funds. A money market fund is a mutual fund that puts investments in highly liquid, near-term instruments. Examples of these instruments are cash, cash equivalent securities, and high-credit-rating, debt-based securities with a short-term maturity like the U.S. Treasury Bills.

Managing money market funds entails working on a highly stable asset value through liquid investments while at the same time paying investors in the form of dividends. Hence, money market funds offer high liquidity to investors with a very low-risk level. Although not quite as safe as cash, money market funds are considered extremely low-risk on the investment spectrum.

Do not confuse the Money Market Fund with Money Market Account (MMA). The former carries no principal guarantee while the latter, being insured by the Federal Deposit Insurance Corporation (FDIC), has transaction privileges. MMA is a type of interest-earning savings account that is offered by financial institutions.

How Does a Money Market Fund Works?

Like an ordinary mutual fund, money market fund issues to investors some redeemable units or shares. Investors are protected in the sense that money market funds follow certain guidelines promulgated by the authority, such as the Securities and Exchange Commission or SEC.

A money market fund generates income (taxable or tax-free, depending on its portfolio) but little capital appreciation. Money market funds should be used to park money temporarily before investing elsewhere or making an anticipated cash outlay; they are not suitable as long-term investments.

There are many debt-based financial instruments where a money market fund may invest. Here are some examples:

· Commercial paper.

This is an unsecured short-term corporate debt as any form of collateral does not back it. Commercial paper is usually used to finance short-term liabilities such as payroll, inventories, and accounts payable. The maturity of commercial papers does not take any longer than 270 days.

It is typically issued at a discount from face value, and it usually reflects the prevailing market interest rates.

· Bankers’ Acceptances (B.A.).

These are short-term debt that is guaranteed by a commercial bank. B.A. is a negotiable instrument that functions like post-dated checks work, although it is the commercial bank and not the account holder that guarantees the payment. It is traded at a discount to face value in the money markets.

· Repurchase agreements (Repo).

These are short-term government securities. Dealers sell government securities to investors.

The transaction usually takes place on an overnight basis. These dealers buy back these government securities the following day at a slightly higher price. The gap in the selling and buying price is what they call the implicit overnight interest rate.

It is for this reason that repo is good when it comes to raising short-term capital. The central bank also uses repo to aid open market operations.

· U.S. Treasury Bills.

These are short-term government debt issues.

· Certificates of Deposits (CD).

Banks issue these with short-term maturity. Banks and credit unions offer a CD. CD provides an interest rate premium in exchange for the customer agreeing to leave a lump sum deposit untouched for a predetermined period.

Although almost all consumer financial institutions offer CD, it is the sole discretion of each bank that CD terms it wants to offer, how much higher the rate will be compared to the bank’s savings and money market products, and what penalties it applies early withdrawal.

Types of Schwab Money Market Funds

Money market funds are classified into various types depending upon the class of invested assets, maturity, and other attributes.

Different Schwab Money Market Funds prioritize liquidity, current income, and stability of capital. Some of their common features include having no transaction fees for buying and selling, a minimum investment of as low as $0, and access to tax-exempt money funds. Schwab Money Market Funds give investors a convenient way to access potentially higher cash yields because of these common features.

1. Prime Money Fund

Schwab Prime Money Funds are taxable.

These funds invest in high-quality, short-term money market securities issued by the U.S. and foreign entities, including financial institutions, the U.S. government, and other corporations.

As of December 02, 2020, the 7-day yield (with waivers) of Prime Money Funds like the Schwab Value Advantage Money Fund “Investor Shares” (SWVXX) is 0.03%. The minimum initial investment of this type of Prime Money Fund is $0.

Take note, however, that although the Fund’s Investor Shares have no initial investment minimum, Schwab systems require the minimum payment of $1 per transaction or trade. These minimum initial investments are subject to change. It is, therefore, advisable to check Schwab’s website for these potential changes.

2. Government and Treasury Fund Money Fund

Government and Treasury Fund Money Funds are also taxable.

These funds invest in short-term U.S. government debt securities. A government money fund invests at least 99.5% of its total assets in cash, government securities, and repurchase agreements that are fully collateralized by cash or government securities.

There has been a 0.01% 7-day yield (with waivers) as of December 02, 2020. Likewise, various Schwab Government and Treasury Fund Money Funds require a minimum initial investment of $0, but there are also those that require $1,000,000.

3. Municipal Money Fund

Lastly, Schwab Municipal Money funds are tax-exempt.

These funds invest in short-term municipal money market securities issued by states, local governments, and other municipal agencies. Municipal Money Fund qualifies as a retail money market fund, which means that it is available for investment by natural persons only.

When the shareholder fails to satisfy eligibility requirements for a retail money market fund (for example, when the shareholder is not a natural person as required), the Schwab Municipality Money Fund reserves the right to involuntarily redeem a shareholder’s shares after providing 60 days’ written notice.

Moreover, the fund may also deny the purchase of Fund shares.

For those Schwab Municipal Money Funds that require a minimum initial investment of $0, there has been a 0.01% 7-day yield (with waivers) as of December 02, 2020. Moreover, a 7-day taxable equivalent yield of 0.02% was recorded on the same date.

Schwab Money Market Fund by Category

Before going over the different Schwab Money Market Funds, know what the following means:

The 7-day yield refers to the average income paid out over the previous seven days assuming interest income is not reinvested, and it reflects the effect of all applicable waivers.

The taxable-equivalent yield in the Schwab Municipal Money Funds Table assumes a federal regular income tax rate of 40.80%, which includes a Medicare surcharge rate of 3.8%. Take note, however, that your tax rate may be different.

Schwab Prime Money Funds
Fund Name 7-day yield (with waivers)as of 12/2/2020 Minimum initial investment
Schwab Value Advantage Money Fund® Investor Shares (SWVXX) 0.03% $0
Schwab Value Advantage Money Fund® Ultra Shares (SNAXX) 0.03% $1,000,000
Schwab Government and Treasury Money Funds
Fund Name 7-day yield (with waivers)as of 12/2/2020 Minimum initial investment
Schwab Government Money Fund – Investor Shares (SNVXX) 0.01% $0
Schwab Government Money Fund – Ultra Shares (SGUXX) 0.01% $1,000,000
Schwab Treasury Obligations Money Fund – Investor Shares (SNOXX) 0.01% $0
Schwab Treasury Obligations Money Fund – Ultra Shares (SCOXX) 0.01% $1,000,000
Schwab U.S. Treasury Money Fund – Investor Shares (SNSXX) 0.01% $0
Schwab U.S. Treasury Money Fund – Ultra Shares (SUTXX) 0.01% $1,000,000
Schwab Municipal Money Funds
Fund Name 7-day yield (with waivers)as of 12/2/2020 7-day Taxable Equivalent Yields Minimum Initial Investment
Schwab Municipal Money Fund – Investor Shares (SWTXX) 0.01% 0.02% $0
Schwab Municipal Money Fund – Ultra Shares (SWOXX) 0.02% 0.04% $1,000,000
Schwab California Municipal Money Fund – Investor Shares (SWKXX) 0.01% 0.02% $0
Schwab California Municipal Money Fund – Ultra Shares (SCAXX) 0.01% 0.02% $1,000,000
Schwab New York Municipal Money Fund – Investor Shares (SWYXX) 0.01% 0.02% $0
Schwab New York Municipal Money Fund – Ultra Shares (SNYXX) 0.04% 0.07% $1,000,000

Which Schwab Money Market Funds is right for you?

Schwab reminds all money fund investors to consider the information contained in the money fund prospectus, or if available, the summary prospectus that includes investment risks, objectives, charges, and expenses.

Besides considering what information is written in the money fund prospectus, you can directly request a mutual fund prospectus by calling Schwab at 1-800-435-4000 to choose the right Schwab Money Market Fund. Once the mutual fund prospectus is provided, make sure to review all the details contained therein to assess the fund’s strengths and weaknesses fully. After doing so, you may confidently choose which Schwab Money Market Fund is the right one for you.


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8 Best Charles Schwab Index Funds for Your Investment Portfolio

8 Best Charles Schwab Index Funds

A lot of investors could testify that the Schwab index funds have always been one of the main choices for those who would want long-term investments. Throughout the decades, the Schwab index funds as an institution has evolved to become even more attractive to investors than ever before.

The fund now offers a wide array of index funds, from equities in the country, up to international stocks that have very low and competitive expense ratios.

But what is the Charles Schwab anyway and how can this help my financial portfolio as an investor? In this article, we will tackle its offerings, its differences with other index funds, and which type of Charles Schwab in the stock market would best suit your portfolio development interests.

8 Best Charles Schwab Index Funds for Your Investment Portfolio

1) Schwab S&P 500 Index Fund (SWPPX)

The Schwab S & P 500 Index Fund is one that gives investors returns of over 13% in a decade-long period. Engaging with the Schwab S & P 500 index fund SWPPX is also known to be more affordable for investors than with so many competing funds. The expense ratio for this is relatively small, as capped at 0.02%.

2) Schwab Total Stock Market Index Fund (SWTSX)

This Schwab total stock market index fund gives investors exposure to the US stock market index as a whole from small to large cap stocks. You can even own more than 3,000 stocks just by purchasing one of the many mutual funds, because asset allocation is based on the capitalization of the market.

With an expense ratio of 0.03%, along with very low management expenses, you can lead to a larger return in the long run.

3) Schwab 1000 Index Fund (SNXFX)

If you are more interested in mid to large cap funds and not really the small cap index fund, then the Schwab 1000 index fund is something that you can consider. It is similar to the S & P 500 index, but it allows the inclusion of 500 stocks more (hence 1000).

4) Schwab Small Cap Index Fund (SWSSX)

The Schwab Small Cap Index Fund, as the term implies, tracks small-cap indexes, and comprises 1,992 stocks.

Over the recent decade the SWSSX benefitted investing individuals with annual returns of 12.63% and with a 9% average since 1997.

The expense ratio for this is at 0.04%.

5) Schwab Fundamental US Large Company Index Fund (SFLNX) 

The Company Index Fund brought about by the SFLNX has given so much success stories for investing individuals. It lessens the exposure to U S large cap stocks in the market that may have already surpassed their value based on fundamentals. It also promotes reallocation automatically based on fundamental measurements.

Furthermore, the portfolio of the fund portfolio has a higher turnover than with an S P 500 index mutual fund. The expense ratios for this is usually high and pegged at 0.25%, but is still below average than the other actively managed mutual funds out there in the broad market.

6) Schwab Fundamental US Small Company Index Fund (SFSNX)

Opposite to SFLNX discussed above, this index fund focuses on small companies, some of whose brands are the ones might not be familiar to you yet. The fundamental reallocation strategy of SFSNX is one that lessens the exposure to those stocks that may have run themselves in the market a bit too fast and too far. For reallocation, the investment of the funds then focuses on stocks that may seem to have less value based on the fundamentals they come along with.

If you engage with this fund, you will expect to pay the same expense ratio to that of the SFLNX at 0.25%, which is again lower than the average mutual fund that is actively managed.

7) Schwab Fundamental International Large Company Index Fund (SFNNX)

This bond index fund is one that focuses on tracking international companies. The funds comprise the biggest international companies, where approximately 25% of the investments are from those in Japan, while 16% of the pie are for companies that are based in the UK.

With an expense ratio of 0.25%, you can get a price to earnings ratio of 12.66%!

8) Schwab Fundamental International Small Company Index Fund (SFILX)

Lastly, the SFILX is a Charles Schwab Fund that gives concentration on the international investments of developed countries. With this, you can expect to have higher turnover with small cap low cost index funds.

The expense ratio is pegged at 0.39% which is competitively lower than the other funds, and comes with a better performance at 2.34% for yield.

Is Charles Schwab Index Funds right for you?

If you would want to stay competitively in the stocks market then the Charles Schwab Funds is definitely right for you. With low cost and operational expense ratios, you can definitely expect better ETF returns even amidst emerging markets.

About Charles Schwab

Founded in 1971, the Charles Schwab corporation is one that really made a remarkable name in the world of investment. It started out as an investment newsletter service which evolved into a broker-dealer institution.

After having adapted to various external factors and economic evolution, the corporation now has more than 350 brokerages throughout the country. Today, the company provides investment services that come along with more than 50 funds and ranks as the top 3 largest mutual funds companies on the basis of assets under management.


The mission statement of the company clearly points out how they promised to empower individuals who would want to invest and engage in the economic market.

To achieve this promise, they have come up with various offerings and services to all those who would want to be a part of the economic system.

Let’s talk about these services and the accounts that come along with them:

1) Brokerage accounts

As founded in retail brokerage services, Schwab has been renowned to bring services that the average investor can expect. Today, they have these both in online accounts, as well as offline–in retail branches.

They offer brokerage accounts with trades as low as zero dollars to keep investing very much financially affordable for pretty much everybody. A lot of brokerage accounts in this company do not require a minimum initial investment to start your money rolling.

Designing their brokering services this way has made investing accessible to all, but also cost-efficient as well.

2) Trading solutions

Brokerage accounts are not the only ones being offered, but research tools and an easy-to-use trading platform are also being offered. With these, market data and other relevant information are now at the fingertips of investors, empowering even more than ever.

They offer research through the website, and through their mobile app, which gives you the informed choice you will be needing whenever you are out there trading.

3) Automated Investing

If you would want to engage in the stock market but put your hands off from it, this company has made it possible for you to do so. Your investment growth can now be fully automated with their automated investing feature, where you can set up automatic reinvestments so that your earnings and other dividends have the room to grow in your registered and nominated account.

The company also offers robo advisors which serve as an automated financial manager that can help you build your financial profile and keep you diversified in the market. It also rebalances the numbers in your account whenever deemed necessary so that you can easily track the growth of your planted seeds.

A lot of investors who have other agenda throughout their regular day opt to choose to have their investments automatically monitored. All you have to do is to wait and witness your account grow as it is being overseen by an automated expert.

4) Schwab Global Accounts

Nobody wants to get encased just in the domestic stock market. This is why Schwab has evolved into creating global accounts, which have given investors access to the leading accounts in the worldwide stock market–all at the tap of your fingertips.

As an investment company that stands true to their principle on accessibility, no minimum investment capital is required (meaning no trade minimum and no account minimum). This opens so many doors to the leading markets across the globe.

5) Education Savings Accounts

As parents, students, and young professionals, we all probably know by now how much high and expensive educational costs are. This is why the company has created service products for investors to save solely in the context of education even from kindergarten until college.

These education savings accounts are really designed for you to be able to save money for the future. For example, when you withdraw from your ESA (educational savings account), you won’t have to pay for taxes when it comes to qualified education expenses. You won’t have to pay for an account minimum to start investing in this fund.

Make sure that when using this fund, you can save more when you spend it on “allowed expenses.” Such expenses include, but are not limited to, tuition and school supplies.

6) Retirement accounts

Of course, you can expect that retirement investment accounts is one thing that will never go missing from the Schwab suite. You can choose between Roth IRA or a traditional IRA in Schwab’s retirement account service, or you can even start with a “Rollover IRA” so that you can transfer your retirement funds from another source, and into your portfolio with Schwab.

If you are a self-employed individual, than a Simple IRA or even a SEP IRA are one of the many efficient ways to plan for your future when it comes to their retirement accounts and investment products, including the Schwab health care fund.

Bottom line

The Schwab Funds come with a wide array of tools, services and investment products. Even if it does not have as much funds as the other companies, your needs could still be met because of the variety of their cap stocks products and their very competitive expense ratio.If you would want to know more about mutual funds or the securities index fund industry, then know that Investorialist is your go-to website for so many references. Known as one of the best financial websites out there, Investorialist is really one that will equip and empower average stocks investors like you!