Vanguard Adds Same-Day Trading for Bank Transfers
It’s no secret that I love Vanguard. In fact, with the exception of two employer-related retirement accounts that are held at Fidelity, we do all of our investing at Vanguard. I was thus pleased to see that they’ve added the ability to make same-day mutual fund trades when transferring money in from a linked bank account.
Same-day trades with electronic bank transfers
Now you can get today’s trade date if you use our electronic bank transfer service to buy a Vanguard mutual fund. Just submit your request on business days before the close of regular trading on the New York Stock Exchange (generally 4 p.m., Eastern time) and you’ll receive that day’s closing price.
They’ve apparently been rolling this out gradually for awhile but, as of last week, it’s available to everyone. While the vast majority of our investing happens through automatic (pre-scheduled) transfers, it’s certainly nice to have a bit of added flexibility.
The old rule was that, if you bought (with outside funds from a linked bank account) by 10PM Eastern on a particular day*, you’d get the next day’s trade date (and closing price). Thus, if you wanted to put new money into the market on a particularly bad day, your cash already had to be at Vanguard, presumably sitting in a money market fund.
The problem with this is that money market mutual funds are currently paying a pittance — just 0.03% for the Vanguard Prime Money Market as of this writing. While bank interest rates aren’t exactly high, you can do way better than 0.03% with an online savings account.
In essence, Vanguard is now trusting that your funds transfer request will clear without any problems. Given that trades don’t technically settle for three days, they’ll still have your money (or not) before the settlement deadline. This change brings them in line with many other brokers who have been offering this level of service all along.
*Note: As always, exchanges between funds occur on the day you place the order, as long as you place it before the market closes.
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Modified on October 7th, 2011 - One Comment
Filed under: Saving & Investing
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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September 28th, 2011 at 11:13 am
While much of your commentary, research and ideas are worthy, I find the area of “related articles” to be dangerous. Many of them refer to rates and ideas that are so outdated, that if one isn’t careful, one can blunder into a regreted mistake. I strongly suggest you attach dates to the right of and items put in the related articles ….. it will eliminated wasted time looking at for instance a MM rate from years ago that isn’t applicable for today….who cares about rates from years ago !!!..Thanks for letting me sound off.