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Money Market in brokerage

Mark256

How am I supposed to account for a money market account that
is within a brokerage account? The money
market really is not a security to be bought and sold. It is the brokerage account cash balance. If I treat it like a money market I will get negative
cash balance. The brokerage downloads
transactions as if dividends are reinvestments of money market. What do you all
do?

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unknown

I have found that it all depends on what transactions the broker downloads.

For Fidelity they don't download transaction for the buying and selling in and out of the money market fund. So for them, I just let it go to the cash balance.

For Vanguard they send the transactions to buy and sell in and out of the money fund, so in that case I just use those transactions and my cash balance is zero, and my "cash for the account" is in that money market fund.

Mark256

If you use the money market as cash don't you have to "buy" MM shares when you receive dividends and "sell" upon purchase of more stock?

unknown

If you use the money market as cash don't you have to "buy" MM shares when you receive dividends and "sell" upon purchase of more stock?

Again that depends on what the financial institution sent (that "action" of the transaction).

Let me show you some examples.
Fidelity.

Image httpsd2r1vs3d9006apcloudfrontnets3_images1768252RackMultipart20181220-81856-7pjp5l-Fid_inlinePNG1545326850

They send just a Div transaction, therefore it just adds to the cash balance.

Now look at what they sent for a "reinvest" in a different fund:

Image httpsd2r1vs3d9006apcloudfrontnets3_images1768255RackMultipart20181220-39764-ok11yw-FidRe_inlinePNG1545327018

So they sent two Div transactions that added to the cash balance, and then sent a buy transactions for the "reinvest".

Now here is Vanguard:

Image httpsd2r1vs3d9006apcloudfrontnets3_images1768256RackMultipart20181220-81856-1bn4i3d-Vanguard_inlinePNG1545327140

They sent a "ReinvDiv" transaction which does the div/buy in one transaction.

But the more I think of it I now know what you are facing.

So back to your original question:

The brokerage downloads
transactions as if dividends are reinvestments of money market. What do you all
do?

I have this problem in my wife's 401K account (Merrill Lynch).

They send all of the dividends as Div transactions. When in fact about once a month they are reinvestments.

So the bottom line is that this is a "coding problem" from the financial institution.
What they are suppose to be sending for a reinvestment is one of the two approaches I show above.

What you need to do to fix the problem is to change the transaction/action type from Div to Reinvest.