Vanguard Brokerage Settlement Accounts and Cash

jsaldutti

If setup correctly, should transactions resolve themself without any additional entries?
I understand there is a settlement period but my MMF is neg and cash is positive resulting in $0

scampsrp

The Cash should be negative after purchasing stocks or mutual funds. Vanguard will sell the Vanguard MMF dollars after the sale settles (usually 2 days later) -- so you go from Negative Cash to $0.00 Cash.

Conversely, if you are selling then the Cash would be positive until VG purchases the Cash (usually 2 days later) and puts it back into the MMF -- so you go from Positive Cash to $0.00 Cash.

Tom Young

"If setup correctly, should transactions resolve themself without any additional entries?"

Not sure exactly what you're asking here, but it suggests to me you're relying entirely on downloads to enter transactions into your transactions list which is not "best practices" in my opinion but certainly can work fairly well if the financial institution (FI) is sending properly formatted information.  ("Corporate actions" - mergers, acquisitions, spin-offs, etc. - is where many FIs drop the ball.)  Correct me if I'm wrong.

Quicken doesn't natively handle settlement period issues.  If you sell or buy a security the actions involved - Sold and Bought - immediately affect cash even though the cash isn't literally removed from your account at that instant.  Accordingly, depending on the transaction being entered you can end up in the situation you describe, assuming the net $0 position is the correct point you'll obtain after settlement.

Frankx

Hi @jsaldutti,

You should be able to download transactions which will completely record the buy and sell transactions, as well as the withdrawal/reinvestment of the investment/sales proceeds and any other expenses of the brokerage transactions (if any).  Unlike most other brokerages, Vanguard brokerage accounts do contain cash balances - instead any cash that may be uninvested in the brokerage is swept to a designated "settlement fund".  You make the choice of which Vanguard fund to use as your settlement fund.

If your brokerage account is now showing a negative value in your money market "sweep" holding in Quicken and "cash" in the brokerage account, that means that a "buy" transaction has not been recorded in the account.  To fix that, you need to download or enter a "buy transaction" in your Vanguard brokerage account in Quicken to reflect the purchase of shares in the "MMF" that is the "sweep" investment. 

Get back to me with any followups.

Frankx

q_lurker

I should point out in the response from @Frankx, he referred specifically to Vanguard Brokerage accounts. That is also what the opening question referred to. 

Vanguard Mutual Fund accounts do (in my experience) properly sweep in and out of MM funds. Vanguard continues to be moving toward Brokerage accounts for everything, though. 

Bob_L

FWIW, Vanguard's "upgraded" brokerage accounts require the settlement fund to be the federal money market fund.  (Under the previous structure you could designate a sweep account.)