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Treat Money Market as cash; Yes or No?

I would like to hear expert comments on the best practices, pros & cons, and challenges of enabling the treatment of Money Market settlement funds as cash in the investment accounts.

Currently I am not using this feature, so my Quicken accounts' cash balance is zero and is shown in the funds instead: Vanguard DC (VMFXX) and Schwab EWC+ (SWVXX). My setup is complete investing and I do not want to show the cash in a checking account. I have both taxable and retirement sub accounts.

Yesterday I setup a test file with just a single Vanguard account, QIF imported the transactions and then setup online downloads, and enabled VMFXX to be treated as cash. I see that the process changes the original nature of the existing transactions (i.e. ReinvDiv > Div) and deletes some others, hence I cannot get those transactions back if I later change my mind - it's a commitment.

On my own, it will probably take months to determine the full ramifications, which is why I'd appreciate your comments in order to make an informed decision. Thank you.

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dpags

I am in investment operations. I treat money market as cash in my Quicken. The advantage is that you ignore all of the buys and sells of money market at 1,00 so it cuts down on the transaction noise. This can be especially helpful if you have a lot of transactions. The only disadvantage in my view is that you will not exactly match the custodian statement as they would show money market and maybe cash that would match to your total cash balance.

NotACPA

For my wife & I, our respective taxable brokerage accounts use the "Show cash in a checking account" option … these are our primary checking accounts.

Our other accounts have so little cash/MMF (literally, pennies) that we just show that as cash.

Sceptic

@BK I asked copilot your exact question. It produced a lot of great information from Quicken Help & Quicken Support. I found the summary table it produced very informative and concise.

Choice	Best When	Pros	Cons	Risks
Treat MMF as Cash	Brokerage uses MMF as sweep cash; no Buy/Sell downloads	Clean register; simple reconciliation; automatic dividend tracking	No MMF shares; limited performance detail	Transaction deletion if switching back; possible mismatch if brokerage reports shares
Track MMF as Position	Brokerage reports MMF as a security with transactions	Full visibility; accurate performance; aligns with brokerage statements	More clutter; more reconciliation steps	Cash balance may diverge if brokerage treats MMF as sweep

Chris_QPW

Good description.

For switching back I wouldn't say "possible", I would say 100%.

Whereas Quicken can quite easily delete any buys/sells/dividend transactions for the given security that are already in the account, it wouldn't have anything to rebuild them if you switched back. So, you would definitely lose that history. One the other hand if all was needed is for it to be right in the future then removing the cash with a MiscExp and an add shares would do that.

Thank you and thumbs up to everyone. So far no negatives. I'll give it a few days to see if there are other responses and will then accept all answers. Keep'em coming please.

ptladasue

I treat all our MMF as cash. Works for us and keeps it simple. Each month I leaf in the comments the number of shares and price.

I would like to make one update to my original post. Unlike Vanguard and Fidelity, Schwab's money fund (like SWVXX and a few others) is not a sweep settlement fund. All buy & sell proceeds come and go thru cash at Schwab. There is no auto-sweep like the other guys, hence a customer must manually trade between cash and the money fund if they wish, which will settle the next day. I hope I got this right.

Searching the community there are a few reports of mismatch when compared to the 'Online Center' specific to Schwab. So perhaps treating Schwab's money funds as cash may not be the best approach for everyone depending on how much cash there is and their view.

My personal view: If I have $900 in SWVXX + $100 in cash, and Quicken shows that my cash balance is $1,000, that is misleading - because my purchasing power today is only $100. I cannot buy a $500 stock today. First I need to sell SWVXX and wait a day for the $ to become available as cash, before I can buy my desired stock the next day.

So to partially answer my original post, treating Schwab's money funds as cash in Quicken would not be my preferred approach.

John_in_NC

You answered your own question. It really depends on how the fund is being handled at your brokerage.

For MMFs that are completely liquid and require no intervention from me, I prefer they show as cash. Some of this "cash" doesn't even show as a MMF, even though it is behind the scenes.

On the (typically higher yield MMFs) that require me to call my broker to sell off shares to access the cash, then I prefer they show as a holding of a security. That way, there is no confusion about my immediately available cash. It won't be part of my running balance in the register.

Chris_QPW

I'm curious if SWVXX with Schwab actually shows in Quicken as allowing "Show as cash"?

Even after they have allowed this there has never been an explanation of how Quicken decides what securities should be treated this way.

In the past, Quicken Windows would allow a single MMF to be treated this way, but only based on something that was coming from the financial institution. As in, it was sort of rare that you could do it at all and only for one. Chase for instance, which uses multiple securities like this would keep asking to switch back and forth between the "pending" and "closed" ones on trades.

Then they implemented this new system, or maybe even more correct they extended the old system (and I believe it is new to Quicken Mac).

Originally there was an idea to allow the user to pick any security and treat it as cash, but clearly that didn't happen, instead there is the mystery picking system.

On the general subject, in the past you ended up with these three situations:

Financial institution didn't have a sweep account. As such there would certainly not be a way "not to treat it as cash".
The financial institution sweeps the cash in and out of a MMF, but Quicken didn't give you the choice to treat it as cash. A user could manually delete the sweep transactions and it would all just go to the cash balance, but that would be a pain, so the suggestion was to just leave it, but note that there were financial institutions that wouldn't do the "sweep" until the trade closed and as such you could have negative balances.
And then the rare case where Quicken did allow you to treat the security as cash which basically just deleted those sweep transactions for you. This what they recently "extended".

I'm curious if SWVXX with Schwab actually shows in Quicken as allowing "Show as cash"?

Yes, SWVXX with Schwab is allowed. I just double checked.

In the past, Quicken Windows would allow a single MMF to be treated this way, but only based on something that was coming from the financial institution.

Now it allows more than one and I don't know if there is a limit. Look at this. The second line only appears when there is more than one qualified money fund that meets their unknown criteria. Otherwise it is only the first line. ~~One can add known 4-5 money funds in a test file to see if the list grows (or maybe it requires matching with online account)?~~ EDIT: Seem to require online matching so I couldn't test it.

Chris_QPW

Thanks for the information.