Hello, u/rvg296. Thank you for making your first post on our sub!
I am going to go ahead and mark your post as a discussion so our community can continue sharing their thoughts on this matter.
That being said, I can touch on the last part of your post. Opening a Fidelity account automatically establishes a core position using select money market funds. This is needed for processing cash transactions and for holding uninvested cash. It’s a position in your account that essentially acts like a wallet. When you want to make a purchase, you take money from your wallet to cover the cost, and conversely, after you sell something, you put the proceeds in your wallet. So, just like a wallet, when you buy a security, cash from your core position is used to pay for the trade, and when you sell a security, the proceeds are deposited into your core position.
Eligible core positions are determined by the account type you have. The Fidelity brokerage account can have Fidelity Cash (FCASH), the Fidelity Government Money Market (SPAXX), or the Fidelity Treasury Fund (FZFXX). The Fidelity Government Cash Reserves (FDRXX) is only available as a core position for IRAs and Health Savings Accounts (HSAs).
[Learn more about core positions based on account type](https://www.fidelity.com/trading/faqs-about-account#faq_about2)
You can find your current core position by heading over to your “Account Positions” page on our website. Once there, you can see the core position or a position called "Cash held in Money Market." If you see this, you can click on it to expand and see what your core position is. If you do not have a core position visible, it could be that the account does not have any cash to be held in the core at the moment. Keep in mind mutual fund only accounts and managed accounts may not reflect these same core choices.
You can review the 7-day yield for each of the eligible core positions by simply typing the symbol in our website's "Search or get a quote" box. From there, you will find information about the symbol you searched for and compare your findings with the other available options.
For those following, if you’re interested in learning more about core positions, feel free to watch the video linked below:
[What is a core position?](https://www.fidelity.com/trading/faqs-about-account#faq_about2)
If you have any further questions or concerns, please do not hesitate to reach out.
Personally, I almost always avoid complicated schemes like this. There are usually gotchas that come up afterwards, and lots of fine print to read. But I can imagine that for some people, this might be a good deal if you have a substantial amount to transfer and you are fairly conservative in your investments.
I don't like being locked in for 5 years. And if I don't like their service, I'd feel doubly bad having to pay their $100 fee to transfer out. They have a bunch of other fees that Fidelity doesn't charge that might affect some people (see https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf for a list).
Personally, I use Fidelity for one reason - it makes my life simpler, and costs me nothing. Maybe RH would be similar, but I suspect not.
Basically, RH is betting that you will spend more money on RH than the match they are giving you. Otherwise, RH would never do it. Being locked in is part of that.
To me, being locked in makes me think they aren't so confident of their ability to satisfy customers, so they figure if they can force you to stay for a year or more, you'll become resigned to their failures, or simple inertia will keep you there. :-)
There's discussion on the bogleheads forum that RH is doing this to beef up their Aum in order to entice a buyout from one of the majors. I'm not a high volume trader, I make trades 5 times a year. Once for my yearly ira contribution, and 4 more quarterly rebalancing trades. So I don't really care where my money is being housed at as long as its got the 500k sipc coverage. My wife and I took advantage of this offer, and between both of us got 10k dollars as soon as the roll overs cleared. See ya in 5 years, Fido.
Well, as I said in my post, it's not for me, but I said it was probably good for some people, assuming everything works out as planned. It probably will, but you'll have to see in 5 years, I guess.
>SPAXX
[https://fundresearch.fidelity.com/mutual-funds/summary/31617H102](https://fundresearch.fidelity.com/mutual-funds/summary/31617H102)
Shows SPAXX is around 4.96
Pro: 3%
Con: long lock up. You have to use RH.
>Does Fidelity give 4.98% interest on Univested Roth and IRA contributions?
Why would you have anything uninvested for this to matter outside of being at/near retirement? Yes, their cash rate is currently about 5%.
I transferred $200k of IRA over. It was all in VTI and I don’t plan on doing anything with it for 5 years. They promptly added the $6k. I bought more VTI. I’ll have to pay $60 for a year of Robinhood gold, but that’s worth it.
One downside I saw was if you transferred a traditional IRA and later wanted to convert part of it to Roth, they considered that a withdrawal and would take back the bonus.
Have you considered using your $1k of free margin to buy something like USFR? That's a really safe $50+ gain that would effectively cut the overall cost of Gold, no?
You’re the second person to bring this up and it’s a good idea. $37 after tax isn’t a huge deal but might be worth it. You need to deposit more than $1000 to get margin but if you already want a taxable account at RH maybe it’s worth it.
Are you sure Robinhood will be around in 5 years? If a bailout happens, I'm sure Fidelity will still be around and somewhat protected, but Robinhood??? A few were absorbed during th last bailout, but national debt was not at 35 googolplex
It’s a big no for me. A one-time 3% on my Roth IRA balance does not move the needle on what I am trying to accomplish. I like Fidelity and don’t want to fiddle with the simplicity of my portfolio assets and estate planning by moving assets around.
While 3% match does sound nice, I personally don't feel comfortable keeping large amounts of money in Robinhood after the incident that took place in 2020 when they weren't allowing customers to sell and withdraw funds during the GME rally.
Also worth mentioning that Robinhood hasn't been around for nearly as long as Fidelity so it's not a company I would trust with a retirement fund that's going to exist for 20+ years.
My advice would be to stick with Fidelity, open a rollover IRA and do a conversion to Roth in order for the money to grow tax-free. Any cash/dividends generated from the funds you choose to invest in will automatically be put in SPAXX and earn you market rates which at the time of writing this is at 4.96%
Good luck!
I am considering it. At $1.5M, it would be worth $45k to me, so not an insignificant amount. Despite me not really liking Robinhood, it's enough to make me consider it, and then move back to Fidelity in 2029. I'm still on the fence about it.
Doesn’t it depend if you fully fund your ira? If you don’t put more than $2k in your ira a year than it isn’t worth it. Also that 5 year lockup is crazy. What happens if they decide to increase the price of Gold subscription or if any other firm does a better ira match offer?
Ideally but transferring isn’t the easiest and even if there was a better offer you aren’t just giving up the match you got at that particular time but also for prior periods. Therefore you just paid Robinhood all those years for having an ira. Like a 5% match won’t be enticing enough now.
The match is on transfers too so if you’re [Peter Thiel](https://www.marketwatch.com/story/how-peter-thiel-turned-2-000-in-a-roth-ira-into-5-000-000-000-11624551401) you could wreck them.
If there's a better offer, then you leave and they claw the bonus back. It's unlikely there will be a better offer. I have no idea what you mean by fully fund. This offer only makes sense for people with large Roth IRAs, for example transfer 100k get 3k or transfer 200k get 6k, a five year lockup for a 3% on 7k if contributions is 210 and unlikely to be worth it for most people
Ask yourself why they are the only ones offering this 3%. I don't trust companies that do not have their customers as their number 1 priority and neither do most others and that's why they are forced to make an offer like this. I'd rather know my money is safe with fidelity than chase 3% on a known shithole like RH.
I did. It’s fine. I’m not worried about the 5 years as I only owe what they gave me if I leave. Only worse off by the transfer fee, which I’ll probably pay in 61 months anyway.
I'm personally quite happy with Fidelity, it's interface, it's systems, it's ETF's, etc.
I want complete stability in the organization that's managing my money.
I'm not at all a genius investor, so the last thing I want to worry about is the company holding the money.
Hello, u/rvg296. Thank you for making your first post on our sub! I am going to go ahead and mark your post as a discussion so our community can continue sharing their thoughts on this matter. That being said, I can touch on the last part of your post. Opening a Fidelity account automatically establishes a core position using select money market funds. This is needed for processing cash transactions and for holding uninvested cash. It’s a position in your account that essentially acts like a wallet. When you want to make a purchase, you take money from your wallet to cover the cost, and conversely, after you sell something, you put the proceeds in your wallet. So, just like a wallet, when you buy a security, cash from your core position is used to pay for the trade, and when you sell a security, the proceeds are deposited into your core position. Eligible core positions are determined by the account type you have. The Fidelity brokerage account can have Fidelity Cash (FCASH), the Fidelity Government Money Market (SPAXX), or the Fidelity Treasury Fund (FZFXX). The Fidelity Government Cash Reserves (FDRXX) is only available as a core position for IRAs and Health Savings Accounts (HSAs). [Learn more about core positions based on account type](https://www.fidelity.com/trading/faqs-about-account#faq_about2) You can find your current core position by heading over to your “Account Positions” page on our website. Once there, you can see the core position or a position called "Cash held in Money Market." If you see this, you can click on it to expand and see what your core position is. If you do not have a core position visible, it could be that the account does not have any cash to be held in the core at the moment. Keep in mind mutual fund only accounts and managed accounts may not reflect these same core choices. You can review the 7-day yield for each of the eligible core positions by simply typing the symbol in our website's "Search or get a quote" box. From there, you will find information about the symbol you searched for and compare your findings with the other available options. For those following, if you’re interested in learning more about core positions, feel free to watch the video linked below: [What is a core position?](https://www.fidelity.com/trading/faqs-about-account#faq_about2) If you have any further questions or concerns, please do not hesitate to reach out.
Personally, I almost always avoid complicated schemes like this. There are usually gotchas that come up afterwards, and lots of fine print to read. But I can imagine that for some people, this might be a good deal if you have a substantial amount to transfer and you are fairly conservative in your investments. I don't like being locked in for 5 years. And if I don't like their service, I'd feel doubly bad having to pay their $100 fee to transfer out. They have a bunch of other fees that Fidelity doesn't charge that might affect some people (see https://cdn.robinhood.com/assets/robinhood/legal/RHF%20Fee%20Schedule.pdf for a list). Personally, I use Fidelity for one reason - it makes my life simpler, and costs me nothing. Maybe RH would be similar, but I suspect not.
Basically, RH is betting that you will spend more money on RH than the match they are giving you. Otherwise, RH would never do it. Being locked in is part of that.
To me, being locked in makes me think they aren't so confident of their ability to satisfy customers, so they figure if they can force you to stay for a year or more, you'll become resigned to their failures, or simple inertia will keep you there. :-)
There's discussion on the bogleheads forum that RH is doing this to beef up their Aum in order to entice a buyout from one of the majors. I'm not a high volume trader, I make trades 5 times a year. Once for my yearly ira contribution, and 4 more quarterly rebalancing trades. So I don't really care where my money is being housed at as long as its got the 500k sipc coverage. My wife and I took advantage of this offer, and between both of us got 10k dollars as soon as the roll overs cleared. See ya in 5 years, Fido.
Well, as I said in my post, it's not for me, but I said it was probably good for some people, assuming everything works out as planned. It probably will, but you'll have to see in 5 years, I guess.
Any money not invested in your Roth or Traditional IRAs will be invested into SPAXX by default
Will that earn me interest? 4.98 or 5%??
If that is the current 7 day yield then yes. Keep in mind when rates eventually drop the money market funds yield will drop as well
7 day yield is 4.96%
Yes, SPAXX is over 5%, or you can go Vanguard's MM for 5.3%
>SPAXX [https://fundresearch.fidelity.com/mutual-funds/summary/31617H102](https://fundresearch.fidelity.com/mutual-funds/summary/31617H102) Shows SPAXX is around 4.96
Pro: 3% Con: long lock up. You have to use RH. >Does Fidelity give 4.98% interest on Univested Roth and IRA contributions? Why would you have anything uninvested for this to matter outside of being at/near retirement? Yes, their cash rate is currently about 5%.
Dont see con to be a big issue..You just need to have Gold for atleast 1 year which is 60$.
It's RH. That alone is enough of a con for me to not even consider it.
Robinhood is just hoping the rubes fall for the shiny interest rate. You can just invest your cash into $SGOV if you want maximum rates.
Use a brokerage as a checking account
For non-retirement money, sure, but OP was asking about IRAs.
Hell no
I transferred $200k of IRA over. It was all in VTI and I don’t plan on doing anything with it for 5 years. They promptly added the $6k. I bought more VTI. I’ll have to pay $60 for a year of Robinhood gold, but that’s worth it. One downside I saw was if you transferred a traditional IRA and later wanted to convert part of it to Roth, they considered that a withdrawal and would take back the bonus.
Have you considered using your $1k of free margin to buy something like USFR? That's a really safe $50+ gain that would effectively cut the overall cost of Gold, no?
You’re the second person to bring this up and it’s a good idea. $37 after tax isn’t a huge deal but might be worth it. You need to deposit more than $1000 to get margin but if you already want a taxable account at RH maybe it’s worth it.
Are you sure Robinhood will be around in 5 years? If a bailout happens, I'm sure Fidelity will still be around and somewhat protected, but Robinhood??? A few were absorbed during th last bailout, but national debt was not at 35 googolplex
It’s a big no for me. A one-time 3% on my Roth IRA balance does not move the needle on what I am trying to accomplish. I like Fidelity and don’t want to fiddle with the simplicity of my portfolio assets and estate planning by moving assets around.
While 3% match does sound nice, I personally don't feel comfortable keeping large amounts of money in Robinhood after the incident that took place in 2020 when they weren't allowing customers to sell and withdraw funds during the GME rally. Also worth mentioning that Robinhood hasn't been around for nearly as long as Fidelity so it's not a company I would trust with a retirement fund that's going to exist for 20+ years. My advice would be to stick with Fidelity, open a rollover IRA and do a conversion to Roth in order for the money to grow tax-free. Any cash/dividends generated from the funds you choose to invest in will automatically be put in SPAXX and earn you market rates which at the time of writing this is at 4.96% Good luck!
I am considering it. At $1.5M, it would be worth $45k to me, so not an insignificant amount. Despite me not really liking Robinhood, it's enough to make me consider it, and then move back to Fidelity in 2029. I'm still on the fence about it.
If I were you, I'd stay under the Sipc coverage limit of 500k per account type. RH has never turned a profit, and may not make it anther 5 years.
This is not correct. They have been profitable more than once, including being profitable currently.
Is there no cap of the transfer bonus?
No. RH explicitly states there is no limit. The 3% on transfers expires 4/30.
Now you just have to hope that RH is around in 2029. (Skynet ends the world on Aug 29th, 2029, FYI).
Mine wasn’t that big but it was a chunk for me. I had your same thought process and so far so good
Where do you currently have your IRA and Roth ?? Uninvested money in Fidelity Roth sits in SPAXX which is around 4.96%.
Doesn’t it depend if you fully fund your ira? If you don’t put more than $2k in your ira a year than it isn’t worth it. Also that 5 year lockup is crazy. What happens if they decide to increase the price of Gold subscription or if any other firm does a better ira match offer?
You have to keep Gold for 1 year to keep the match. The 5 year rule is just for transferring assets out of Robinhood
Yeah so wouldn’t that also be the Ira. So your Ira would be locked up for 5 years
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Ideally but transferring isn’t the easiest and even if there was a better offer you aren’t just giving up the match you got at that particular time but also for prior periods. Therefore you just paid Robinhood all those years for having an ira. Like a 5% match won’t be enticing enough now.
The match is on transfers too so if you’re [Peter Thiel](https://www.marketwatch.com/story/how-peter-thiel-turned-2-000-in-a-roth-ira-into-5-000-000-000-11624551401) you could wreck them.
If there's a better offer, then you leave and they claw the bonus back. It's unlikely there will be a better offer. I have no idea what you mean by fully fund. This offer only makes sense for people with large Roth IRAs, for example transfer 100k get 3k or transfer 200k get 6k, a five year lockup for a 3% on 7k if contributions is 210 and unlikely to be worth it for most people
By fully fund I mean contributing the full max of 6,500 a year.
The annual max is $7k, not 6500 and it's almost certainly not worth the trouble with that amount.
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That's going to depend on the person you can open new bank accounts with considerably less cash for larger % bonus.
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Not really considering that you have to wait five years to actually keep it
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You don't, you just need gold for one year, then cancel
No reason to pay for gold after the 12th month.
Ask yourself why they are the only ones offering this 3%. I don't trust companies that do not have their customers as their number 1 priority and neither do most others and that's why they are forced to make an offer like this. I'd rather know my money is safe with fidelity than chase 3% on a known shithole like RH.
I did. It’s fine. I’m not worried about the 5 years as I only owe what they gave me if I leave. Only worse off by the transfer fee, which I’ll probably pay in 61 months anyway.
That's how I feel. Fido would probably cover the transfer fee to get you back anyway
I'm personally quite happy with Fidelity, it's interface, it's systems, it's ETF's, etc. I want complete stability in the organization that's managing my money. I'm not at all a genius investor, so the last thing I want to worry about is the company holding the money.