My main checking account earns almost zero interest but I don’t want to change. It has plenty of other good features and is already integrated everywhere I need it. Fortunately, it is connected to a brokerage account and for free will cover overages in my checking with my brokerage account. Over the last few months I have played around with this keeping almost zero dollars in my checking account.
When my mortgage check comes out of my checking account and there isn’t enough cash it just pulls cash or creates a margin loan in my attached brokerage account. Honestly it is a pretty nice buffer from Schwab. There were a few times when I had to verify my card somewhere and the merchant said there was no cash in the checking account, but as long as I kept $10 or more in the checking account that seemed to be no real problem. The big downside was constantly having to transfer, sell a little, etc. Schwab’s margin rates aren’t great compared to my other brokers. So it pains me if I have a margin loan with Schwab.
Fortunately, I think I have found a better solution with leveraged ETFs to keep $10,000 in my checking while maintaining an overall allocation of 100% global equities in my checking and attached brokerage accounts.
For now this is the portfolio I have come up with and it allows me to keep about 60% of the value of the assets in cash while getting pretty similar results to VT historically. There are some downsides. There is a bit more volatility and there are some countries that are left out of this allocation when compared to buying VT outright. However, for this scenario of wanting to keep cash on hand but stay invested with global stocks this seems like a sensible solution.
- UPRO 24%
- EURL 12%
- EDC 4%
- BIL/Cash 60%
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