7-day delay to purchase non-VG funds

[chang]

I transferred $X from my bank to VG to purchase PIMIX. Once the money showed up as "Funds Available to Trade" I tried to place to order - but it would not accept it. Called them on the phone to ask why. I was informed that bank account transfers are held for 7 days before being investable in non-VG funds.

On the one hand, VG beats Fidelity in that you can buy a VG fund directly from funds in your bank account. On the other hand, this situation regarding non-VG funds is definitely a negative. I will end up losing about 10-12 days interest on a large sum.

[Chahta]

Jan 17, 2023 13:45:05 GMT chang said:

I transferred $X from my bank to VG to purchase PIMIX. Once the money showed up as "Funds Available to Trade" I tried to place to order - but it would not accept it. Called them on the phone to ask why. I was informed that bank account transfers are held for 7 days before being investable in non-VG funds.

On the one hand, VG beats Fidelity in that you can buy a VG fund directly from funds in your bank account. On the other hand, this situation regarding non-VG funds is definitely a negative. I will end up losing about 10-12 days interest on a large sum.

Might it be better to buy a VG fund then sell/buy PIMIX?

[chang]

Jan 17, 2023 14:14:51 GMT Chahta said:

Might it be better to buy a VG fund then sell/buy PIMIX?

I probably should have last week, but as they advised me that I can place the trade on Friday, I don't think it's worth it at this point.

[johnsmith]

Jan 17, 2023 13:45:05 GMT chang said:

I transferred $X from my bank to VG to purchase PIMIX. Once the money showed up as "Funds Available to Trade" I tried to place to order - but it would not accept it. Called them on the phone to ask why. I was informed that bank account transfers are held for 7 days before being investable in non-VG funds.

On the one hand, VG beats Fidelity in that you can buy a VG fund directly from funds in your bank account. On the other hand, this situation regarding non-VG funds is definitely a negative. I will end up losing about 10-12 days interest on a large sum.

I can understand this can be frustrating, Sorry you have to go through this.

I believe these are security measures to prevent fraud.

I know that TD Ameritrade will instantly put money in my account, when I do a bank transfer, even though the money is taken out of my bank account a day or two later.

This creates an opportunity for trouble, even more so when one is purchasing external funds, because now Vanguard would be sending money to an external firm, when they don't necessarily have it in their accounts yet.

I think Vanguard is being conservative in how they process these transactions (they could probably shorten the time period to 4-5 days).

[hondo]

Jan 17, 2023 13:45:05 GMT chang said:

I transferred $X from my bank to VG to purchase PIMIX. Once the money showed up as "Funds Available to Trade" I tried to place to order - but it would not accept it. Called them on the phone to ask why. I was informed that bank account transfers are held for 7 days before being investable in non-VG funds.

On the one hand, VG beats Fidelity in that you can buy a VG fund directly from funds in your bank account. On the other hand, this situation regarding non-VG funds is definitely a negative. I will end up losing about 10-12 days interest on a large sum.

I can see VG point in holding bank account funds 7days before being invested in non-VG funds. If the bank funds don't come thru, VG can reclaim the money from the VG fund.  If it goes to buy a non-VG fund, I don't think they could get it back.

[yogibearbull]

Related but interesting for VG funds at VG Brokerage.

I wondered what was the difference between 2 options offered - Buy (and pay from linked bank a/c) vs Bank Transfer (and then buy).

I found that Bank Transfer required several days of wait/hold before I could use funds to buy.

But Buy was immediate (same day at 4pm close) and linked a/c was charged in 1-2 days.

It looks like Vanguard extends credit to customers who use its Buy option.

Be aware that most ACH transactions are offline and typically take 2-3 days - day 0-1 for transfer, day 1-2 is just wait for possible institutional error reports, day 2-3 is when a/c is credited. ACH transaction are done 4-5 times during the day, so the timing during the day matters for whether it is 2-3 days.

Those that do it quicker really extend credit to their known and better customers.

The US is not yet on real-time transfers. Zelle, Venmo, Popmoney, etc don't count due to their limitations (vary by banks).

Many countries are now doing real-time transfers. I can transfer money from the US to India, or within India, within hours using Indian apps/websites.

[chang]

Thanks yogibearbull, I honestly don't remember these options. This is the first non-VG I have ever bought through VG. Normally you can buy a VG directly from funds in your bank account (something which Fido doesn't offer), which is a very nice feature.

I had actually intended to buy PIMIX on Tuesday. Then it jumped on Wednesday, and I was afraid it might run away from me. But I ended up buying on Friday at a penny per share less than Tuesday's price. Not that it will matter in 10 years, but still; all's well that ends well.

[habsui]

This has not been my experience. I have initiated bank transfers to Vanguard (from VG account) several times, and they were immediately included in the tradable column (even though it took 1-2 days for the transfer).

[chang]

Same here for VANGUARD funds. The money showed up under “Funds available to trade”, but the fact is that it was not available to buy a non-VG fund.

But, as mentioned, I actually saved a penny. So all’s well that ends well.