- One Fidelity Brokerage Account ("brokerage")
- One Fidelity Cash Management Account ("CMA")
- One Fidelity 2% Cash Back Credit Card
How Money Flows
- Payroll direct deposited into brokerage
- All non-mortgage, non-Amazon expenses are paid with the Fidelity credit card
- Bills autopay from brokerage (credit cards, insurance, billpay to household vendors)
- Debit cards and live paper checks written against CMA
We use a brokerage account because it lets us keep cash and investments in the same account. All of our cash, including working capital and reserves, sits in the brokerage's core position. Our core position is FZFXX, a Federal money market fund that pays ~2% interest.
We use the Fidelity credit card because it pays 2% cash back when it's set up to deposit rewards into a Fidelity account. It is also one of the only cards I've seen that can be set to automatically cash out deposits. Ours is set to deposit into the brokerage account.
We use the Amazon Prime credit card for all Amazon expenses. This pays 5% back on Amazon purchases which makes it worth it for us. Your milage may vary.
We have the CMA so we don't expose the brokerage account number every time we write a paper check. This is probably overly paranoid and is the only significant complication in the entire system.
The CMA can optionally have "self-funded overdraft protection" turned on, which would automatically transfer from the brokerage account into the CMA to fund checks and debit card transactions. We don't have this turned on, again mostly for paranoia. We make so few transactions like this that it's no problem to top up the account every few months.
The brokerage core position is not FDIC insured. I don't care about FDIC insurance. FZFXX is composed of ultra short term US Treasury bills. If Treasuries are suddenly not liquid enough to withdraw our money our society has much bigger problems.
The CMA's core position is FDIC insured, and the CMA is almost a full brokerage account, but we don't use it as the centerpiece account for two reasons. First, the CMA core position pays shit for interest. Second, the CMA cannot have margin turned on. We'll talk about why that's important in the next post.