Motley Fool Money Schwab Is Not SVB
Jul 18, 2023
Asit Sharma, an investment analyst at The Motley Fool, joins financial expert Robert Brokamp to discuss the surprising resilience of Charles Schwab following the collapse of Silicon Valley Bank. They delve into Schwab's strategies for managing cash and liquidity. Robert answers listener queries about 529 plans, target-date funds, and retirement strategies, emphasizing the importance of risk management and diversification. The conversation also touches on the Activision-Microsoft merger and opportunities in a fluctuating market.
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Schwab's Outflow Situation
- Schwab investors are cheering the slowing outflow of deposits, signaling increased confidence.
- Much of this outflow is merely a shift to higher-yielding money market funds within Schwab.
Schwab's Resilience
- Schwab, managing $8 trillion, is demonstrating resilience unlike Silicon Valley Bank.
- Its diverse assets and liquidity make it less susceptible to bank runs.
Schwab's Debt Management
- Schwab is addressing deposit loss by taking on higher-interest debt, like issuing CDs.
- This is manageable due to increased interest income from existing assets.