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If one sells shares held at Vanguard, do the proceeds go to a cash account or do you have to transfer to another Vanguard fund only ?

I just spoke with a Vanguard CSR about a similar matter. I recently set up a Vanguard account with eight funds and want to buy another as soon as I have the minimum $3K. I have several Ameritrade accounts (stocks and IRAs) and can transfer money from three linked bank accounts until I have enough to make a trade cost effective.

I asked the CSR if I could do this with my Vanguard account and the answer was "no". Their next best solution was to have me open a Mutual Fund account with Vanguard and use this as my sweep account to accrue money. Unfortunately, the minimum to open an Mutual Fund account is also $3K, so this option does not do anything for me.

I suspect that selling an entire Vanguard fund would require you to transfer the money out of the account or buy another fund immediately.

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