Bogleheads

[indexfundfan]

Does anyone use Vanguard's direct deposit service for their paychecks? I am looking into direct depositing my paycheck into Vanguard's money market fund (instead of a bank account) and would like to hear of any experiences.

Thanks for sharing.

Note: I am NOT referring to the Vanguard Advantage account.
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[goosecat]

I deposit directly to Vanguard MM. No problems.

[Laura]

I do not directly deposit my entire paycheck into the Prime Money Market fund but I do "allocate" the bulk of my paycheck. This is set up just like an alimony payment or something similar through my payroll. One piece to the bank and the majority to Vanguard. It works like a charm to let me pay myself first.

Laura

[WiseNLucky]

[indexfundfan]

Thanks for sharing.

I am happy to hear that there is no problem at all; at first I was concerned because the account number for direct deposit has alphabet-characters in them (in addition to numbers). E.g.

ABA # : 031000503 (Wachovia Bank)
Acct # : VAN90001234567890

I wasn't sure if HR will accept them.

I wonder if the same account and ABA number can be used to pull money out.

One more question if you have direct deposit: do you see the credit on the same day as with a checking account; or if there is an additional delay in the processing? Thanks.
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[Laura]

There is sort of a one day delay but not really. The deposit shows up online after it is processed after the market closes. I see the paycheck in the bank money on payday while I see the MM money the day after payday.

Hope that makes sense.

Laura

[Nitsuj]

I see the Direct Deposit to my bank the morning of deposit as available balance, not ledger balance.

I see the DD into Vanguard the next day with a transaction date of the previous day.

[mudfud]

[goosecat]

I "push" money from my VG MM to my Emigrant savings and my checking acct. I don't find a need to "pull" money since the accounts are already linked on the Vanguard side. The end result is the same. I'm pretty sure you can have bills directly deducted from your VG MM as well.

[Nitsuj]

[indexfundfan]

[indexfundfan]

[greg24]

I have been doing it since 2001, and it works great. It really maximizes your interest accrual.

When I first did it in 2001, it took 2 or 3 check cycles for my employer to get it correct. It seemed to be related to how Vanguard did things.

When I got a new job in early 2006, it worked correctly the first time.

About once a month I write a check to myself and deposit in a local bank account for ATM withdrawals and paying smaller bills.

[Sunny Sarkar]

[indexfundfan]

[indexfundfan]

Direct deposit and earning of dividends in MMF

I am thinking of direct depositing my pay check into Vanguard but after reading the prospectus, it appears that I will lose a few days of interest with every direct into Vanguard (compared to using a bank account) :

According to the prospectus,

For an electronic bank transfer (other than an Automatic Investment Plan purchase): A purchase request received by Vanguard on a business day before 10p.m., Eastern time, will have a trade date of the following business day.

Earning Dividends
You begin earning dividends on the business day following your trade date. When buying money market fund shares through a federal funds wire, however, you can begin earning dividends immediately by making a purchase request by telephone to Vanguard before 10:45a.m., Eastern time (2 p.m., Eastern time, for Vanguard Prime Money Market Fund).

My payday is on Friday, which means that the trade day will be on the following Monday and will start earning dividends only on Tuesday. If I direct deposit into a bank, interest will accrue on Friday, a difference of 4 days more of interest.

Is my understanding correct?
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[vectorizer]

indexfunfan:

My payday is also Friday. My biweekly last paycheck on 4/20 was direct deposited into PMM with both a process and trade date of 4/20 (same day). Can't tell when interest was earned. YMMV. Also, my mother's social security payments also arrived in PMM on the same day it used to arrive at the bank. Direct deposit appears to be a special case, not like an ACH transfer.

OP:

I use a weekly auto transfer from PMM to my bank account for regular bills and cash, a biweekly (payday) exchange into my Vanguard retirement accounts, and a monthly auto transfer for my mortgage payment. What's left behind is just right to pay predictable but irregular bills like taxes and insurance. I figure I earn about $100 per year by keeping money in PMM as long as possible instead of languishing in checking acct.

Also, I use a different Vanguard MM account for "savings" of cash that is not designated for a particular purpose. That way I can manage the paycheck PMM just for necessary spending.

[Doc]

Laura wrote:

[jeober]

As previously noted employer's direct deposits register in a Money Market Fund the day after. Interestly, we first tried to direct deposit through our Advantage Checking account (with the same Money Market as the sweep account) but the transaction using a different bank took at least 4 days. On Vanguard's advice we direct deposit to the same Money Market Fund but use the Advantage checking acountfor automatic bill paying.
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Clarke

[indexfundfan]

[wx27]

[indexfundfan]

[mrpuddles]

I use the DD to put a certain % of my paycheck directly into my mutual funds. The best part is that you can set up the deposit to match the % breakdown of your asset allocation and it doesn't require you to satisfy the minimum deposit of the MF.

[girishvv]

indexfundfan, I like your style of thinking and the math behind it. Pretty Good. Girish

[Doc]

wx27 wrote:

[indexfundfan]

girishvv, thanks for your kind words.

Doc, I believe what wx27 meant was to submit a "Buy" request for a Vanguard fund using an electronic funds transfer. And yes, this can be done.

Anyway, I sent an email to the Voyager CSR for final clarification on when dividends will accrue. If it is really only on Monday, I would skip the direct deposit into Vanguard and direct deposit the paycheck into my existing GMAC account instead, which currently has an APY of 5.3%.
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[wx27]