Bogleheads.org

Excellent!

BTW, the OP has a behavioral issue to address. Maybe better than a direct indexing approach, a low cost advisor would be a better option to take some of the decision paralysis and lizard brain control out of his hands. The problem with Direct Indexing is that it essentially will become a millstone around the neck after a few years.

Agree with Taylor, I strongly suggest you read the Morningstar articles. He shows for whom direct indexing makes sense. It is a very small group of investors with very specific and generally unusual characteristics. Even in the BH community has a very small group of them.

Leesbro63 wrote: ↑Fri Mar 31, 2023 6:31 am I currently own VUSB (7 day SEC 4.99% taxable yield). What are the downsides, if any, of moving to VMSXX (4.10% 7 day SEC tax free yield)? My VUSB has a tiny capital gain so making the switch will be basically capital-gain tax free.

The yield of VMSXX will be much lower than VUSB in about 5 days.

I would ask why you own VUSB? Do you have a 1 year duration need or were you just chasing yields? If so, you may want to stick around in VUSB. If rates are about to drop, you may get a small capital gain, if they stay the same or go up, maybe a bit more yield if you hold them for at least a year.

Second question, VUSB does not generally make sense for folks in high tax brackets, but VMSXX does, what are you trying to optimize?

Hey Bogleheads, I am in NJ. I currently have HSA Bank with $1000 in cash, and $38K invested with Devenir, which is HSA Bank's investment platform. Of the 38k, 12k are gains. Since I'm in NJ, which doesn't recognize HSA's, I am stuck with the 38k at Devenir since I can't transfer it without liquidating, thereby triggering a taxable event in the process for NJ. I am looking to transfer the $1000 cash to Fidelity, where my new contributions are deposited. Is this a fairly straight forward process? There is some new monthly fee ($3) for the cash account, so I'm trying to avoid that. Having $0 in HSA Bank wouldn't affect my ability to invest in Devenir right? Alternatively, I could just reimburse myself for $1000 medical expenses in the past fe...

The gist of the article can be summarized as this: Money markets got wonkey a couple times in the last 15 years, so Prime Money markets got regulated out existence (almost) and Government Money Markets were re-structured so conservatively that they turn out to be much safer than banks. Worse, the Fed created new liquidity tools (Reverse Repos) making them even more safe AND lucrative. Along the way, he describes a proposed bank in 2018 call "The Narrow Bank" that essentially worked like a Money Market, but the Fed outlawed it because they are afraid of the risk to traditional banking's important and vital economic support! There appears to be a lot more to that story, but I haven't finished researching it. Well they got the risk a...

hudson wrote: ↑Thu Mar 30, 2023 3:52 pm

retiringwhen wrote: ↑Thu Mar 30, 2023 3:05 pm

hoops777 wrote: ↑Thu Mar 30, 2023 2:53 pm Why do people always post links to sites that require a subscription to read?
Thanks for what you highlighted though

Oops, I forget, Matt's newsletter is available for free by email. I strongly encourage anyone to subscribe. He really has one of the best voices about markets and the business of business and finance and he's pretty darn funny (and cynical).

I request a quick summary about the Money Market Mutual Funds part of the article.
or a link to subscribe by email.
Thanks!

Click on the link I provided and use click on the 'Get Alerts for Matt Levine' hyperlink to subscribe. I am not sure I can excerpt much more without getting afoul of Fair Use guidelines.

mouth wrote: ↑Thu Mar 30, 2023 3:06 pm

zonto wrote: ↑Thu Mar 30, 2023 2:26 pm I'm seeing 4.15% 7-day SEC yield for this fund today. Tax equivalent yield for higher federal tax brackets is approaching 7%. Can't last long, right? But I moved money from the settlement fund here all the same.

7.06% TEY for those of us in 38.8%/5.75% fed/state brackets

what is strange to me is that tons of money is flowing INTO money markets right now on the retails side, who is selling so many short-term bonds that the prices are dropping. This cyclical thing just doesn't make sense to me even with the quarterly coupon payment flow ideas thrown out before in articles.

hoops777 wrote: ↑Thu Mar 30, 2023 2:53 pm Why do people always post links to sites that require a subscription to read?
Thanks for what you highlighted though

Oops, I forget, Matt's newsletter is available for free by email. I strongly encourage anyone to subscribe. He really has one of the best voices about markets and the business of business and finance and he's pretty darn funny (and cynical).

Today, Matt Levine has an EXCELLENT! article discussing the unexpected threat that Money Market Mutual Funds are posing to banks! This is really an interesting discussion and on that is completely germaine to the questions here. I suggest anyone who wonders just what the heck is going on in the fixed income markets and banking read this. It is not a full story, but it shows a perfect example of the law of unintended consequences. Regulations to stabilize the money market industry unintentional destabilized banks (or at least facilitated the underlying actions.) Jump past the BBB stuff (but that is interesting too) https://www.bloomberg.com/opinion/articles/2023-03-30/bed-bath-beyond-has-more-stock-to-sell#xj4y7vzkg key graph: This seems to ...

That's incredible. Years ago when I considered installation without wiring in a location (all the locations I installed already had wiring) the most folks seemed to get was a week or 2 from Ring and the Ring 3 - although states 6-12 months - I see reviews show 25 days more typical. Not sure if you should be prefacing your statement with "surely" as reading online reviews not everyone gets the full 2 years (temparature and amount of use/live-viewing all have an impact) but it's great they have this performance - it certainly makes the case for someone without preexisting wiring to conisder blink over ring. I did disclose that high traffic areas that the cameras (several activations per hour during normal business hours) had much s...

I believe Ring, in general, is a great product (and maybe swapping a battery every few days will be fine - you can always start with the battery and hard wire the unit later in any case - I think the model you mention supports both as most do). My Blink (same hardware as the Ring camera) lithium batteries have lasted over 14 mos. so far without replacement. In fact, all my Blink cameras (I have a lot of them!) have seen 2+ years before requiring battery changes. They are very energy efficient little buggers. We did have a Blink camera installed in a high traffic area in a church and the batteries only last about 6 mos. But if they aren't hardwired how often and how much of a hassle is it to manage the batteries? How long does a charge last...

SmileyFace wrote: ↑Thu Mar 30, 2023 8:34 am I believe Ring, in general, is a great product (and maybe swapping a battery every few days will be fine - you can always start with the battery and hard wire the unit later in any case - I think the model you mention supports both as most do).

My Blink (same hardware as the Ring camera) lithium batteries have lasted over 14 mos. so far without replacement. In fact, all my Blink cameras (I have a lot of them!) have seen 2+ years before requiring battery changes. They are very energy efficient little buggers.

We did have a Blink camera installed in a high traffic area in a church and the batteries only last about 6 mos.

I use the "Blink" cameras. Inexpensive, and easy setup. I have 3 outside cameras as well as the doorbell camera. I second this - I have several Blink cameras. They are owned by Amazon - might be a positive or a negative! The Blink doorbell is actually the same guts as the Ring doorbell. It is really about which app you want to use and the service levels. I use an Alarm.com security system, but don't like their doorbells/cameras, so I went with Blink cameras and door bells. They really are very nice and easy to setup and use. The annual fee is reasonable if you want to store video. BTW, if you want a loud chime inside, the best way to get one is to buy a blink mini camera for indoors. It doubles as a chime. Lastly, my Blink doorbe...

I think you would have a hard time finding someone to do an odd job that might take less than an hour for $50/hour labor I agree. I'm talking about what you pay for work that takes a day or two. Short jobs cost more. I have another son who supplements his main income with odd jobs via Angie's List (not 100% sure that is the site). He told me that when he started, he had zero reputation on the site, so he took the lowball priced jobs to just get a reputation. As soon as it improved, he got a lot more choosey to ensure he actually made money. After a few months, a local landlord who needed extra repair work found him and now my son almost exclusively works for that guy since the work can be planned and relatively steady with minimal travel.

I think this shortage of people to do home repairs is nation wide. I suspect it isn't so much a shortage of handyman rather than a shortage of what people are willing to pay a handyman more or the same as what they could earn doing something else. So many small projects take a lot of time to plan out, complete, and clean up after but from what I see, most people balk at paying very much over what materials cost. There are so many jobs needing people that pay better and are probably easier too, that in order to secure a handyman, one needs to shell out more money. The handful of people I know with handymen, all pay on a weekly basis regardless if needed or not. Just like a house cleaner or lawnmower service. Generally the handyman comes ove...

According to this old post on the Ed Slott IRA forum, you daughter cannot take the IRA as a spousal IRA, so it must be taken as a beneficiary IRA.

https://www.irahelp.com/forum-post/1366 ... -ex-spouse

I have no idea beyond that.

St. Louis Fed's "How the Fed Implements Monetary Policy" (in plain English), includes: Open Market Operations: Maintaining Ample Reserves Open market operations are the buying and selling of government securities by the Federal Reserve. https://www.stlouisfed.org/in-plain-english/the-fed-implements-monetary-policy Does this not mean that, in addition to other actions, the Fed would buy and sell T-bills in order to keep the short term interest rate near their target? From the same article: The Fed’s administered rates are the key tools for monetary policy when reserves in the banking system are ample. So, the Fed uses open market operations periodically to e nsure the level of reserves in the banking system remain large enough so ...

TheTimeLord wrote: ↑Tue Mar 28, 2023 10:01 am Or put another way, I personally don't invest on the possibility of Global Nuclear War, although others may, even though it is a possibility.

A shorter answer: Why would a build my home next to a Minuteman silo if I have a perfectly suitable alternative that sits outside the incoming blast radius?

It is not a conspiracy theory to say the banks are constructed upon a confidence game. The reason that FDIC insurance exists is to ensure that there is substance to the confidence. It is not needed for direct investments like T-bills or Treasury Mutual Funds because they are fully funded. While I understand the theory behind what you are saying, can you explain to me how (at least in the near term) the financial system can function without banks? Or put another way, I personally don't invest on the possibility of Global Nuclear War, although others may, even though it is a possibility. Actually, I am not arguing against banks at all! They are 100% necessary for reasons far beyond the scope of this thread, but they are precarious tools for ...

It is not a conspiracy theory to say the banks are constructed upon a confidence game. The reason that FDIC insurance exists is to ensure that there is substance to the confidence. It is not needed for direct investments like T-bills or Treasury Mutual Funds because they are fully funded. While I understand the theory behind what you are saying, can you explain to me how (at least in the near term) the financial system can function without banks? Or put another way, I personally don't invest on the possibility of Global Nuclear War, although others may, even though it is a possibility. Actually, I am not arguing against banks at all! They are 100% necessary for reasons far beyond the scope of this thread, but they are precarious tools for ...

CD's are the only thing I am aware of (besides savings accounts, and most checking) that are FDIC insured, therefore, they are superior in that way. But I'm not trying to compare mutual funds and CD. I do not value FDIC insurance as having any additional value over holding T-bills or Treasury Money Markets or Bond funds. In fact Treasuries have one less intermediary to fail between the investor and the full faith and credit of the US Gov't. I also feel that the fundamental credit risk of any conventional Treasury mutual fund is less than any Bank account even fully 100% FDIC insured for the simple reason that a conventional mutual fund is 100% funded with no leverage. The average Bank account (CDs included) are leveraged on average about 5...

Amy Arnott at Morningstar has a good summary of the factors that impact interest rates written from the perspective of how to interpret what the yield curve is telling you. I am not advocating any action on these insights, but it is a good summary of the conventional ways that the bond market behaves and the thinking behind it. Nicely dovetails with my last post

https://www.morningstar.com/articles/11 ... ond-market

John Rekenthaler has a very nice article about Direct Indexing and some investor characteristics to make the strategy appropriate. I think it is a very good summary of much discussed here with a few minor twists.

https://www.morningstar.com/articles/11 ... your-taxes

He has eight investor factors identified:
- High Federal Taxes
- High State Taxes
- Large Direct Index pool of funds
- Ongoing additions/replenishments into the pool
- Schedule D Capital Gains
- Short Term Capital Gains
- Volatile Market Environment
- Pre-Liquidation (don't have plan to sell the assets)

Kevin M wrote: ↑Mon Mar 27, 2023 7:43 pm

retiringwhen wrote: ↑Mon Mar 27, 2023 7:28 pm

Kevin M wrote: ↑Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.

I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.

40% = 0% if you live in CA, CT or NY.

Oh yes, not nice.

Kevin M wrote: ↑Mon Mar 27, 2023 7:18 pm I would call 70% pessimistic, as it's been running at 75-80%, so I would call 80% optimistic and 70% pessimistic. I just changed my TEY calcs to use 75% USGO as an estimate for 2023.

I concur. I switched to 75% after the FEB report on VUSXX. I am using 40% for VMFXX and VMRXX as well base upon their recent reports.

index245 wrote: ↑Mon Mar 27, 2023 5:24 pm I'll note I'm not a pure one funder though. I used a SP500 index in taxable, low cost target date funds in tax advantaged. Still one fund per account.

My opinion, not popular in this thread is that your approach is superior for just about anyone who will build a substantial taxable account in their lifetime for minimal additional effort for maintenance. It addresses the most important tax efficiency issues and only requires minor thinking about overall AA. Keep it simple, but not too simple.

evancox10 wrote: ↑Mon Mar 27, 2023 2:05 pm Not tying to derail this into the details of Fed operations, but I am genuinely wondering along with OP why we would see large divergences in treasury rates versus federal funds rate. Is there an expectation these will be arbitraged away? Does it just reflect changing credit risks?

The FFR is not the only influence/variable on rates. This is evidence that other factors are playing hard on the market such as secular expectations of future rates as well as demand for short-term funds as deposits flow out of the banks.

Besides, officially, The Fed is still in an official Quantitative Tightening where Fed Open Market operations are greatly diminished.

Bogle-007 wrote: ↑Sun Mar 26, 2023 10:33 pm How does Turbo Tax (or other tax programs) decipher how much to state tax to charge? Is this info listed on Vanguard's tax form in a way that the program automatically understands?

Vanguard produces a report they publish ont he website under their tax center. You will need to enter data from that form into TT manually. Not hard, but frankly, the way TT asks the questions can be confusing. BTW, I only enter the data for my tax state (NJ) and lump all the other states into the “other” category.

The bond market is way harder to time than the stock market. It just seems easier until you try to actually do it. BTW, I don't think it is easy to time the stock market. Why do you need to time the bond market? Bonds literally tell you how much you will earn over the course of duration when you buy them. You buy them if you like the rates, don't if you don't. See them message that prompted my response. I have no need to time the bond market and when I am tempted, I try hard to remember all the times I got stuff wrong. As good old Yogi supposedly said, "predictions are hard, especially when they are about the future". Most people forget we were arguing about 50 or 75 more bps in rate increases just 30 days ago. The several high p...

Kenkat wrote: ↑Sun Mar 26, 2023 7:40 pm So much for it being plainly obvious that rates were going to keep going up.

The bond market is way harder to time than the stock market. It just seems easier until you try to actually do it.

BTW, I don't think it is easy to time the stock market.

Sorry, I just re-read your post. I originally thought you said 100 acres (saw the 100yds), which would justify a golf cart or UTV. 1.5 acres is not nearly enough room for a UTV by any means. Definitely not a gas job. If your yard isnt big enough to justify a snowmobile, then it isn't big enough for a utv. You wouldn't even use high gear in 100 acres on a UTV, would burn out the belts, let alone 1.5 acres. We have electric golf carts, lifted golf carts with mud tires, polaris and john deere side by sides but we are on acreage. Maybe a golf cart at best but hard to say without seeing your property. Its overkill but it's your money. I have a Honda Pioneer 520 (their little bitty UTV) on a 1/2 acre. Of course, it has a 80' descent on the hill....

The Fed is officially still in the quantitative tightening regime now, not buying in the open market.


With thatvsaid , they are adding massive amounts to their balance sheet by taking deposits at the discount window to support bank solvency.

The Fed doesn't issue Tbills, the U.S. Treasury does that.

This is also a small sign that rates may have reached their current zenith.

Hogan773 wrote: ↑Fri Mar 24, 2023 10:29 am yes the steepness is crazy, which makes it feel like I need to be paying attention!

I am doing the switch again to VMSXX today. I guess from there I will decide if I try to keep watching it or not. Do you think the "sine waves" are predictable enough that I can sort of forecast ahead that I should expect to keep an eye out for the next transition crossover in [X] days or weeks from now?

They are predictable overall, but the frequency is increasing. I don't know if this one will last 28 days like last time. I have a feeling it may be even shorter.

I may give up on this watching/swapping thing haha. I hadn't looked in a couple days and now the VMSXX 7 day yield is shooting up again, so right now it is better than VUSXX tax adjusted. I guess given the reporting lag of the 7-day yield, that means I probably am late again in switching over. So while I haven't thought through this perfectly, my gut is that any benefit here really requires one to pretty much perfectly catch the right crossover points. If one doesn't, but gets "close" then the benefit will be lower and may be just the same as doing nothing, so lots of work for nothing. WORST case if one is too sloppy and really misses the crossover points with a lag, then one may actually be doing worse than just leaving it in VM...

DrivingFun wrote: ↑Fri Mar 24, 2023 8:27 am Can someone explain to me like I'm 5 why national municipal money market is tax free at the federal level, but taxable at the state level (less the proportionate part that was issued in state of residence). However treasury money market is taxable at the federal level but tax free at the state level? Aren't both issues by the government?

It is the law. That is why. There are constitutional reasons, but really it just the specifics of state and federal tax laws. Note, every state has unique laws on both muni and treasury income.

What is your bank that is taking 20 days? Did they do micro-deposits or some other validation scheme? Do you need enter the micro-deposit amounts? Also, regarding holds, generally there is always a 7 day delay on transferring out funds that were just ACH'd in. That is a fraud limitation. That will never go away but there may be additional delays restrictions for new accounts. I just did my annual back door Roth conversion at Fidelity and my wife and I get treated completely differently regarding wait times. go figure. Discover. Already did the micro deposits on the 2nd of march. It just doesn't allow me to add more bank accounts yet. Another question, would cash invested in VUSXX show up as part of the "Funds available to withdraw&quo...

I bought the last 3 TVs at Walmart (43", 50", 55"), it worked perfectly fine. I do stuff myself. I am also very price sensitive.

The worst that can happen is really just a delay in redemptions if the fund seized up for some reason, and VUSXX is actually designed to minimize that risk about as completely as any US mutual fund of any kind, money markets included.

If you are really concerned, keeping a small amount in a different brokerage in a different money market fund would further reduce the risk. I personally don't do that beyond keeping about 2 weeks funds in a HYSA at my credit union. The rest of my cash is in mostly VUSXX and some T-bills.

anon_investor wrote: ↑Wed Mar 22, 2023 8:16 pm Merrill Edge may not let you transfer these institutional share class funds due to contractual limitations. Someone on BHs bought FSIXX, a Fidelity institutional share class money market fund (normally a $1 milllion minimum at Fidelity), at Merrill Edge (only $1k minimum there) and tried to transfer it to Fidelity, and Merrill Edge would not let them.

Seems fair. I am sure Merrill is paying Fidelity a fee to put the fund on their available list to provide a competitive fund in arguably one of the most important categories. They are likely doing all the book-keeping for their retail accounts too.

What is your bank that is taking 20 days? Did they do micro-deposits or some other validation scheme? Do you need enter the micro-deposit amounts?

Also, regarding holds, generally there is always a 7 day delay on transferring out funds that were just ACH'd in. That is a fraud limitation. That will never go away but there may be additional delays restrictions for new accounts.

I just did my annual back door Roth conversion at Fidelity and my wife and I get treated completely differently regarding wait times. go figure.

jeffyscott wrote: ↑Wed Mar 22, 2023 9:01 am Took a while to figure it out, but got there eventually. They show 0 going all the way back to March 2011 and it remains at 0 until Jan 2022:

Yes, since this is the monthly EDGAR snapshot, that is consistent with other data. What is known from Annual USGO % reporting for taxes, there was some Repo activity in previous years but at a much lower level than 24%. 2019 saw a USGO % of 98% and 2020 saw it at only 94%. I can be implied that those less than 100% values came from Federal Reserve bank of NY Repos since they are the only allowed alternative.

jeffyscott wrote: ↑Wed Mar 22, 2023 7:53 am It appears this is something new for VUSXX, since last year it reported 100% of income was from US government obligations.

I just found a great data tool for MMF Repo statistics. From the Office of Financial Research: https://www.financialresearch.gov/money ... l-reserve/

this can drill down and show participation levels in the various Repo markets to various levels of detail.

It is clear from looking at Vanguard Fund level data on the US Treasury Repo market that VUSXX only started in this market in a significant way in the past 90 days.

BTW, this data appears to be an aggregation of the monthly fund reports to EDGAR.

As mentioned there is some state tax advantages to VUSXX over the two mentioned by the OP. What are the differences between VMRXX and VMFXX? The biggest one is that Federal (VMFXX) is used as the settlement fund for Vanguard Brokerages. It also allows check-writing privileges (VMRXX does not). Other than that, there is a small difference in amount of non-USGO assets that VMRXX is allowed to buy, other than that they are the same. I believe the ER difference is driven by the check writing and settlement differences. In practice for the past 6 mos., the two funds have been run almost identically from an investment perspective. That is in part driven by the fact that straight US Treasuries have seen the best yield recently, so everyone goes th...

burritoLover wrote: ↑Tue Mar 21, 2023 2:24 pm There's no non-dividend fund so it would have to be either individual non-dividend paying stocks (yikes) or a fund that has characteristics that tend to include low or no dividend paying stocks (such as growth). But the most diversified way to do that would be to have a value fund (which includes non-dividend payers) in tax-advantaged and a growth fund in taxable. If they have the same index provider, there shouldn't be any overlap between them (generally).

VUG/VTV split works extremely well. Combine with VB and you have a total stock market coverage.

TomatoTomahto wrote: ↑Mon Mar 20, 2023 6:06 am

OverseasBH wrote: ↑Mon Mar 20, 2023 5:56 am Is there a scenario where a dividend focused strategy is rational?

IF I were the beneficiary of a trust where I could spend the income but not touch the principal, I'd probably want the principal in a dividend focused fund. I'm not, so I prefer not to receive dividends.

This is very true, there are real legitimate reasons for certain individuals in certain situations to legitimately prefer dividends for reasons unrelated to their relative return when compared to the overall market.

That does not make them better.

exodusing wrote: ↑Sat Mar 18, 2023 5:29 pm

indexfundfan wrote: ↑Sat Mar 18, 2023 5:18 pm I was holding VUSXX on Etrade and I swapped it to GABXX, which potentially has no repos. It also has a very slightly lower ER.

and a longer average maturity, 32 v 46 days.

About half due to VUSXX holding the Repos I would bet. Most of the other Treasury Only are running around 37-39 days.

My tool is configurable for time frame

what do y'all think about moving from VUSXX to the vgd short term treasury index fund? VGSH is a fine fund, I own a small amount, but it is NOT by any measure comparable to VUSXX. It has a duration of approx. 2 years, it has much more price volatility. Only appropriate if you want to own longer term bonds. I a portion of my fixed income in VGSH and VTIP as part of a barbell approach with much longer term funds. VUSXX, is really for stuff I plan on spending in the next 6 mos. thanks. makes sense. i guess i was thinking of moving half of my vusxx over to vgsh or the admiral version. i really hate paying state taxes on what is supposed to be a treasury fund cheers grok Other options are an auto-roll of 3 or 6 T-bills or SGOV 6 mos. ETF. SGOV ...