I been keeping my cash in Vanguard money market (low 5 digit). I realize I don't really know how to interpret the interest rate. The website say it has SEC yield of 0.02% as of 07/15/2013 and expense ratio of 16%. What does that mean? Should I move my cash to a high yield saving at .85% APY?
vchiu25 wrote:The website say it has SEC yield of 0.02% as of 07/15/2013 and expense ratio of 16%. What does that mean?
The SEC yield is net of expenses. So the securities held in the fund have a yield of about 0.18%, and after the expenses are taken out, it returns 0.02% to you.
vchiu25 wrote:Should I move my cash to a high yield saving at .85% APY?
That depends. If (1) it's a material amount of money and (2) you don't mind the added complexity of having another account at another financial institution, then yes. If only one of those applies, then maybe. If neither of those applies, then no.
FYI, there are savings accounts yielding more than 0.85%, too, if you want to go that route. http://www.depositaccounts.com/
"Why would anyone invest in a money market fund?"
http://whitecoatinvestor.com/why-would- ... rket-fund/
Rates haven't changed since. Don't feel too badly, you haven't lost out on much since even the best bank accounts are paying less than 1%.
vbdoug wrote:I have most of my short-term reserves locked up in a five year c/d with a credit union that will mature in about 3 1/2 years. The rest of it in the Vanguard Prime Money Market Fund and I also have some investments in the Vanguard GNMA Fund. I like the idea of keeping some short-term reserves with Vanguard for use as a sweep account. Any suggestions as to what I should do to maximize my returns and still keep these funds with Vanguard?
That depends, in part, on how much you are talking about. Three month brokered CDs at Vanguard are available now at 0.35% and usually, but not right now, one month brokered CDs are available at much more then the MM is paying. I think the minimum for a Vanguard brokered CD is $10,000. Of course, going our further with Vanguard brokered CDs will provide a higher rate. Short tem bond funds may work, but those rates are low as well.
dm200 wrote:I think the minimum for a Vanguard brokered CD is $10,000.
I believe that's oly for new issue CDs at VBS. Existing issues purchased on the secondary market can be purchased in $1,000 increments (although it costs $2 per buy/$0 per sale, which may make secondary market CDs for such a short period not worthwhile).
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