VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

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erik265
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VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by erik265 »

Just wondering if you need to get highest level of safety, liquidity and reasonable rate of return which investment vehicle is most suitable? $200,000 to invest
retiringwhen
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by retiringwhen »

erik265 wrote: Tue Sep 04, 2018 5:36 pm Just wondering if you need to get highest level of safety, liquidity and reasonable rate of return which investment vehicle is most suitable? $200,000 to invest
Personally I would go with VUSXX as it is backed by the same organization as the FDIC insurance (Uncle Sam). you'd get the same level of safety, higher yield, and probably the same level or more or liquidity.

I keep 40% of our cash in VUSXX (Vanguard US Treasury Money Market) and 1% in FDIC insured accounts.
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welderwannabe
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by welderwannabe »

retiringwhen wrote: Tue Sep 04, 2018 5:39 pm
erik265 wrote: Tue Sep 04, 2018 5:36 pm Just wondering if you need to get highest level of safety, liquidity and reasonable rate of return which investment vehicle is most suitable? $200,000 to invest
Personally I would go with VUSXX as it is backed by the same organization as the FDIC insurance (Uncle Sam). you'd get the same level of safety, higher yield, and probably the same level or more or liquidity.

I keep 40% of our cash in VUSXX (Vanguard US Treasury Money Market) and 1% in FDIC insured accounts.
+1. Since you mentioned safety, and given the choices in your subject, I would also select VUSXX. VMFXX generally tracks pretty closely to VUSXX...sometimes a couple basis points more or less, but close enough to be a non issue if you have the $50K minimim buyin for VUSXX.

I would also look at high yield savings options. At $200K you will be under the FDIC limits assuming you don't have other deposits at the bank. Some good savings accounts will beat VUSXX, and an FDIC insured savings account is about as liquid as it gets...
I am not an investment professional, but I did stay at a Holiday Inn Express last night.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by stan1 »

Remember its very easy to break a CD as well. You will lose some interest but if there's a decent chance you may not actually need the liquidity on the full $200K you could still use a CD for part of the money. Pen Fed for example has a 15 month NCUA insured CD at 2.5% right now.
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Ricchan
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by Ricchan »

The answer probably depends on the tax rate of the state you live in.

- VSUXX, being a treasury fund, is only taxable at the federal level.
- VMMXX is taxable at both federal and state levels.
- VMFXX is more complicated, but in general is partially taxable at only the federal level, and partially taxable at both levels, unless you live in CA, CT, or NY, in which case I believe it's fully taxable at both levels. I don't know the exact breakdown.

So, I assume the answer to your question would be arrived at by calculating the tax equivalent yields of VSUXX and VMFXX according to your state tax bracket and comparing that to the yield of VMMXX.

If you happen to live in CA, NJ, NY, or PA, you might also want to look at VCTXX, VNJXX, VYFXX, or VPTXX. Those are state municipal money market funds, which are tax exempt at both the federal and state level. Note, however, that municipal money market fund yields fluctuate quite a bit. See this thread for more info, including graphs - viewtopic.php?f=1&t=246263&start=200#p4098834

EDIT: If you are willing to consider CDs, these are what new brokered CDs on Vanguard are going for right now:

Image

Synchrony bank also currently has a 13 month CD at 2.65%.
mega317
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by mega317 »

Individual treasuries would also work. What's the money for? You could ladder them to have some mature periodically, and they are also quite liquid.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
retiringwhen
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by retiringwhen »

Ricchan wrote: Tue Sep 04, 2018 11:35 pm The answer probably depends on the tax rate of the state you live in.

- VSUXX, being a treasury fund, is only taxable at the federal level.
- VMMXX is taxable at both federal and state levels.
- VMFXX is more complicated, but in general is partially taxable at only the federal level, and partially taxable at both levels, unless you live in CA, CT, or NY, in which case I believe it's fully taxable at both levels. I don't know the exact breakdown.

So, I assume the answer to your question would be arrived at by calculating the tax equivalent yields of VSUXX and VMFXX according to your state tax bracket and comparing that to the yield of VMMXX.

If you happen to live in CA, NJ, NY, or PA, you might also want to look at VCTXX, VNJXX, VYFXX, or VPTXX. Those are state municipal money market funds, which are tax exempt at both the federal and state level. Note, however, that municipal money market fund yields fluctuate quite a bit. See this thread for more info, including graphs - viewtopic.php?f=1&t=246263&start=200#p4098834

EDIT: If you are willing to consider CDs, these are what new brokered CDs on Vanguard are going for right now:

Image

Synchrony bank also currently has a 13 month CD at 2.65%.
I would not consider NJ munis to be “safest” as per OPs requirement. They are the third lowest rated bonds in the USA. Besides, they have not been paying well since the last tax reform relatively speaking unless you have over $500k in annual taxable income. Can’t speak for the other states as I don’t have a reason to track.
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erik265
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by erik265 »

I live in Florida at the moment just wanted easy liquidity and if I add more money I wont have to worry about opening another account. Money will be used to purchase a new property within the year. Seems like VSUXX is best option though will prob give me 1/2 a point less in interest.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by Munir »

erik265 wrote: Tue Sep 04, 2018 5:36 pm Just wondering if you need to get highest level of safety, liquidity and reasonable rate of return which investment vehicle is most suitable? $200,000 to invest
Did you mean VUSXX? Writng full names of funds once in a post helps clarify ID.
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erik265
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by erik265 »

Munir wrote: Wed Sep 05, 2018 10:25 am
erik265 wrote: Tue Sep 04, 2018 5:36 pm Just wondering if you need to get highest level of safety, liquidity and reasonable rate of return which investment vehicle is most suitable? $200,000 to invest
Did you mean VUSXX? Writng full names of funds once in a post helps clarify ID.
Yes Vusxx
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erik265
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by erik265 »

Ricchan wrote: Tue Sep 04, 2018 11:35 pm The answer probably depends on the tax rate of the state you live in.

- VSUXX, being a treasury fund, is only taxable at the federal level.
- VMMXX is taxable at both federal and state levels.
- VMFXX is more complicated, but in general is partially taxable at only the federal level, and partially taxable at both levels, unless you live in CA, CT, or NY, in which case I believe it's fully taxable at both levels. I don't know the exact breakdown.

So, I assume the answer to your question would be arrived at by calculating the tax equivalent yields of VSUXX and VMFXX according to your state tax bracket and comparing that to the yield of VMMXX.

If you happen to live in CA, NJ, NY, or PA, you might also want to look at VCTXX, VNJXX, VYFXX, or VPTXX. Those are state municipal money market funds, which are tax exempt at both the federal and state level. Note, however, that municipal money market fund yields fluctuate quite a bit. See this thread for more info, including graphs - viewtopic.php?f=1&t=246263&start=200#p4098834

EDIT: If you are willing to consider CDs, these are what new brokered CDs on Vanguard are going for right now:

Image

Synchrony bank also currently has a 13 month CD at 2.65%.
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erik265
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by erik265 »

welderwannabe wrote: Tue Sep 04, 2018 7:28 pm
retiringwhen wrote: Tue Sep 04, 2018 5:39 pm
erik265 wrote: Tue Sep 04, 2018 5:36 pm Just wondering if you need to get highest level of safety, liquidity and reasonable rate of return which investment vehicle is most suitable? $200,000 to invest
Personally I would go with VUSXX as it is backed by the same organization as the FDIC insurance (Uncle Sam). you'd get the same level of safety, higher yield, and probably the same level or more or liquidity.

I keep 40% of our cash in VUSXX (Vanguard US Treasury Money Market) and 1% in FDIC insured accounts.
+1. Since you mentioned safety, and given the choices in your subject, I would also select VUSXX. VMFXX generally tracks pretty closely to VUSXX...sometimes a couple basis points more or less, but close enough to be a non issue if you have the $50K minimim buyin for VUSXX.

I would also look at high yield savings options. At $200K you will be under the FDIC limits assuming you don't have other deposits at the bank. Some good savings accounts will beat VUSXX, and an FDIC insured savings account is about as liquid as it gets...
So VSUXX is best option out of the funds I mentioned is there any difference in risk at all?
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welderwannabe
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by welderwannabe »

erik265 wrote: Wed Sep 05, 2018 11:18 am So VSUXX is best option out of the funds I mentioned is there any difference in risk at all?
Well, it is VUSXX not VSUXX.

There is a difference in risk, and I encourage you to evaluate it yourself to make sure you are comfortable.

All are low risk, however

Very low risk: VMMXX. It is a prime money market that invests in some US Govt Debt but also commercial paper, asset repos, etc. It has some exposure to foreign and corporate debt, so there is a little bit of risk here. I keep most of my money market money in this fund myself.

Very Very Very low risk: VMFXX. This is a Federal money market. It invests exclusively in US Govt Debt, but not just treasuries. It includes some debt from GSEs (and those are implicitly and not explicitly guaranteed, although there is a little controversy over this fact since they were taken back over after the 2008 crisis) . It has some repos as well, but they would all be collateralized by US Govt Debt.

Almost completely riskless: VUSXX. This invests 100% in US Govt TBills. This is as risk-free as it gets, unless the US Govt defaults on its obligations...that wasn't even contemplated before, but in the last 10 years there have been a few times where it has been spoken of by our politicians, so I put it in the "almost riskless" versus riskfree category. So does S&P.


Hope this helps.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by caliguy1 »

Do you have to worry about wash sales if you go in and out of VUSXX a lot?
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by retiringwhen »

caliguy1 wrote: Wed Sep 05, 2018 11:31 am Do you have to worry about wash sales if you go in and out of VUSXX a lot?
No, it is a money market that keeps @ $1/share...

I buy and sell out of ours regularly, no issues. just need to keep $50K minimum as that is the minimum balance.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by SquawkIdent »

retiringwhen wrote: Wed Sep 05, 2018 11:36 am
caliguy1 wrote: Wed Sep 05, 2018 11:31 am Do you have to worry about wash sales if you go in and out of VUSXX a lot?
No, it is a money market that keeps @ $1/share...

I buy and sell out of ours regularly, no issues. just need to keep $50K minimum as that is the minimum balance.
Isn't the 50K figure just the opening minimum amount on this fund? Couldn't you open an account for the 50K and two weeks later withdraw 49K and VG wouldn't say a word?
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by retiringwhen »

SquawkIdent wrote: Wed Sep 05, 2018 11:47 am
retiringwhen wrote: Wed Sep 05, 2018 11:36 am
caliguy1 wrote: Wed Sep 05, 2018 11:31 am Do you have to worry about wash sales if you go in and out of VUSXX a lot?
No, it is a money market that keeps @ $1/share...

I buy and sell out of ours regularly, no issues. just need to keep $50K minimum as that is the minimum balance.
Isn't the 50K figure just the opening minimum amount on this fund? Couldn't you open an account for the 50K and two weeks later withdraw 49K and VG wouldn't say a word?
I believe they would force the account to close after some period of time under the minimum balance. I haven't tried to find out.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by caliguy1 »

retiringwhen wrote: Wed Sep 05, 2018 11:36 am
caliguy1 wrote: Wed Sep 05, 2018 11:31 am Do you have to worry about wash sales if you go in and out of VUSXX a lot?
No, it is a money market that keeps @ $1/share...

I buy and sell out of ours regularly, no issues. just need to keep $50K minimum as that is the minimum balance.
I wasn't sure if your trading cost and the fact that the price does change a little to like $1.0001 might affect that..
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by vieques »

Ricchan wrote: Tue Sep 04, 2018 11:35 pm - VSUXX, being a treasury fund, is only taxable at the federal level.
Can people point me to where VUSXX (Vanguard US Treasury Money Market) is documented to be taxable only at the federal level? I found tangential references to this on bogleheads.org but tried to look for something definitive online and wasn't able to confirm this for California. When I asked Vanguard, they said
No it is not, if you're looking for a state tax-exempt fund for California we do have the following funds:

Vanguard California Intermediate-Term Tax-Exempt Fund (VCAIX)
Vanguard California Long-Term Tax-Exempt Fund (VCLAX)
Vanguard Municipal Money Market Fund (VCTXX)
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by stan1 »

vieques wrote: Wed Sep 05, 2018 7:39 pm Can people point me to where VUSXX (Vanguard US Treasury Money Market) is documented to be taxable only at the federal level? I found tangential references to this on bogleheads.org but tried to look for something definitive online and wasn't able to confirm this for California. When I asked Vanguard, they said
Attached is a link to TY2017 US Govt Obligation summary sheet from Vanguard
https://personal.vanguard.com/pdf/USGO_022018.pdf

Treasury Money Market is 100% US government obligations.

For California:
https://www.ftb.ca.gov/forms/2017/17_1001.pdf

Page 5 middle states US Government obligations are not taxed by California. You'd have to find similar for your state.

Tax software handles this perfectly fine if the data is properly entered. You do have to remember to look up the percentage and enter it into the tax software when it comes available before you file your tax return.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by stanguy »

Ricchan wrote: Tue Sep 04, 2018 11:35 pm The answer probably depends on the tax rate of the state you live in.

- VSUXX, being a treasury fund, is only taxable at the federal level.
- VMMXX is taxable at both federal and state levels.
- VMFXX is more complicated, but in general is partially taxable at only the federal level, and partially taxable at both levels, unless you live in CA, CT, or NY, in which case I believe it's fully taxable at both levels. I don't know the exact breakdown.

So, I assume the answer to your question would be arrived at by calculating the tax equivalent yields of VSUXX and VMFXX according to your state tax bracket and comparing that to the yield of VMMXX.

If you happen to live in CA, NJ, NY, or PA, you might also want to look at VCTXX, VNJXX, VYFXX, or VPTXX. Those are state municipal money market funds, which are tax exempt at both the federal and state level. Note, however, that municipal money market fund yields fluctuate quite a bit. See this thread for more info, including graphs - viewtopic.php?f=1&t=246263&start=200#p4098834

EDIT: If you are willing to consider CDs, these are what new brokered CDs on Vanguard are going for right now:

Image

Synchrony bank also currently has a 13 month CD at 2.65%.
Looks like VMFXX now meets the bar for CA, NJ et al, and would also be only partially taxable at the state level there. As far as I understand, it is fully taxable at the federal level for every state.
https://advisors.vanguard.com/iwe/pdf/F ... 012018.pdf
Atleast that was true for 2017 tax year. It's not clear if Vanguard intends to keep it that way for 2018 and future years.
mpnret
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by mpnret »

stanguy wrote: Mon Sep 24, 2018 4:09 pm
Ricchan wrote: Tue Sep 04, 2018 11:35 pm The answer probably depends on the tax rate of the state you live in.

- VSUXX, being a treasury fund, is only taxable at the federal level.
- VMMXX is taxable at both federal and state levels.
- VMFXX is more complicated, but in general is partially taxable at only the federal level, and partially taxable at both levels, unless you live in CA, CT, or NY, in which case I believe it's fully taxable at both levels. I don't know the exact breakdown.

So, I assume the answer to your question would be arrived at by calculating the tax equivalent yields of VSUXX and VMFXX according to your state tax bracket and comparing that to the yield of VMMXX.

If you happen to live in CA, NJ, NY, or PA, you might also want to look at VCTXX, VNJXX, VYFXX, or VPTXX. Those are state municipal money market funds, which are tax exempt at both the federal and state level. Note, however, that municipal money market fund yields fluctuate quite a bit. See this thread for more info, including graphs - viewtopic.php?f=1&t=246263&start=200#p4098834

EDIT: If you are willing to consider CDs, these are what new brokered CDs on Vanguard are going for right now:

Image

Synchrony bank also currently has a 13 month CD at 2.65%.
Looks like VMFXX now meets the bar for CA, NJ et al, and would also be only partially taxable at the state level there. As far as I understand, it is fully taxable at the federal level for every state.
https://advisors.vanguard.com/iwe/pdf/F ... 012018.pdf
Atleast that was true for 2017 tax year. It's not clear if Vanguard intends to keep it that way for 2018 and future years.
The footnote for Vanguard Federal Money Market in the link you provided states: *** This fund meets the threshold requirements for California, Connecticut, and New York, which require that 50% of the fund’s assets at each quarter-end within the tax year
consist of U.S. government obligations.
I don't see anything about NJ. Can anyone confirm that I would only pay partial tax on VMFXX in NJ?
ishkadetto
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by ishkadetto »

stanguy wrote: Mon Sep 24, 2018 4:09 pm Looks like VMFXX now meets the bar for CA, NJ et al, and would also be only partially taxable at the state level there. As far as I understand, it is fully taxable at the federal level for every state.
https://advisors.vanguard.com/iwe/pdf/F ... 012018.pdf
Atleast that was true for 2017 tax year. It's not clear if Vanguard intends to keep it that way for 2018 and future years.
Am I calculating this correctly then for a fair comparison, with a marginal federal rate of 24% and marginal CA rate of 9.3%, and assuming you'll pay about 30% of your normal CA tax rate on the VMFXX (estimate based on the 69.86% of income from US obligations)? Having a hard time with the partial tax rate can someone check my math...

Code: Select all

Fund				Yield  		Fed Tax 	CA Tax 		Multiplier	Tax Effective Yield
VMMXX (all taxable)		2.11%		.24		.093		1.0		2.11%
VUSXX (no state tax)		1.99%		.24		0		.907		2.19%
VMFXX (partial state tax)	1.97%		.24		.0279		.9349		2.11%
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by Pigeye Brewster »

vieques wrote: Wed Sep 05, 2018 7:39 pm
Ricchan wrote: Tue Sep 04, 2018 11:35 pm - VSUXX, being a treasury fund, is only taxable at the federal level.
Can people point me to where VUSXX (Vanguard US Treasury Money Market) is documented to be taxable only at the federal level? I found tangential references to this on bogleheads.org but tried to look for something definitive online and wasn't able to confirm this for California. When I asked Vanguard, they said
https://www.irs.gov/taxtopics/tc403
Interest income from Treasury bills, notes and bonds - This interest is subject to federal income tax, but is exempt from all state and local income taxes.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by cowbman »

OP said he/she is in FL. FL has no income tax. Given this, I'd probably go for VMMXX for superior yield. It does have slightly more risk than treasuries. Honestly, if I'm going to buy treasuries, I usually buy them at auction from my broker or Treasury Direct. No reason to pay the expense ratio on VUSXX.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by aspiringboglehead »

Personally, I find the safety, simplicity, and liquidity guarantee of VUSXX (or outright Treasury-bill purchases, but I'm willing to pay the expense ratio for the convenience) to be appealing for larger holdings. Remember, retail money-market funds (vs. government money-market funds) don't have an absolute liquidity guarantee under the new regulations.

I admit VMMXX and VMSXX (depending on whether you want interest that's taxable or taxfree at the federal level) probably have exceedingly low risk, but they feel like chasing (admittedly very minor) credit risk for small differences in yield in order to hold instruments that are, at bottom, immensely more complicated for individuals to evaluate. I'm a legal academic with significant financial experience, and still, without much more research, I wouldn't want to opine on the precise risk of a VRDO in times of extreme stress (or the perception of that risk, which might drive redemptions). That kind of complication leads me away from retail funds as a substitute for savings accounts, particularly for larger holdings, even though Vanguard's retail funds have an extremely strong, conservative track record.

I can't see what VMFXX adds over VUSXX, particularly during periods where it doesn't even pay more than VUSXX. I'm ignoring state taxes, personally, because I live in a state without an income tax, but that would of course be another advantage of VUSXX over VMFXX.

VUSXX is literally composed of a few dozen Treasury bills. For me, the idea is that I'm paying active managers at Vanguard a small fee (1) to select those well and (2) to execute the purchases and reinvest the interest so that I don't have to bother.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by smectym »

VUSXX is a brilliant money market fund choice. Go with it. As a matter of protocol and best practice it only makes sense to go with the absolute safest money market fund when you’re looking for safety. So on that basis I would rule out otherwise excellent funds such as Vanguard Prime &c.

The only “safer—er-er” alternative is buying three month treasury bills on Treasury Direct. And that’s not a bad idea actually. It’s even cheaper than VUSXX because Treasury Direct levies no fees or ER whatsoever.

But for some that’s too much of a hassle or they don’t want to learn a new platform, they’re comfortable with Vanguard. Fine. VUSXX will do the job

Smectym
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by shawcroft »

aspiringboglehead wrote: Sat Mar 02, 2019 1:26 am VUSXX is literally composed of a few dozen Treasury bills. For me, the idea is that I'm paying active managers at Vanguard a small fee (1) to select those well and (2) to execute the purchases and reinvest the interest so that I don't have to bother.
Aspiring Boglehead: Great observation. Certainly agrees with Taylor Larimore's frequent suggestion that we keep thing simple.
Shawcroft
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by Dottie57 »

The one thing I don’t like about Fidelity is their Money market funds andd associated expense ratios. The ERs at fidelity are .42 vs .15 at vanguard. Almost 3 times as much at Fidelity. I think VUSXX is an outstanding fund for those who have State income tax.
TheDDC
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by TheDDC »

Dottie57 wrote: Sat Mar 02, 2019 12:04 pm The one thing I don’t like about Fidelity is their Money market funds andd associated expense ratios. The ERs at fidelity are .42 vs .15 at vanguard. Almost 3 times as much at Fidelity. I think VUSXX is an outstanding fund for those who have State income tax.
Agree. I have state tax (though at 3.07% it's not too rough). I just wish you didn't need $50k to start it in a taxable account. That's a lot to hold in cash for anyone, period. Until then I'll be using Ally For my EF.

-TheDDC
Rules to wealth building: 90-100% VTSAX piled high and deep, 0-10% VIGAX tilt, 0% given away to banks, minimize amount given to medical-industrial complex
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by stan1 »

TheDDC wrote: Sat Mar 02, 2019 1:06 pm Agree. I have state tax (though at 3.07% it's not too rough). I just wish you didn't need $50k to start it in a taxable account. That's a lot to hold in cash for anyone, period. Until then I'll be using Ally For my EF.

-TheDDC
Just to point out it is a $50K minimum initial investment, you don't need to keep $50K in Treasury MMF for it to stay open. Maybe that added bit of detail will help a few people?
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by Dottie57 »

stan1 wrote: Sat Mar 02, 2019 1:12 pm
TheDDC wrote: Sat Mar 02, 2019 1:06 pm Agree. I have state tax (though at 3.07% it's not too rough). I just wish you didn't need $50k to start it in a taxable account. That's a lot to hold in cash for anyone, period. Until then I'll be using Ally For my EF.

-TheDDC
Just to point out it is a $50K minimum initial investment, you don't need to keep $50K in Treasury MMF for it to stay open. Maybe that added bit of detail will help a few people?
Yes I know. I would keep about 75k in there. Do you happen to know if check writing is available against this fund?
Grt2bOutdoors
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by Grt2bOutdoors »

Dottie57 wrote: Sat Mar 02, 2019 3:00 pm
stan1 wrote: Sat Mar 02, 2019 1:12 pm
TheDDC wrote: Sat Mar 02, 2019 1:06 pm Agree. I have state tax (though at 3.07% it's not too rough). I just wish you didn't need $50k to start it in a taxable account. That's a lot to hold in cash for anyone, period. Until then I'll be using Ally For my EF.

-TheDDC
Just to point out it is a $50K minimum initial investment, you don't need to keep $50K in Treasury MMF for it to stay open. Maybe that added bit of detail will help a few people?
Yes I know. I would keep about 75k in there. Do you happen to know if check writing is available against this fund?
Page 38 of the Statutory Prospectus (detailed one) indicates you may redeem shares in the fund via checkwriting if you have established that option on your account. Otherwise, you may redeem by selling fund shares and receiving proceeds into your bank account or via a paper check sent from Vanguard.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Dottie57
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by Dottie57 »

Grt2bOutdoors wrote: Sat Mar 02, 2019 3:09 pm
Dottie57 wrote: Sat Mar 02, 2019 3:00 pm
stan1 wrote: Sat Mar 02, 2019 1:12 pm
TheDDC wrote: Sat Mar 02, 2019 1:06 pm Agree. I have state tax (though at 3.07% it's not too rough). I just wish you didn't need $50k to start it in a taxable account. That's a lot to hold in cash for anyone, period. Until then I'll be using Ally For my EF.

-TheDDC
Just to point out it is a $50K minimum initial investment, you don't need to keep $50K in Treasury MMF for it to stay open. Maybe that added bit of detail will help a few people?
Yes I know. I would keep about 75k in there. Do you happen to know if check writing is available against this fund?
Page 38 of the Statutory Prospectus (detailed one) indicates you may redeem shares in the fund via checkwriting if you have established that option on your account. Otherwise, you may redeem by selling fund shares and receiving proceeds into your bank account or via a paper check sent from Vanguard.
Thank you.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by grabiner »

mpnret wrote: Tue Sep 25, 2018 10:00 am The footnote for Vanguard Federal Money Market in the link you provided states: *** This fund meets the threshold requirements for California, Connecticut, and New York, which require that 50% of the fund’s assets at each quarter-end within the tax year
consist of U.S. government obligations.
I don't see anything about NJ. Can anyone confirm that I would only pay partial tax on VMFXX in NJ?
States other than the indicated ones, such as NJ, give a tax exemption to whatever portion of the income was derived from Treasury securities. In CA, CT, and NY, there is no tax exemption at all unless a fund meets the 50% rule.

NJ does have a special rule of its own, also footnoted in the chart, but that rule is not relevant to money-market funds. NJ exempts capital gains from tax if the gains are on bonds exempt from NJ state tax. If a fund is a NJ qualified investment fund (at least 80% tax-exempt), a prorated share of gains on that fund are also tax-exempt. In most other states, capital gains on Treasury bonds, or funds holding them, are taxed the same as other capital gains.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by Ckprocker »

How does VMFXX work in Connecticut with the current tax rules?
I’m a bit confused from comments here because it seems that VMFXX is above the 50% so I’m assuming Connecticut residents would not have to pay state income tax from funds kept in VMFXX...Am I missing something?
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by shawcroft »

Ckprocker wrote: Sat Mar 02, 2019 4:28 pm How does VMFXX work in Connecticut with the current tax rules?
I’m a bit confused from comments here because it seems that VMFXX is above the 50% so I’m assuming Connecticut residents would not have to pay state income tax from funds kept in VMFXX...Am I missing something?
Ckprocker: You and I are in the same boat......(state)....so I share your keen interest in this question.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by stan1 »

Ckprocker wrote: Sat Mar 02, 2019 4:28 pm How does VMFXX work in Connecticut with the current tax rules?
I’m a bit confused from comments here because it seems that VMFXX is above the 50% so I’m assuming Connecticut residents would not have to pay state income tax from funds kept in VMFXX...Am I missing something?
You identify the percentage of government obligation interest based on this table.
https://personal.vanguard.com/pdf/USGO_012019.pdf

For VFMXX it is 77.79% so if you have $1000 in dividends you can claim $777.90 of that as exempt from state income taxes. The rest is taxable by the state. Turbo Tax interview will ask the necessary questions but you have to do some calculations.

CA, CT, and NY require that 50% of the funds assets be in government obligation assets at the end of each quarter. Look for the double asterisk on the table to identify which funds qualify. Note this is a different metric than the percentage of government obligation interest earned. Prime MMF has 28.23% government obligation interest but does not cross the 50% threshold to allow claiming it as tax exempt.
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by Ckprocker »

Thanks Stan1

How is VMFXX taxed at the Federal level ?
For those of us in Connecticut, which would be better? VMFXX or VSUXX?

Thanks again for the feedback for us rookies
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magicwaltz
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Re: VSUXX vs VMMXX vs VMFXX vs Money Market (FDIC insured)

Post by magicwaltz »

Ckprocker wrote: Sat Mar 02, 2019 5:26 pm Thanks Stan1

How is VMFXX taxed at the Federal level ?
For those of us in Connecticut, which would be better? VMFXX or VSUXX?

Thanks again for the feedback for us rookies
It depends on your tax rates.

VMFXX: fed tax + partial state tax.
VUSXX: fed tax only. (no state tax)

To compare VMFXX vs VUSXX, you can compute the after-tax yield = (7-day SEC yield) - (all taxes), whichever gives you the higher after-tax yield is your best bet.
Note that SEC yield varies from time to time, and everyone has different tax rates. So we can't say one is definitely better than another.
Hope this helps.
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