Investing Large Sum of Cash in VUSXX @ Etrade

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Carno
Posts: 30
Joined: Sat Jun 02, 2018 4:54 pm

Investing Large Sum of Cash in VUSXX @ Etrade

Post by Carno » Thu Sep 13, 2018 11:30 pm

I have some bonds at Etrade that I expect to redeem in the near future and was looking for a great place to park the cash. I currently have cash in PurePoint Financial that yields 1.90%. My Etrade adviser suggested VUSXX (Vanguard) that yields ~2% and sells with no commission/fee at Etrade as a Money Market mutual fund. I plan to keep my cash at Etrade if possible and not to move it out in order to enhance my brokerage margin account. I have never before invested in VUSXX. I am asking the members if they could share their experience with this fund including any pros and cons.
Last edited by Carno on Fri Sep 14, 2018 7:39 pm, edited 1 time in total.

User avatar
whodidntante
Posts: 4173
Joined: Thu Jan 21, 2016 11:11 pm

Re: Investing Large Sum of Cash in VUSXX @ Etrade

Post by whodidntante » Thu Sep 13, 2018 11:39 pm

I have not invested in it, but that doesn't matter. It is a well run fund and quite safe. The assets underlying are backed by the federal government.

123
Posts: 3818
Joined: Fri Oct 12, 2012 3:55 pm

Re: Investing Large Sum of Cash in VUSXX @ Etrade

Post by 123 » Thu Sep 13, 2018 11:52 pm

Since it's a money market fund they strive to maintain the share price at $1.00. You don't(hopefully) have the duration issue present in bond funds.
The closest helping hand is at the end of your own arm.

jpborga
Posts: 1
Joined: Thu Sep 13, 2018 11:39 pm

Re: Investing Large Sum of Cash in VUSXX @ Etrade

Post by jpborga » Fri Sep 14, 2018 12:09 am

I would not do that unless I needed the money very soon in only a few years or so. You will not make any money in VUSXX as inflation is at least 2 or 3 percent currently. I would buy the index funds VOO and VXF and maybe a little bit of or VXUS. You could also buy undervalued stocks, such as things with a PE ratio of less than 15 and other low valuations. Examples might include GNC, MO, TAP, GE, KHC, BGFV, XOM, BERY, CMCSA, BBBY, T, MCK, ARCH, VZ, EBAY, AAPL, OLLI, SO, TPB, KR, F, M, FND, TOL, KMB, PG, etc. The cheaper stocks with the lowest valuations - that have been dropping in price most recently - will likely decline a bit more in the short term, but should be the best investments in the medium and long term. That’s what I think, anyways. I prefer to buy low priced stocks and hold on to them a very time and rarely sell. I wouldn’t try to find the stocks that appear to be rising in price, but would instead seek the most stable and high-quality companies, at the lowest price possible. I would suggest ignoring the short term fluctuations, as well, and think long term, if possible. There are many great investments out there and investing is fun, as well.

Carno
Posts: 30
Joined: Sat Jun 02, 2018 4:54 pm

Re: Investing Large Sum of Cash in VUSXX @ Etrade

Post by Carno » Fri Sep 14, 2018 12:49 pm

Thanks for the comments so far. Just to add, VUSXX has a minimum of $50K to buy at Etrade and unlimited trades with no fees. VMMXX has a wee bit better yield but the minimum is $3K to open and has a stiff $20 fee for each trade (buy or sell) thereafter (possibly to discourage excessive trades)!The Admiral class (VMRXX) is not available at Etrade. As I said, I prefer to park my cash for the time being at Etrade in the form of fully liquid assets. As a mutual fund, all shares redeemed (sold) will settle the following day so the cash won't be available immediately unlike selling a security such as an ETF.
Last edited by Carno on Fri Sep 14, 2018 7:39 pm, edited 2 times in total.

CRTR
Posts: 140
Joined: Sat Apr 11, 2015 1:15 pm

Re: Investing Large Sum of Cash in VUSXX @ Etrade

Post by CRTR » Fri Sep 14, 2018 1:26 pm

I have no issues with the choice. Very safe fund. I guess my question is how soon -- or even if you know -- do you expect to access the funds? Another safe, higher yielding option could be a CD ladder. I have a 5 CD year ladder and the worst yield is 2.6% and will be turned over to ~3.5% in December. All of my CDs can be redeemed early with only a small interest penalty (6 months typically)

. . . .just a thought of another possible option with no interest rate risk and FDIC insured. :) Pretty sure you can access to the secondary CD market at Etrade but don't know what the fees are.

rapatelrocky
Posts: 18
Joined: Sun Aug 26, 2018 8:20 pm

Re: Investing Large Sum of Cash in VUSXX @ Etrade

Post by rapatelrocky » Fri Sep 14, 2018 6:01 pm

Carno wrote:
Fri Sep 14, 2018 12:49 pm
Thanks for the comments so far. Just to add, VUSXX has a minimum of $3K to buy at Etrade and unlimited trades with no fees. VMMXX has a wee bit better yield but the minimum is $50K to open and has a stiff $20 fee for each trade (buy or sell) thereafter (possibly to discourage excessive trades)!The Admiral class (VMRXX) is not available at Etrade. As I said, I prefer to park my cash for the time being at Etrade in the form of fully liquid assets. As a mutual fund, all shares redeemed (sold) will settle the following day so the cash won't be available immediately unlike selling a security such as an ETF.
I believe you meant to reverse that - VUSXX has a $50k minimum, VMMXX has a $3k minimum. Not sure about trading costs - I bought VMMXX at Wells Fargo (Portfolio Premier level) with no cost. I suspect Etrade is similar in that regards. But yes, in a taxable account, depending on your bracket, if you have the $50k available, VUSXX would likely beat VMMXX due to tax difference on the dividends.

Carno
Posts: 30
Joined: Sat Jun 02, 2018 4:54 pm

Re: Investing Large Sum of Cash in VUSXX @ Etrade

Post by Carno » Fri Sep 14, 2018 7:36 pm

Sorry, yes, I mixed up the minimum amounts. The Compound Yield difference is currently ~0.12% where VMMXX yields ~0.12% greater than VUSXX.

Post Reply