How to set up direct deposit to Vanguard Prime Money Market?

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Momus
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How to set up direct deposit to Vanguard Prime Money Market?

Post by Momus » Sun Sep 23, 2018 5:20 pm

I have Ally Savings account but since Vanguard Prime MM is earning more, I want to direct deposit straight to Vanguard Prime MM.

I am not even sure why Vanguard made our settlement account Vanguard Federal Money Market Fund (that's worse than Prime MM)...

How do I do this with the least steps possible?

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Mel Lindauer » Sun Sep 23, 2018 6:30 pm

Momus wrote:
Sun Sep 23, 2018 5:20 pm
I have Ally Savings account but since Vanguard Prime MM is earning more, I want to direct deposit straight to Vanguard Prime MM.

I am not even sure why Vanguard made our settlement account Vanguard Federal Money Market Fund (that's worse than Prime MM)...

How do I do this with the least steps possible?
Unlike the "good old days", with the Brokerage account, everything goes through the Federal MM Transaction acct. so things now take more steps than previously. That's part of the supposed "upgrade" which, IMO, is a step backwards.
Best Regards - Mel | | Semper Fi

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by arf30 » Sun Sep 23, 2018 6:31 pm

Momus wrote:
Sun Sep 23, 2018 5:20 pm
I am not even sure why Vanguard made our settlement account Vanguard Federal Money Market Fund (that's worse than Prime MM)...
This is due to money market reform in 2016, brokerages must now use federal MM funds as settlement accounts (or FDIC cash) because prime MM funds are subject to floating NAV, redemption gates and fees imposed on them during a crisis.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Big Dog » Sun Sep 23, 2018 6:56 pm

^^correct. The feds made 'em do it.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by oldcomputerguy » Sun Sep 23, 2018 7:07 pm

Momus wrote:
Sun Sep 23, 2018 5:20 pm
I am not even sure why Vanguard made our settlement account Vanguard Federal Money Market Fund (that's worse than Prime MM)...
https://investor.vanguard.com/mutual-fu ... et-reform/
Our Federal Money Market Fund**—which also seeks to maintain a stable $1 NAV—is now the only fund that can be used to settle brokerage trades. The fund isn't subject to the liquidity fee or redemption gate requirements.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by UpperNwGuy » Sun Sep 23, 2018 8:07 pm

It isn't just Vanguard. The other brokerage houses have similar restrictions to comply with the Federal rules.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by indexfundfan » Sun Sep 23, 2018 8:15 pm

We are lucky that at least Vanguard offers the Federal MMF as a sweep, which provides a reasonable yield.

Most other brokerages took advantage of the situation and only offer a FDIC product for the sweep account. The interest rates offered on those FDIC products are miserable, typically like 0.25% or less. These brokerage profit from this arrangement.
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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by welderwannabe » Sun Sep 23, 2018 8:18 pm

If someone sees some language stating that the feds actually required settlement funds to be government funds I would like to see it. I haven't seen that language but have looked for it. Am curious if anyone else has.

My guess is that it was easier for Vanguard and others to just use a single settlement fund since fixed NAV retail MM's are limited to persons only and not corporations, institutions etc. Otherwise they would need to have different settlement funds for different types of customers and that could get painful.

Fidelity did a nice job...because even though their 'core' funds are limited to government funds/FDIC accounts, they allow you to use any money market fund in your account as a source of cash for trades. While Fidelity's 'core' funds don't yield as much as Vanguards Federal due to higher expenses, they arent horrible. I wish Vanguard would consider all my MM money in prime part of my 'cash available to trade' like Fidelity does.


However, to answer the OPs question: If you have the newer style Vanguard 'brokerage' account, you can't direct deposit to anything but the settlement fund. The older style accounts you could DD to a specific fund within your account. What I do is an automatic investment at Vanguard a couple days after payday. Solves the problem, but of course paychecks vary a bit so it isn't perfect.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by welderwannabe » Sun Sep 23, 2018 8:20 pm

indexfundfan wrote:
Sun Sep 23, 2018 8:15 pm
We are lucky that at least Vanguard offers the Federal MMF as a sweep, which provides a reasonable yield.
Agreed. The Federal MM is a solid product.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by indexfundfan » Sun Sep 23, 2018 8:34 pm

welderwannabe wrote:
Sun Sep 23, 2018 8:18 pm
Fidelity did a nice job...because even though their 'core' funds are limited to government funds/FDIC accounts, they allow you to use any money market fund in your account as a source of cash for trades.
Interesting. How does this work? Do you get to specify that a certain MMF can be used to settle trades? Is the redemption from the MMF done automatically to settle trades?

I know Vanguard lets you specify an alternate redemption fund to pay for checks written.
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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by welderwannabe » Mon Sep 24, 2018 7:03 am

indexfundfan wrote:
Sun Sep 23, 2018 8:34 pm
Interesting. How does this work? Do you get to specify that a certain MMF can be used to settle trades? Is the redemption from the MMF done automatically to settle trades?

I know Vanguard lets you specify an alternate redemption fund to pay for checks written.
It just works. The core fund and all money markets in an account are considered cash available for trade and withdrawal.

If I have 3 different fidelity money market funds with $50 each, then my cash available to trade shows up as $150.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by femur » Mon Sep 24, 2018 7:07 am

From what I understand, if you setup "Vanguard Advantage" in your account (flagship only offering), you can designate the PMM to be a checking-like account. Meaning you can direct deposit to it and write checks against it.

Is that correct?

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by TN Bogle » Mon Sep 24, 2018 7:27 am

I have been able to deposit money directly into prime MM from my bank account without the money going into Fedreal MM. I think you just designate the destination and the source. It was a single step transaction.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Dandy » Mon Sep 24, 2018 7:41 am

femur wrote:
Mon Sep 24, 2018 7:07 am
From what I understand, if you setup "Vanguard Advantage" in your account (flagship only offering), you can designate the PMM to be a checking-like account. Meaning you can direct deposit to it and write checks against it.

Is that correct?

I believe flagship isn't the only group that can have the Advantage Account but there is a fee charged for non flagship customers. The Fed Money Market is used vs Prime. I don't believe you can choose Prime.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by abuss368 » Wed Sep 26, 2018 11:34 am

Mel Lindauer wrote:
Sun Sep 23, 2018 6:30 pm
Momus wrote:
Sun Sep 23, 2018 5:20 pm
I have Ally Savings account but since Vanguard Prime MM is earning more, I want to direct deposit straight to Vanguard Prime MM.

I am not even sure why Vanguard made our settlement account Vanguard Federal Money Market Fund (that's worse than Prime MM)...

How do I do this with the least steps possible?
Unlike the "good old days", with the Brokerage account, everything goes through the Federal MM Transaction acct. so things now take more steps than previously. That's part of the supposed "upgrade" which, IMO, is a step backwards.
Hi Mel -

Did you “upgrade” to the brokerage accounts?
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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Mel Lindauer » Wed Sep 26, 2018 1:17 pm

abuss368 wrote:
Wed Sep 26, 2018 11:34 am
Mel Lindauer wrote:
Sun Sep 23, 2018 6:30 pm
Momus wrote:
Sun Sep 23, 2018 5:20 pm
I have Ally Savings account but since Vanguard Prime MM is earning more, I want to direct deposit straight to Vanguard Prime MM.

I am not even sure why Vanguard made our settlement account Vanguard Federal Money Market Fund (that's worse than Prime MM)...

How do I do this with the least steps possible?
Unlike the "good old days", with the Brokerage account, everything goes through the Federal MM Transaction acct. so things now take more steps than previously. That's part of the supposed "upgrade" which, IMO, is a step backwards.
Hi Mel -

Did you “upgrade” to the brokerage accounts?
Yes, reluctantly, and I wish I hadn't. I've called it a "downgrade" rather than an "upgrade". I've identified and reported a number of things that constitute steps backwards, rather than forwards.

I have heard (but can't verify because I haven't used it yet) that we can once again deposit checks to our Vanguard account by taking a picture on our our phones like we used to be able to do under the old system but couldn't do after the "upgrade". That was one of my many complaints about steps backwards that I reported to Vanguard.
Best Regards - Mel | | Semper Fi

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Momus » Wed Sep 26, 2018 4:33 pm

TN Bogle wrote:
Mon Sep 24, 2018 7:27 am
I have been able to deposit money directly into prime MM from my bank account without the money going into Fedreal MM. I think you just designate the destination and the source. It was a single step transaction.
How?

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Artsdoctor » Wed Sep 26, 2018 5:17 pm

femur wrote:
Mon Sep 24, 2018 7:07 am
From what I understand, if you setup "Vanguard Advantage" in your account (flagship only offering), you can designate the PMM to be a checking-like account. Meaning you can direct deposit to it and write checks against it.

Is that correct?
No. Vanguard Advantage account will only only the Federal Money Market fund as your (interest-bearing) checking account. If you like, you can always transfer money into and out of that fund to other money markets, but all of your check and electronic transmittals will go through the Federal Money Market account.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Artsdoctor » Wed Sep 26, 2018 5:19 pm

TN Bogle wrote:
Mon Sep 24, 2018 7:27 am
I have been able to deposit money directly into prime MM from my bank account without the money going into Fedreal MM. I think you just designate the destination and the source. It was a single step transaction.
Definitely. You can "buy" into any fund from your banking account (you just have to connect the banking account with your Vanguard account). However, I don't think you can set up a direct deposit for this.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by abuss368 » Wed Sep 26, 2018 6:57 pm

Mel Lindauer wrote:
Wed Sep 26, 2018 1:17 pm
abuss368 wrote:
Wed Sep 26, 2018 11:34 am

Hi Mel -

Did you “upgrade” to the brokerage accounts?
Yes, reluctantly, and I wish I hadn't. I've called it a "downgrade" rather than an "upgrade". I've identified and reported a number of things that constitute steps backwards, rather than forwards.

I have heard (but can't verify because I haven't used it yet) that we can once again deposit checks to our Vanguard account by taking a picture on our our phones like we used to be able to do under the old system but couldn't do after the "upgrade". That was one of my many complaints about steps backwards that I reported to Vanguard.
I would also add (and I told the Vanguard representative this on two recent telephone calls) that they need to provide actual "year to date" account statements like the older system. In other words, one statement at year end (or quarterly for those who prefer) that includes every single transaction for the year (and not a rolling balance statement). The representative responded in each telephone call that they have heard this from our clients.
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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Mel Lindauer » Wed Sep 26, 2018 7:57 pm

abuss368 wrote:
Wed Sep 26, 2018 6:57 pm
Mel Lindauer wrote:
Wed Sep 26, 2018 1:17 pm
abuss368 wrote:
Wed Sep 26, 2018 11:34 am

Hi Mel -

Did you “upgrade” to the brokerage accounts?
Yes, reluctantly, and I wish I hadn't. I've called it a "downgrade" rather than an "upgrade". I've identified and reported a number of things that constitute steps backwards, rather than forwards.

I have heard (but can't verify because I haven't used it yet) that we can once again deposit checks to our Vanguard account by taking a picture on our our phones like we used to be able to do under the old system but couldn't do after the "upgrade". That was one of my many complaints about steps backwards that I reported to Vanguard.
I would also add (and I told the Vanguard representative this on two recent telephone calls) that they need to provide actual "year to date" account statements like the older system. In other words, one statement at year end (or quarterly for those who prefer) that includes every single transaction for the year (and not a rolling balance statement). The representative responded in each telephone call that they have heard this from our clients.
That's another step backwards that I reported to Vanguard. While they claim that the monthly statements are YTD, they're really nothing more than monthly statements, which means you have to keep all of the statements instead of just the last one.
Best Regards - Mel | | Semper Fi

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by abuss368 » Wed Sep 26, 2018 8:43 pm

Mel Lindauer wrote:
Wed Sep 26, 2018 7:57 pm
abuss368 wrote:
Wed Sep 26, 2018 6:57 pm

I would also add (and I told the Vanguard representative this on two recent telephone calls) that they need to provide actual "year to date" account statements like the older system. In other words, one statement at year end (or quarterly for those who prefer) that includes every single transaction for the year (and not a rolling balance statement). The representative responded in each telephone call that they have heard this from our clients.
That's another step backwards that I reported to Vanguard. While they claim that the monthly statements are YTD, they're really nothing more than monthly statements, which means you have to keep all of the statements instead of just the last one.
Did you receive any response from Vanguard that they will change the statements?
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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Eagle33 » Thu Sep 27, 2018 12:37 am

Artsdoctor wrote:
Wed Sep 26, 2018 5:19 pm
TN Bogle wrote:
Mon Sep 24, 2018 7:27 am
I have been able to deposit money directly into prime MM from my bank account without the money going into Fedreal MM. I think you just designate the destination and the source. It was a single step transaction.
Definitely. You can "buy" into any fund from your banking account (you just have to connect the banking account with your Vanguard account). However, I don't think you can set up a direct deposit for this.
If you establish a VG connection with your bank account, then you can setup an "Automatic Investment" that is initiated from VG to your bank for the funds. This works for both the old MF accounts and the new brokerage accounts - we have both setup and automatically working. See your account maintenance screen for these "Banking and money movement" services.
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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Mel Lindauer » Thu Sep 27, 2018 3:41 am

abuss368 wrote:
Wed Sep 26, 2018 8:43 pm
Mel Lindauer wrote:
Wed Sep 26, 2018 7:57 pm
abuss368 wrote:
Wed Sep 26, 2018 6:57 pm

I would also add (and I told the Vanguard representative this on two recent telephone calls) that they need to provide actual "year to date" account statements like the older system. In other words, one statement at year end (or quarterly for those who prefer) that includes every single transaction for the year (and not a rolling balance statement). The representative responded in each telephone call that they have heard this from our clients.
That's another step backwards that I reported to Vanguard. While they claim that the monthly statements are YTD, they're really nothing more than monthly statements, which means you have to keep all of the statements instead of just the last one.
Did you receive any response from Vanguard that they will change the statements?
Only that they'll report it and add it to the list.
Best Regards - Mel | | Semper Fi

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by lostdog » Thu Sep 27, 2018 7:55 am

It's so easy the transfer money from a checking account to the Federal MM anyway. Why bother with direct deposit.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Artsdoctor » Fri Sep 28, 2018 12:20 pm

Eagle33 wrote:
Thu Sep 27, 2018 12:37 am
Artsdoctor wrote:
Wed Sep 26, 2018 5:19 pm
TN Bogle wrote:
Mon Sep 24, 2018 7:27 am
I have been able to deposit money directly into prime MM from my bank account without the money going into Fedreal MM. I think you just designate the destination and the source. It was a single step transaction.
Definitely. You can "buy" into any fund from your banking account (you just have to connect the banking account with your Vanguard account). However, I don't think you can set up a direct deposit for this.
If you establish a VG connection with your bank account, then you can setup an "Automatic Investment" that is initiated from VG to your bank for the funds. This works for both the old MF accounts and the new brokerage accounts - we have both setup and automatically working. See your account maintenance screen for these "Banking and money movement" services.
Yes. Vanguard can definitely pull an automatic investment/deposit from your bank and can also automatically push a withdrawal to your bank. However, I don't think you can actually do a direct deposit from your employer to a Vanguard fund.

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by UpperNwGuy » Fri Sep 28, 2018 2:06 pm

lostdog wrote:
Thu Sep 27, 2018 7:55 am
It's so easy the transfer money from a checking account to the Federal MM anyway. Why bother with direct deposit.
+1

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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by Eagle33 » Sat Sep 29, 2018 2:44 am

Artsdoctor wrote:
Fri Sep 28, 2018 12:20 pm
Eagle33 wrote:
Thu Sep 27, 2018 12:37 am
Artsdoctor wrote:
Wed Sep 26, 2018 5:19 pm
TN Bogle wrote:
Mon Sep 24, 2018 7:27 am
I have been able to deposit money directly into prime MM from my bank account without the money going into Fedreal MM. I think you just designate the destination and the source. It was a single step transaction.
Definitely. You can "buy" into any fund from your banking account (you just have to connect the banking account with your Vanguard account). However, I don't think you can set up a direct deposit for this.
If you establish a VG connection with your bank account, then you can setup an "Automatic Investment" that is initiated from VG to your bank for the funds. This works for both the old MF accounts and the new brokerage accounts - we have both setup and automatically working. See your account maintenance screen for these "Banking and money movement" services.
Yes. Vanguard can definitely pull an automatic investment/deposit from your bank and can also automatically push a withdrawal to your bank. However, I don't think you can actually do a direct deposit from your employer to a Vanguard fund.
We were able to do a Direct Deposit from payroll check to a specific fund in the old MF-style account. Unable to do direct deposit from my payroll check into spouse's IRA brokerage account because of the different name.
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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by youngpleb » Sat Sep 29, 2018 7:37 am

Well, I’m saving for a house and I’ve got my auto-investments set to buy Prime Money Market. So you could go that route if this is a recurring thing.
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Re: How to set up direct deposit to Vanguard Prime Money Market?

Post by William4u » Sat Sep 29, 2018 9:09 am

Federal Money Market, for the last year or so, is generally 13-15bp behind Prime Money Market. But Federal MM generally has better tax treatment (being partially exempt from state taxes). The difference in returns between Federal MM and Prime MM is very small, once taxes are calculated.

Right now, Federal MM compound yield is 2.02%. Prime MM is 2.15%.

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