VMMXX - [Vanguard Prime Money Market Fund vs. online bank]

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Topic Author
davidvoyna
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Joined: Sun Dec 30, 2018 10:21 pm

VMMXX - [Vanguard Prime Money Market Fund vs. online bank]

Post by davidvoyna » Sat Jan 12, 2019 1:01 pm

I was thinking of parking my emergency savings and money I am trying to decide which VG funds to invest in in VMMXX instead of an online bank like Synchrony/CapOne/Ally. The amount is about 100 to 150k.

Does this approach seem reasonable?

Also, can one readily access and transfer money from VMMXX to my brick-n-mortar bank as needed? Or are there problems?

Thank you!

mhalley
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Re: VMMXX -

Post by mhalley » Sat Jan 12, 2019 1:21 pm

That is what I do. I transferred money from my vanguard fund to my b&m bank the other day with just a couple of clicks, showed up as expected.

sport
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Location: Cleveland, OH

Re: VMMXX -

Post by sport » Sat Jan 12, 2019 5:56 pm

Transferring money between a bank checking account and a Vanguard MM fund is easy. It normally takes a day or two. However, you need to set up the bank link at Vanguard to make this happen. That will take longer, as Vanguard implements security steps to make sure that the bank account is really yours. I believe that takes about 10 days. Once it is set up, you can transfer money in either direction.

Topic Author
davidvoyna
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Re: VMMXX -

Post by davidvoyna » Sat Jan 12, 2019 8:01 pm

Thank you both!

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pokebowl
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Re: VMMXX -

Post by pokebowl » Sat Jan 12, 2019 8:22 pm

davidvoyna wrote:
Sat Jan 12, 2019 1:01 pm
I was thinking of parking my emergency savings and money I am trying to decide which VG funds to invest in in VMMXX instead of an online bank like Synchrony/CapOne/Ally. The amount is about 100 to 150k.

Does this approach seem reasonable?

Also, can one readily access and transfer money from VMMXX to my brick-n-mortar bank as needed? Or are there problems?

Thank you!
I've been doing this for awhile since interest rates began to rise again. The perk is you get market value instantly versus waiting on your bank to get around to it. The inverse is also true in a falling rate environment similar to 2009 and many of us going into online "high yield account banking" (Synchrony/CapOne/Ally) for that sweet 1%. The negative is its not FDIC insured, no money market fund is, and to some that is scary, though for conservative funds such as VMMXX I do not view the risk as that large.

For your second question no issues, I've been able to transfer money in and out of VMMXX as I would have a normal high yield bank account, takes one to two days per normal ACH push/pull times. I'll probably continue to use it for the foreseeable future.
There is nothing more expensive than something offered for free.

retiredflyboy
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Re: VMMXX - [Vanguard Prime Money Market Fund vs. online bank]

Post by retiredflyboy » Sat Jan 12, 2019 11:55 pm

Yes is reasonable, and yes easy to transfer funds.
Facts are stubborn things. Everything works until it doesn’t.

beall_canbe
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Re: VMMXX - [Vanguard Prime Money Market Fund vs. online bank]

Post by beall_canbe » Sun Jan 13, 2019 12:05 am

I live in MA. I park my emergency money in VMATX, which invests in Massachusetts Municipal Bonds.

Higher and tax-free dividend rate (around 3%) compared with VMMXX, and of course, with a bit more risk. But the trade-off has been working for me. The downside seems to be limited. Even when that happens, like in the last one or two years, the dividend income made up for the loss and the total value never dip below my initial investment.

LocusCoeruleus
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Re: VMMXX - [Vanguard Prime Money Market Fund vs. online bank]

Post by LocusCoeruleus » Sun Jan 13, 2019 9:03 am

beall_canbe wrote:
Sun Jan 13, 2019 12:05 am
I live in MA. I park my emergency money in VMATX, which invests in Massachusetts Municipal Bonds.

Higher and tax-free dividend rate (around 3%) compared with VMMXX, and of course, with a bit more risk. But the trade-off has been working for me. The downside seems to be limited. Even when that happens, like in the last one or two years, the dividend income made up for the loss and the total value never dip below my initial investment.
Holding emergency money in a long term state muni fund such as VMATX is not prudent. Here is another red flag - look at the risk potential listed on vanguard - it is a 3/5. For e-fund you want something that is 1/5 on the risk scale. Don't fall into the trap of looking at the higher yields offered by long term state muni. It is higher for a reason. This state muni long term fund is an inappropriate choice for an emergency fund.

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ruralavalon
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Re: VMMXX - [Vanguard Prime Money Market Fund vs. online bank]

Post by ruralavalon » Sun Jan 13, 2019 11:59 am

davidvoyna wrote:
Sat Jan 12, 2019 1:01 pm
I was thinking of parking my emergency savings and money I am trying to decide which VG funds to invest in in VMMXX instead of an online bank like Synchrony/CapOne/Ally. The amount is about 100 to 150k.

Does this approach seem reasonable?
Yes that is reasonable.


Also, can one readily access and transfer money from VMMXX to my brick-n-mortar bank as needed? Or are there problems?

Thank you!
It is easy to transfer, it takes about 2 business days.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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greg24
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Re: VMMXX - [Vanguard Prime Money Market Fund vs. online bank]

Post by greg24 » Sun Jan 13, 2019 12:01 pm

We keep the bulk of our cash in VMMXX, with a local credit union checking account for cash, ATM usage and small checks.

Moving money from VMMXX to local checking or vice versa was easy to setup, and easy to do.

I love using VMMXX for the bulk of our cash, it has a very competitive yield.

Topic Author
davidvoyna
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Joined: Sun Dec 30, 2018 10:21 pm

Re: VMMXX - [Vanguard Prime Money Market Fund vs. online bank]

Post by davidvoyna » Sun Jan 13, 2019 6:08 pm

Thank you all! I will park my money in VMMXX.

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