Time to Move Vanguard MM Funds to Local Bank? (B of A)

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VeganBH
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Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by VeganBH » Wed Mar 18, 2020 4:59 pm

DH and I are considering moving a significant amount of funds out of Vanguard Federal MM (default account, VMFXX), to a savings account at BofA Branch (~$1/2M within FDIC limit). This is our taxable account.

Is this crazy to consider making this move - or prudent/safer under these unprecedented times? We are on the cusp of retirement too (or not).
Obviously, our "stay the course" philosophy is seriously being challenged. :shock:
Last edited by VeganBH on Wed Mar 18, 2020 6:12 pm, edited 2 times in total.
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rasta
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by rasta » Wed Mar 18, 2020 5:23 pm

why not just do a cd ladder with brokered cd's
or:
buy VUSXX
or
buy short term t-bills at auction?

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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by retired@50 » Wed Mar 18, 2020 5:49 pm

Since the OP clarified, this is a taxable account,

I suppose if you're seeking FDIC insurance, then moving to a bank would be prudent.

Since the Vanguard Federal Money Market fund is invested primarily in U.S. Government securities, I would suspect it's nearly as good.

Regards,
Last edited by retired@50 on Wed Mar 18, 2020 8:31 pm, edited 1 time in total.
This is one person's opinion. Nothing more.

AerialP
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by AerialP » Wed Mar 18, 2020 5:49 pm

Two days ago I moved ~9 months of usual expenses from my liquid Vanguard Prime Money Market fund in to my credit union, by way of a small ladder of CDs as well as in to my savings and my checking accounts.
This left another 9 months of expenses still liquid at Vanguard.
Nothing radical, I'm just seeing it as a broad brushstroke of prudence.

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VeganBH
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by VeganBH » Wed Mar 18, 2020 6:11 pm

AerialP wrote:
Wed Mar 18, 2020 5:49 pm
Two days ago I moved ~9 months of usual expenses from my liquid Vanguard Prime Money Market fund in to my credit union, by way of a small ladder of CDs as well as in to my savings and my checking accounts.
This left another 9 months of expenses still liquid at Vanguard.
Nothing radical, I'm just seeing it as a broad brushstroke of prudence.
Oops, sorry not "not-taxable" - but our TAXABLE account (will edit my post) - so not a Roth.

Think we'll do something similar to you....
Thanks! :beer
"Until we extend our circle of compassion to all living things, humanity will not find peace."​ ~ Albert Sc​hweitzer

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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by VeganBH » Wed Mar 18, 2020 6:15 pm

rasta wrote:
Wed Mar 18, 2020 5:23 pm
why not just do a cd ladder with brokered cd's
or:
buy VUSXX
or
buy short term t-bills at auction?
Thanks for suggestion - will look into/consider the CDs - the other.... I don't have enough confidence in my understanding of anything finance related, especially anything new to me. :o
"Until we extend our circle of compassion to all living things, humanity will not find peace."​ ~ Albert Sc​hweitzer

Rudedog
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by Rudedog » Wed Mar 18, 2020 6:55 pm

Moved a year of expenses out of VMMXX to Ally Bank 11 month CD, 1.75%. FDIC insured.

smectym
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by smectym » Wed Mar 18, 2020 11:31 pm

Rudedog wrote:
Wed Mar 18, 2020 6:55 pm
Moved a year of expenses out of VMMXX to Ally Bank 11 month CD, 1.75%. FDIC insured.
Basically what we’re doing too, but VUSXX to TIAA (formerly Everbank). Money market fund yields appear headed towards zero again, so locking in some sort of yield seems prudent.

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Riprap
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by Riprap » Wed Mar 18, 2020 11:50 pm

I'm moving cash from Vanguard MM funds to a couple of banks I have accounts with mainly for the insurance. I'll worry about how to invest that cash once it gets there. I'll probably just leave it in savings accounts for now.

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celia
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by celia » Thu Mar 19, 2020 12:25 am

VeganBH wrote:
Wed Mar 18, 2020 4:59 pm
DH and I are considering moving a significant amount of funds out of Vanguard Federal MM (default account, VMFXX), to a savings account at BofA Branch (~$1/2M within FDIC limit).
May I ask how you would get FDIC insurance for $2M?

$250k for her account
$250k for his account
$250k for joint account
$250k for each of 5 beneficiaries of a trust account
????

Even though this scenario would be covered, FDIC-wise, the growth (interest) as time goes by, will increase the amount at that bank. This also assumes you have no other accounts at BofA.

rj49
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by rj49 » Thu Mar 19, 2020 12:44 am

With Fed rates at zero, it's likely that bank rates will soon reflect that. If you have substantial funds, you could set up a CD ladder of sorts. I just saw that Discover Bank has 12-36 month CDs at 1.75-1.80%, with an early withdrawal penalty of 3-6 months of interest. I've used them for some time, and they recently went to a no=fee system and have good US-based customer service, so I've tried to get my mother to get away from the Wells Fargo vultures to Discover Bank. I remember earning next to nothing in the VG MMF accounts for several years, so I'd think it would be worthwhile to move any money you don't need for the next couple of years to a safe CD ladder. I put lots of money into 7-year CDs paying 6.25% in 2007, which helped me ride out both the stock market carnage and the resultant minimal MMF and bank yields afterwards.

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VeganBH
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by VeganBH » Thu Mar 19, 2020 3:29 am

rj49 wrote:
Thu Mar 19, 2020 12:44 am
With Fed rates at zero, it's likely that bank rates will soon reflect that. If you have substantial funds, you could set up a CD ladder of sorts. I just saw that Discover Bank has 12-36 month CDs at 1.75-1.80%, with an early withdrawal penalty of 3-6 months of interest. I've used them for some time, and they recently went to a no=fee system and have good US-based customer service, so I've tried to get my mother to get away from the Wells Fargo vultures to Discover Bank. I remember earning next to nothing in the VG MMF accounts for several years, so I'd think it would be worthwhile to move any money you don't need for the next couple of years to a safe CD ladder. I put lots of money into 7-year CDs paying 6.25% in 2007, which helped me ride out both the stock market carnage and the resultant minimal MMF and bank yields afterwards.
Good tips - I appreciate your input. CD's should be another consideration for us...
"Until we extend our circle of compassion to all living things, humanity will not find peace."​ ~ Albert Sc​hweitzer

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VeganBH
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Re: Time to Move Vanguard MM Funds to Local Bank? (B of A)

Post by VeganBH » Thu Mar 19, 2020 3:37 am

celia wrote:
Thu Mar 19, 2020 12:25 am
VeganBH wrote:
Wed Mar 18, 2020 4:59 pm
DH and I are considering moving a significant amount of funds out of Vanguard Federal MM (default account, VMFXX), to a savings account at BofA Branch (~$1/2M within FDIC limit).
May I ask how you would get FDIC insurance for $2M?

$250k for her account
$250k for his account
$250k for joint account
$250k for each of 5 beneficiaries of a trust account
????

Even though this scenario would be covered, FDIC-wise, the growth (interest) as time goes by, will increase the amount at that bank. This also assumes you have no other accounts at BofA.
Sorry, it's actually $0.5M - where $250K x 2 is coverage for a two trustee named account (of Rev. trust).

Banks yielding near zero not too much a concern - preservation of capital...

Thanks for your input! :beer
"Until we extend our circle of compassion to all living things, humanity will not find peace."​ ~ Albert Sc​hweitzer

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