VMFXX at 2.08% now and keeps growing

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longlife
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VMFXX at 2.08% now and keeps growing

Post by longlife »

I occasionally checked the yield of VMFXX and found it keeps growing from about 0.5% last year to 1.46% now -- I didn't keep an exact record of the numbers, so I only have some rough numbers. Last time I checked it was at probably 1.2% last month. My bet is it will keep growing in the next few months given the rising interest rates.

This is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me.


=============
Edit on 07/22/2022: Only a week after this post, it's raised to 1.51% now. It will likely keep growing.

=============
1.92% as of 08/01/2022 https://investor.vanguard.com/investmen ... mfxx#price
Also edit the subject to reveal the current rate

============
2.00% as of 08/02/2022

============
2.08% as of 08/03/2022
Last edited by longlife on Thu Aug 04, 2022 9:25 am, edited 7 times in total.
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retired@50
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Re: VMFXX at 1.46% now and keeps growing

Post by retired@50 »

longlife wrote: Thu Jul 14, 2022 10:52 am I occasionally checked the yields of VMFXX and found it keeps growing from about 0.5% last year to 1.46% now -- I didn't write down or record all the numbers and dates I checked, so I only have some rough numbers. Last time I checked it was at 1.2% last month. My bet is it will keep growing in the next few months given the raising interest rates.

This is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me.
Yes, you can use VMFXX as an HYSA.

No, Vanguard doesn't offer banking (bill pay) services.

The yield of VMFXX and several other Vanguard money market funds is being tracked in this (similar) thread.
See link: viewtopic.php?p=6773577#p6773577

Regards,
This is one person's opinion. Nothing more.
throw123112
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Re: VMFXX at 1.46% now and keeps growing

Post by throw123112 »

Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
throw123112
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Re: VMFXX at 1.46% now and keeps growing

Post by throw123112 »

Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
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Re: VMFXX at 1.46% now and keeps growing

Post by xenial »

throw123112 wrote: Thu Jul 14, 2022 11:01 am Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
exodusNH
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Re: VMFXX at 1.46% now and keeps growing

Post by exodusNH »

longlife wrote: Thu Jul 14, 2022 10:52 am I occasionally checked the yield of VMFXX and found it keeps growing from about 0.5% last year to 1.46% now -- I didn't keep an exact record of the numbers, so I only have some rough numbers. Last time I checked it was at probably 1.2% last month. My bet is it will keep growing in the next few months given the raising interest rates.

This is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me.
I have started using it as my HYSA. No check writing, etc, but I don't have those features with my HYSA, either. I just transfer to my primary checking account.

Assuming that you didn't just open the account with Vanguard, they credit you the deposit immediately, even though it takes a day or two for the ACH to complete.
OHWantToRetire
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Re: VMFXX at 1.46% now and keeps growing

Post by OHWantToRetire »

I have recently put money in VMFXX in my Chase self-directed account that is tied to my Chase Banking. I was trying to figure out how to buy T-Bills in Chase self-directed, and this was my short term solution until I figured that out.
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Re: VMFXX at 1.46% now and keeps growing

Post by longlife »

xenial wrote: Thu Jul 14, 2022 11:13 am
throw123112 wrote: Thu Jul 14, 2022 11:01 am Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
Thank you for the info! 250 minimum is not bad. actually this webpage is quite informative. I can see VMFXX has almost all the features I need for daily banking, except for debit card which I don't care much. But bill pay is missing which is essential to me, unfortunately.
  • Check
Checkwriting Redemption
Write checks for $250 or more from your Vanguard nonretirement bond or money market fund.
  • Get paid
Direct Deposit Service
Automatically deposit your paycheck, Social Security, pension, or other recurring payment into your Vanguard account.
  • Wire transfer
Wire Redemption
Sell shares from your nonretirement Vanguard account and transfer the proceeds to your bank account by wire.

And many more: https://personal.vanguard.com/us/funds/ ... IntExt=INT
Last edited by longlife on Thu Jul 14, 2022 11:48 am, edited 1 time in total.
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longlife
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Re: VMFXX at 1.46% now and keeps growing

Post by longlife »

exodusNH wrote: Thu Jul 14, 2022 11:16 am
longlife wrote: Thu Jul 14, 2022 10:52 am I occasionally checked the yield of VMFXX and found it keeps growing from about 0.5% last year to 1.46% now -- I didn't keep an exact record of the numbers, so I only have some rough numbers. Last time I checked it was at probably 1.2% last month. My bet is it will keep growing in the next few months given the raising interest rates.

This is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me.
I have started using it as my HYSA. No check writing, etc, but I don't have those features with my HYSA, either. I just transfer to my primary checking account.

Assuming that you didn't just open the account with Vanguard, they credit you the deposit immediately, even though it takes a day or two for the ACH to complete.
As pointed out above, Vanguard does offer check writing which is very nice (with a minimum of 250). 1 day or 2 is fast enough for my emergency fund, and with check writing, it's probably immediately available via checks. I think I might just move onto VMFXX for my emergency fund parking.
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Re: VMFXX at 1.46% now and keeps growing

Post by exodusNH »

longlife wrote: Thu Jul 14, 2022 11:46 am
exodusNH wrote: Thu Jul 14, 2022 11:16 am
longlife wrote: Thu Jul 14, 2022 10:52 am I occasionally checked the yield of VMFXX and found it keeps growing from about 0.5% last year to 1.46% now -- I didn't keep an exact record of the numbers, so I only have some rough numbers. Last time I checked it was at probably 1.2% last month. My bet is it will keep growing in the next few months given the raising interest rates.

This is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me.
I have started using it as my HYSA. No check writing, etc, but I don't have those features with my HYSA, either. I just transfer to my primary checking account.

Assuming that you didn't just open the account with Vanguard, they credit you the deposit immediately, even though it takes a day or two for the ACH to complete.
As pointed out above, Vanguard does offer check writing which is very nice (with a minimum of 250). 1 day or 2 is fast enough for my emergency fund, and with check writing, it's probably immediately available via checks. I think I might just move onto VMFXX for my emergency fund parking.
I was talking more about getting the credit for interest. Note that when you transfer money into the account, it's a couple of days before you can withdraw it, even though you can invest it right away.

Also, while you will get account and routing numbers for ACH deposits, I believe I read here that you can't do an ACH pull from another institution. You need to push it from Vanguard, either directly or via check.

The nice thing about using them as your HYSA is that there's no 6 withdrawal limit that some banks are still enforcing on savings accounts.
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Re: VMFXX at 1.46% now and keeps growing

Post by cvsvm2007 »

When I checked the performance on Vanguard website, I see Year-to-Date return for VMFXX is .17%. I maybe missing something. Can Original poster or someone explain how the return is 1.46%?

Thank You
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Re: VMFXX at 1.46% now and keeps growing

Post by anon_investor »

cvsvm2007 wrote: Wed Jul 20, 2022 9:03 pm When I checked the performance on Vanguard website, I see Year-to-Date return for VMFXX is .17%. I maybe missing something. Can Original poster or someone explain how the return is 1.46%?

Thank You
CVSretur
The 7-day SEC yield is now 1.5%
https://investor.vanguard.com/investmen ... mfxx#price
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Re: VMFXX at 1.46% now and keeps growing

Post by arcticpineapplecorp. »

longlife wrote: Thu Jul 14, 2022 10:52 am This is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?
Ally's paying 1.25% now:
https://time.com/nextadvisor/banking/al ... rest-rate/
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Re: VMFXX at 1.46% now and keeps growing

Post by whodidntante »

xenial wrote: Thu Jul 14, 2022 11:13 am
throw123112 wrote: Thu Jul 14, 2022 11:01 am Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
If I write a check for $249, would it not be paid?
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Re: VMFXX at 1.46% now and keeps growing

Post by anon_investor »

whodidntante wrote: Wed Jul 20, 2022 9:22 pm
xenial wrote: Thu Jul 14, 2022 11:13 am
throw123112 wrote: Thu Jul 14, 2022 11:01 am Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
If I write a check for $249, would it not be paid?
Do you want to risk a bounced check? Probably not worth the risk if sending it to the IRS, but to you brother? Maybe. :twisted:
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Re: VMFXX at 1.46% now and keeps growing

Post by xenial »

whodidntante wrote: Wed Jul 20, 2022 9:22 pm
xenial wrote: Thu Jul 14, 2022 11:13 am
throw123112 wrote: Thu Jul 14, 2022 11:01 am Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
If I write a check for $249, would it not be paid?
I vaguely remember someone posting long ago that a check mistakenly written for under $250 was indeed honored. Perhaps you'd like to perform an experiment.
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Re: VMFXX at 1.46% now and keeps growing

Post by UpperNwGuy »

anon_investor wrote: Wed Jul 20, 2022 9:04 pm The 7-day SEC yield is now 1.5%
https://investor.vanguard.com/investmen ... mfxx#price
And VMRXX is now 1.5% too. VMRXX had been lagging behind VMFXX for quite some time.
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Re: VMFXX at 1.46% now and keeps growing

Post by whodidntante »

xenial wrote: Wed Jul 20, 2022 9:29 pm
whodidntante wrote: Wed Jul 20, 2022 9:22 pm
xenial wrote: Thu Jul 14, 2022 11:13 am
throw123112 wrote: Thu Jul 14, 2022 11:01 am Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
If I write a check for $249, would it not be paid?
I vaguely remember someone posting long ago that a check mistakenly written for under $250 was indeed honored. Perhaps you'd like to perform an experiment.
There is a lot I have done for science, including directly funding and participating in studies. But opening a Vanguard account to test a hypothesis is a step too far. :P

I think I would also be way too tempted to write an entire box of checks for $249 each, allowing each one to clear first, just to make a point. :twisted:
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Re: VMFXX at 1.46% now and keeps growing

Post by whodidntante »

anon_investor wrote: Wed Jul 20, 2022 9:28 pm
whodidntante wrote: Wed Jul 20, 2022 9:22 pm
xenial wrote: Thu Jul 14, 2022 11:13 am
throw123112 wrote: Thu Jul 14, 2022 11:01 am Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
If I write a check for $249, would it not be paid?
Do you want to risk a bounced check? Probably not worth the risk if sending it to the IRS, but to you brother? Maybe. :twisted:
My god, man! I pay the IRS with a credit card! I am not a savage! :P
increment
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Re: VMFXX at 1.46% now and keeps growing

Post by increment »

whodidntante wrote: Wed Jul 20, 2022 9:22 pm If I write a check for $249, would it not be paid?
Years ago I accidentally wrote a check for less than $250 on a Vanguard money-market fund. I received a letter saying that I had broken the rules, but they were honoring the check this one time.
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Re: VMFXX at 1.46% now and keeps growing

Post by anon_investor »

whodidntante wrote: Wed Jul 20, 2022 11:06 pm
anon_investor wrote: Wed Jul 20, 2022 9:28 pm
whodidntante wrote: Wed Jul 20, 2022 9:22 pm
xenial wrote: Thu Jul 14, 2022 11:13 am
throw123112 wrote: Thu Jul 14, 2022 11:01 am Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
If I write a check for $249, would it not be paid?
Do you want to risk a bounced check? Probably not worth the risk if sending it to the IRS, but to you brother? Maybe. :twisted:
My god, man! I pay the IRS with a credit card! I am not a savage! :P
I wish I could pay my mortgage with a credit card and the same fee the IRS payment processors charge...

Should I bother to move some money from Ally (1.25%) to VFMXX (1.50%). Every time I consider it Ally raises their rate.
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Re: VMFXX at 1.46% now and keeps growing

Post by Vulcan »

anon_investor wrote: Wed Jul 20, 2022 11:25 pm
whodidntante wrote: Wed Jul 20, 2022 11:06 pm
anon_investor wrote: Wed Jul 20, 2022 9:28 pm
whodidntante wrote: Wed Jul 20, 2022 9:22 pm
xenial wrote: Thu Jul 14, 2022 11:13 am
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
If I write a check for $249, would it not be paid?
Do you want to risk a bounced check? Probably not worth the risk if sending it to the IRS, but to you brother? Maybe. :twisted:
My god, man! I pay the IRS with a credit card! I am not a savage! :P
I wish I could pay my mortgage with a credit card and the same fee the IRS payment processors charge...

Should I bother to move some money from Ally (1.25%) to VFMXX (1.50%). Every time I consider it Ally raises their rate.
VFMXX will likely be yielding over 2% in a couple weeks (soon after the next Fed meeting).
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: VMFXX at 1.46% now and keeps growing

Post by whodidntante »

anon_investor wrote: Wed Jul 20, 2022 11:25 pm
whodidntante wrote: Wed Jul 20, 2022 11:06 pm
anon_investor wrote: Wed Jul 20, 2022 9:28 pm
whodidntante wrote: Wed Jul 20, 2022 9:22 pm
xenial wrote: Thu Jul 14, 2022 11:13 am
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
If I write a check for $249, would it not be paid?
Do you want to risk a bounced check? Probably not worth the risk if sending it to the IRS, but to you brother? Maybe. :twisted:
My god, man! I pay the IRS with a credit card! I am not a savage! :P
I wish I could pay my mortgage with a credit card and the same fee the IRS payment processors charge...

Should I bother to move some money from Ally (1.25%) to VFMXX (1.50%). Every time I consider it Ally raises their rate.
On the second point, I like to ask myself what the maximum gain on the trade is. I'm amazed at the contortions some people make to earn an extra $20 per year that is fully taxable. Especially when it is trivial to make an extra $1,000 or even much more that is not. I'm also borrowing 50k at 0% right now. That's a decent deal when even T-bills pay over 3% and short-term TIPS pay 9%.
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Re: VMFXX at 1.46% now and keeps growing

Post by whodidntante »

increment wrote: Wed Jul 20, 2022 11:25 pm
whodidntante wrote: Wed Jul 20, 2022 9:22 pm If I write a check for $249, would it not be paid?
Years ago I accidentally wrote a check for less than $250 on a Vanguard money-market fund. I received a letter saying that I had broken the rules, but they were honoring the check this one time.
So what happened the second time? :twisted:
cowbman
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Re: VMFXX at 1.46% now and keeps growing

Post by cowbman »

Quite a few accounts are offering 1.5% APY now, such as, Tmobile money.
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Re: VMFXX at 1.46% now and keeps growing

Post by kvdecide »

longlife wrote: Thu Jul 14, 2022 10:52 am I occasionally checked the yield of VMFXX and found it keeps growing from about 0.5% last year to 1.46% now -- I didn't keep an exact record of the numbers, so I only have some rough numbers. Last time I checked it was at probably 1.2% last month. My bet is it will keep growing in the next few months given the raising interest rates.

This is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me.
Is VMFXX FDIC insured? I think it is not. Isnt that a concern? Why not?
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Re: VMFXX at 1.46% now and keeps growing

Post by KlangFool »

exodusNH wrote: Thu Jul 14, 2022 11:53 am
longlife wrote: Thu Jul 14, 2022 11:46 am
exodusNH wrote: Thu Jul 14, 2022 11:16 am
longlife wrote: Thu Jul 14, 2022 10:52 am I occasionally checked the yield of VMFXX and found it keeps growing from about 0.5% last year to 1.46% now -- I didn't keep an exact record of the numbers, so I only have some rough numbers. Last time I checked it was at probably 1.2% last month. My bet is it will keep growing in the next few months given the raising interest rates.

This is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me.
I have started using it as my HYSA. No check writing, etc, but I don't have those features with my HYSA, either. I just transfer to my primary checking account.

Assuming that you didn't just open the account with Vanguard, they credit you the deposit immediately, even though it takes a day or two for the ACH to complete.
As pointed out above, Vanguard does offer check writing which is very nice (with a minimum of 250). 1 day or 2 is fast enough for my emergency fund, and with check writing, it's probably immediately available via checks. I think I might just move onto VMFXX for my emergency fund parking.
I was talking more about getting the credit for interest. Note that when you transfer money into the account, it's a couple of days before you can withdraw it, even though you can invest it right away.

Also, while you will get account and routing numbers for ACH deposits, I believe I read here that you can't do an ACH pull from another institution. You need to push it from Vanguard, either directly or via check.

The nice thing about using them as your HYSA is that there's no 6 withdrawal limit that some banks are still enforcing on savings accounts.
Can't do ACH pull is a great safety feature!! That is why I use Vanguard MMF for my emergency fund.

KlangFool
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Re: VMFXX at 1.46% now and keeps growing

Post by anon_investor »

KlangFool wrote: Thu Jul 21, 2022 6:13 am
exodusNH wrote: Thu Jul 14, 2022 11:53 am
longlife wrote: Thu Jul 14, 2022 11:46 am
exodusNH wrote: Thu Jul 14, 2022 11:16 am
longlife wrote: Thu Jul 14, 2022 10:52 am I occasionally checked the yield of VMFXX and found it keeps growing from about 0.5% last year to 1.46% now -- I didn't keep an exact record of the numbers, so I only have some rough numbers. Last time I checked it was at probably 1.2% last month. My bet is it will keep growing in the next few months given the raising interest rates.

This is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me.
I have started using it as my HYSA. No check writing, etc, but I don't have those features with my HYSA, either. I just transfer to my primary checking account.

Assuming that you didn't just open the account with Vanguard, they credit you the deposit immediately, even though it takes a day or two for the ACH to complete.
As pointed out above, Vanguard does offer check writing which is very nice (with a minimum of 250). 1 day or 2 is fast enough for my emergency fund, and with check writing, it's probably immediately available via checks. I think I might just move onto VMFXX for my emergency fund parking.
I was talking more about getting the credit for interest. Note that when you transfer money into the account, it's a couple of days before you can withdraw it, even though you can invest it right away.

Also, while you will get account and routing numbers for ACH deposits, I believe I read here that you can't do an ACH pull from another institution. You need to push it from Vanguard, either directly or via check.

The nice thing about using them as your HYSA is that there's no 6 withdrawal limit that some banks are still enforcing on savings accounts.
Can't do ACH pull is a great safety feature!! That is why I use Vanguard MMF for my emergency fund.

KlangFool
The only concern is a fraudulent ACATS transfer, which is much less likely than a fraudulent ACH pull.
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Re: VMFXX at 1.46% now and keeps growing

Post by KlangFool »

anon_investor wrote: Thu Jul 21, 2022 6:20 am
KlangFool wrote: Thu Jul 21, 2022 6:13 am
exodusNH wrote: Thu Jul 14, 2022 11:53 am
longlife wrote: Thu Jul 14, 2022 11:46 am
exodusNH wrote: Thu Jul 14, 2022 11:16 am

I have started using it as my HYSA. No check writing, etc, but I don't have those features with my HYSA, either. I just transfer to my primary checking account.

Assuming that you didn't just open the account with Vanguard, they credit you the deposit immediately, even though it takes a day or two for the ACH to complete.
As pointed out above, Vanguard does offer check writing which is very nice (with a minimum of 250). 1 day or 2 is fast enough for my emergency fund, and with check writing, it's probably immediately available via checks. I think I might just move onto VMFXX for my emergency fund parking.
I was talking more about getting the credit for interest. Note that when you transfer money into the account, it's a couple of days before you can withdraw it, even though you can invest it right away.

Also, while you will get account and routing numbers for ACH deposits, I believe I read here that you can't do an ACH pull from another institution. You need to push it from Vanguard, either directly or via check.

The nice thing about using them as your HYSA is that there's no 6 withdrawal limit that some banks are still enforcing on savings accounts.
Can't do ACH pull is a great safety feature!! That is why I use Vanguard MMF for my emergency fund.

KlangFool
The only concern is a fraudulent ACATS transfer, which is much less likely than a fraudulent ACH pull.
That is your only concern. Not mine.

I do not care whether fraudulent ACH pull is likely or not. It is better to make it impossible.

To each its own.

KlangFool
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Re: VMFXX at 1.46% now and keeps growing

Post by nisiprius »

longlife wrote: Thu Jul 14, 2022 10:52 am... Can we just use VMFXX as a HYSA?
Sure. Subject to the observation that VMFXX is not FDIC-insured. Everyone used to use money market mutual funds as a bank account alternative when the rate difference was large, but that faded in recent decades when money market mutual fund yields dropped to the same or less than bank deposit rates.

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me...
[/quote]I assume they still offer check writing, they've been making changes in that, and I doubt if they offer the others. It's not really a "check," of course, it just looks like one, and must be written for some minimum amount... but anyone willing to take a check at all was always willing to take them.

Historically money market mutual fund emerged as alternatives to bank accounts, and checking was the main feature. When they emerged, circa 1971, deposit rates were capped by Regulation Q, at 5½% for commercial banks, 5¾% for savings-and-loans. Money market funds paid around 10% so this was a Great Big Deal. And it took the IRS six to eight weeks to cash checks, and a colleague came to lunch grinning like the cat that ate the canary when he discovered that the IRS would accept checks drawn on money market funds for tax payments.

When Regulation Q was lifted, gradually over time bank rates got better, and starting maybe ten or fifteen years ago money market fund yields declined, to the point where their advantage over bank accounts pretty much vanished.

Money market funds paid much more than bank accounts for a good long time. That's why they created some new regulations for bank savings accounts that were allowed to pay higher interest as long as they imposed some restrictions (account minimums and a limit on the number of withdrawals per month), which was OK, and they were allowed to call them "Money Market Deposit Accounts," which in my opinion was not the least bit OK and has led to endless confusion. "High yield savings accounts" is a much better name except that I feel sure it is going to lead to confusion and make people think "high yield bonds" are just as safe.

Money market funds are not FDIC-insured and depend on prudent management by the fund managers. Investment article will usually say "they are not as safe as FDIC-insured bank accounts but are generally regarded as very safe." I think that's true, but the difference was underlined in 2008 by the collapse of the Reserve Primary account. To understand how earth-shattering that was, you have to realize that it was one of the oldest, if not the oldest of these accounts. It was huge. Even worse, the collapse was caused by the fund investing in the same kind of commercial paper that, just a year or two earlier, the manager had been publicly viewing with alarm and saying that a trend for their use by money market mutual funds would not end well.

Holders of the Reserve Primary Fund were eventually, over a period of more than two years, almost made whole, but they lost access to their funds for many months, and their money was restored in dribs and drabs and lurches as various bankruptcy courts completed their proceedings.

For a short period of time after the collapse of the Reserve Primary Fund, in order to reassure investors and prevent further collapses, the FDIC did insure money market mutual funds, but that was discontinued.

There was one story about a distraught couple who were under the impression that their financial advisor had deposited their money in the Federal Reserve, and although it is easy to say "read the prospectus," in real life people trust advice and product names, and I bet they weren't the only people who thought the Reserve Primary Fund was (somehow) the Federal Reserve Bank.

I believe that the move to the Federal money market account as the Vanguard settlement account was absolutely right.
Last edited by nisiprius on Thu Jul 21, 2022 6:47 am, edited 1 time in total.
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Re: VMFXX at 1.46% now and keeps growing

Post by anon_investor »

KlangFool wrote: Thu Jul 21, 2022 6:41 am
anon_investor wrote: Thu Jul 21, 2022 6:20 am
KlangFool wrote: Thu Jul 21, 2022 6:13 am
exodusNH wrote: Thu Jul 14, 2022 11:53 am
longlife wrote: Thu Jul 14, 2022 11:46 am

As pointed out above, Vanguard does offer check writing which is very nice (with a minimum of 250). 1 day or 2 is fast enough for my emergency fund, and with check writing, it's probably immediately available via checks. I think I might just move onto VMFXX for my emergency fund parking.
I was talking more about getting the credit for interest. Note that when you transfer money into the account, it's a couple of days before you can withdraw it, even though you can invest it right away.

Also, while you will get account and routing numbers for ACH deposits, I believe I read here that you can't do an ACH pull from another institution. You need to push it from Vanguard, either directly or via check.

The nice thing about using them as your HYSA is that there's no 6 withdrawal limit that some banks are still enforcing on savings accounts.
Can't do ACH pull is a great safety feature!! That is why I use Vanguard MMF for my emergency fund.

KlangFool
The only concern is a fraudulent ACATS transfer, which is much less likely than a fraudulent ACH pull.
That is your only concern. Not mine.

I do not care whether fraudulent ACH pull is likely or not. It is better to make it impossible.

To each its own.

KlangFool
I think you misunderstand. I am agreeing with you. ACH fraud is more likely than ACATS fraud. VMFXX is safer than HYSA.
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Re: VMFXX at 1.46% now and keeps growing

Post by mtmingus »

Vanguard MMFs always beat Fidelity’s.
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Re: VMFXX at 1.46% now and keeps growing

Post by Kenkat »

whodidntante wrote: Wed Jul 20, 2022 11:06 pm
anon_investor wrote: Wed Jul 20, 2022 9:28 pm
whodidntante wrote: Wed Jul 20, 2022 9:22 pm
xenial wrote: Thu Jul 14, 2022 11:13 am
throw123112 wrote: Thu Jul 14, 2022 11:01 am Unfortunately no check writing. A better solution may be to use Fidelity brokerage as a checking account and then directly invest in Treasury bills as a savings account. You then effectively get 1.1% on your checking and 1.6% on your savings. You also don’t have the hassle or time lag associated with transferring money in or out.
Vanguard Federal Money Market Fund does allow checkwriting with a $250 minimum.
If I write a check for $249, would it not be paid?
Do you want to risk a bounced check? Probably not worth the risk if sending it to the IRS, but to you brother? Maybe. :twisted:
My god, man! I pay the IRS with a credit card! I am not a savage! :P
Laugh out loud #1 is in the books for July 21st :D

Note that the time was 8:35am.
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Re: VMFXX at 1.46% now and keeps growing

Post by Kenkat »

I just keep both a HYSA and VMFXX open with a few bucks in each and move money based on current rates. For the past few years, most of the money has been in the HYSA but I’ve been moving money back to VMFXX recently and expect that most of it will be back at Vanguard soon as HYSA tends to lag in rate increasing situations.
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Re: VMFXX at 1.46% now and keeps growing

Post by MikeG62 »

anon_investor wrote: Wed Jul 20, 2022 11:25 pm
Should I bother to move some money from Ally (1.25%) to VFMXX (1.50%). Every time I consider it Ally raises their rate.
For 25bps on what should largely be funds you need to pay bills in the near term, I'd say no (probably not enough dollars to make a difference). If you have excess cash at Ally (beyond what you'd need in the next few months) I'd invest it in short-term treasuries. That is what I have been doing. YMMV.
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Re: VMFXX at 1.46% now and keeps growing

Post by deweybogle »

Can VMFXX be used in a Fidelity brokerage account or is there something similar?
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Re: VMFXX at 1.46% now and keeps growing

Post by retired@50 »

deweybogle wrote: Thu Jul 21, 2022 8:21 am Can VMFXX be used in a Fidelity brokerage account or is there something similar?
I don't think you can hold VMFXX at Fidelity. <- Turns out you can, if you're willing to pay the purchase fee (Possibly $75).

Fidelity has some money market fund choices (SPAXX or FDRXX) but they don't pay as much.

This is one of the consistent knocks on Fidelity. They seem to have much higher expense ratios for running a money market mutual fund. Vanguard can seem to do it for around 20 - 30 basis points less than Fidelity.

Regards,
Last edited by retired@50 on Fri Jul 22, 2022 2:22 pm, edited 1 time in total.
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Re: VMFXX at 1.46% now and keeps growing

Post by patrick »

longlife wrote: Thu Jul 14, 2022 10:52 amThis is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?
Some here like to do so, but VMFXX remains well below the best HYSAs. https://www.doctorofcredit.com/high-int ... gs-to-get/ has the most extensive list, but the current leaders for regular savings accounts are Bask Bank and MyBankingDirect which both pay 2.02%, and even higher rates are available on small balanes.
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Re: VMFXX at 1.46% now and keeps growing

Post by exodusNH »

patrick wrote: Thu Jul 21, 2022 9:09 am
longlife wrote: Thu Jul 14, 2022 10:52 amThis is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?
Some here like to do so, but VMFXX remains well below the best HYSAs. https://www.doctorofcredit.com/high-int ... gs-to-get/ has the most extensive list, but the current leaders for regular savings accounts are Bask Bank and MyBankingDirect which both pay 2.02%, and even higher rates are available on small balanes.
While that's true, opening up a new savings account every month when someone one-ups someone else is a lot of work to chase 0.25% additional interest. (Not to mention the additional burden of monitoring all of those accounts for fraud or terms of service changes that might result in fees.)
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Re: VMFXX at 1.46% now and keeps growing

Post by anon_investor »

MikeG62 wrote: Thu Jul 21, 2022 7:52 am
anon_investor wrote: Wed Jul 20, 2022 11:25 pm
Should I bother to move some money from Ally (1.25%) to VFMXX (1.50%). Every time I consider it Ally raises their rate.
For 25bps on what should largely be funds you need to pay bills in the near term, I'd say no (probably not enough dollars to make a difference). If you have excess cash at Ally (beyond what you'd need in the next few months) I'd invest it in short-term treasuries. That is what I have been doing. YMMV.
It is just extra cash I keep as a portion of my EF. I guess I could auto-roll T-Bills at Fido. I moved a large chunk of my EF into I Bonds over the last 3 years already.
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Re: VMFXX at 1.46% now and keeps growing

Post by intendi »

deweybogle wrote: Thu Jul 21, 2022 8:21 am Can VMFXX be used in a Fidelity brokerage account or is there something similar?
FZDXX is close to VMFXX yield wise but requires 100k to open.

Nice post by @Aelron comparing the various Fidelity mm offerings:

viewtopic.php?t=336863
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Re: VMFXX at 1.46% now and keeps growing

Post by anon_investor »

intendi wrote: Thu Jul 21, 2022 9:54 am
deweybogle wrote: Thu Jul 21, 2022 8:21 am Can VMFXX be used in a Fidelity brokerage account or is there something similar?
FZDXX is close to VMFXX yield wise but requires 100k to open.

Nice post by @Aelron comparing the various Fidelity mm offerings:

viewtopic.php?t=336863
That $100k minimum if tough to meet for most.
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Re: VMFXX at 1.46% now and keeps growing

Post by MikeG62 »

anon_investor wrote: Thu Jul 21, 2022 9:59 am
intendi wrote: Thu Jul 21, 2022 9:54 am
deweybogle wrote: Thu Jul 21, 2022 8:21 am Can VMFXX be used in a Fidelity brokerage account or is there something similar?
FZDXX is close to VMFXX yield wise but requires 100k to open.

Nice post by @Aelron comparing the various Fidelity mm offerings:

viewtopic.php?t=336863
That $100k minimum if tough to meet for most.
It is just to open the position. You can then keep as little in it as you want or have available. But still recognize you need the $100,000 liquid to open the position.
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Re: VMFXX at 1.46% now and keeps growing

Post by ket1141 »

With a "7-day SEC yield", does that mean it pays interest every 7 days or how often?
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Re: VMFXX at 1.46% now and keeps growing

Post by mtmingus »

ket1141 wrote: Thu Jul 21, 2022 2:44 pm With a "7-day SEC yield", does that mean it pays interest every 7 days or how often?
Some CDs pay monthly, semiannually, annually. Some pay at maturity.

https://en.wikipedia.org/wiki/7-day_SEC_yield
Last edited by mtmingus on Thu Jul 21, 2022 3:03 pm, edited 1 time in total.
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Re: VMFXX at 1.46% now and keeps growing

Post by increment »

ket1141 wrote: Thu Jul 21, 2022 2:44 pm With a "7-day SEC yield", does that mean it pays interest every 7 days or how often?
Money-market funds earn interest every day (or maybe every business day). They pay out monthly (generally). The "7-day yield" is a standardized calculation mandated by the government to help you compare funds, and is not meant to reflect any details of how the fund actually interacts with you.
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Re: VMFXX at 1.46% now and keeps growing

Post by arcticpineapplecorp. »

ket1141 wrote: Thu Jul 21, 2022 2:44 pm With a "7-day SEC yield", does that mean it pays interest every 7 days or how often?
no, it means this:
SEC yield

A non-money market fund's SEC yield is based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income as a percentage of its assets. A security's income, for the purposes of this calculation,is based on the current market yield to maturity (for bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30-day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience; as a result, income distributions from the fund may be higher or lower than implied by the SEC yield.

The SEC yield for a money market fund is calculated by annualizing its daily income distributions for the previous 7 days.
got that from clicking on the blue "7 day SEC yield" on the vanguard page:
https://investor.vanguard.com/investmen ... mfxx#price
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Re: VMFXX at 1.46% now and keeps growing

Post by longlife »

exodusNH wrote: Thu Jul 21, 2022 9:13 am
patrick wrote: Thu Jul 21, 2022 9:09 am
longlife wrote: Thu Jul 14, 2022 10:52 amThis is better than most HYSAs (Ally at 1.15% now) and have full liquidity as cash parking. Can we just use VMFXX as a HYSA?
Some here like to do so, but VMFXX remains well below the best HYSAs. https://www.doctorofcredit.com/high-int ... gs-to-get/ has the most extensive list, but the current leaders for regular savings accounts are Bask Bank and MyBankingDirect which both pay 2.02%, and even higher rates are available on small balanes.
While that's true, opening up a new savings account every month when someone one-ups someone else is a lot of work to chase 0.25% additional interest. (Not to mention the additional burden of monitoring all of those accounts for fraud or terms of service changes that might result in fees.)
admittedly VMFXX can unlikely beat the _best_ HYSA, but the point is that the best HYSA changes from time to time, and there isn't a consistent best one. And from my experience, some HYSAs started with high APY to attract enough deposits and then never raised the APY again, so most of the time the current best one doesn't stay on the top in the long run, or in some cases imposes several requirements to keep the rates high, such as DD, debit card purchase, max amount cap, etc.

For people who are tired of chasing the best rates or the hassles to meet those requirements, and don't care about the small difference in interest rate, VMFXX could be an excellent option which changes dynamically with the market at a very reasonable rate. just my two cents :happy
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Re: VMFXX at 1.46% now and keeps growing

Post by longlife »

nisiprius wrote: Thu Jul 21, 2022 6:42 am
longlife wrote: Thu Jul 14, 2022 10:52 am... Can we just use VMFXX as a HYSA?
Sure. Subject to the observation that VMFXX is not FDIC-insured. Everyone used to use money market mutual funds as a bank account alternative when the rate difference was large, but that faded in recent decades when money market mutual fund yields dropped to the same or less than bank deposit rates.

Not sure if Vanguard offers any banking services like check writing, wire transfers, bill pay and accepting payrolls. A debit card will be nice to have too, but not important to me...

I assume they still offer check writing, they've been making changes in that, and I doubt if they offer the others. It's not really a "check," of course, it just looks like one, and must be written for some minimum amount... but anyone willing to take a check at all was always willing to take them.

Historically money market mutual fund emerged as alternatives to bank accounts, and checking was the main feature. When they emerged, circa 1971, deposit rates were capped by Regulation Q, at 5½% for commercial banks, 5¾% for savings-and-loans. Money market funds paid around 10% so this was a Great Big Deal. And it took the IRS six to eight weeks to cash checks, and a colleague came to lunch grinning like the cat that ate the canary when he discovered that the IRS would accept checks drawn on money market funds for tax payments.

When Regulation Q was lifted, gradually over time bank rates got better, and starting maybe ten or fifteen years ago money market fund yields declined, to the point where their advantage over bank accounts pretty much vanished.

Money market funds paid much more than bank accounts for a good long time. That's why they created some new regulations for bank savings accounts that were allowed to pay higher interest as long as they imposed some restrictions (account minimums and a limit on the number of withdrawals per month), which was OK, and they were allowed to call them "Money Market Deposit Accounts," which in my opinion was not the least bit OK and has led to endless confusion. "High yield savings accounts" is a much better name except that I feel sure it is going to lead to confusion and make people think "high yield bonds" are just as safe.

Money market funds are not FDIC-insured and depend on prudent management by the fund managers. Investment article will usually say "they are not as safe as FDIC-insured bank accounts but are generally regarded as very safe." I think that's true, but the difference was underlined in 2008 by the collapse of the Reserve Primary account. To understand how earth-shattering that was, you have to realize that it was one of the oldest, if not the oldest of these accounts. It was huge. Even worse, the collapse was caused by the fund investing in the same kind of commercial paper that, just a year or two earlier, the manager had been publicly viewing with alarm and saying that a trend for their use by money market mutual funds would not end well.

Holders of the Reserve Primary Fund were eventually, over a period of more than two years, almost made whole, but they lost access to their funds for many months, and their money was restored in dribs and drabs and lurches as various bankruptcy courts completed their proceedings.

For a short period of time after the collapse of the Reserve Primary Fund, in order to reassure investors and prevent further collapses, the FDIC did insure money market mutual funds, but that was discontinued.

There was one story about a distraught couple who were under the impression that their financial advisor had deposited their money in the Federal Reserve, and although it is easy to say "read the prospectus," in real life people trust advice and product names, and I bet they weren't the only people who thought the Reserve Primary Fund was (somehow) the Federal Reserve Bank.

I believe that the move to the Federal money market account as the Vanguard settlement account was absolutely right.
Thanks a lot for the reply. Very informative post, especially on the history and the Regulation Q.
Last edited by longlife on Fri Jul 22, 2022 4:17 pm, edited 1 time in total.
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Re: VMFXX at 1.46% now and keeps growing

Post by longlife »

anon_investor wrote: Thu Jul 21, 2022 6:43 am
KlangFool wrote: Thu Jul 21, 2022 6:41 am
anon_investor wrote: Thu Jul 21, 2022 6:20 am
KlangFool wrote: Thu Jul 21, 2022 6:13 am
exodusNH wrote: Thu Jul 14, 2022 11:53 am

I was talking more about getting the credit for interest. Note that when you transfer money into the account, it's a couple of days before you can withdraw it, even though you can invest it right away.

Also, while you will get account and routing numbers for ACH deposits, I believe I read here that you can't do an ACH pull from another institution. You need to push it from Vanguard, either directly or via check.

The nice thing about using them as your HYSA is that there's no 6 withdrawal limit that some banks are still enforcing on savings accounts.
Can't do ACH pull is a great safety feature!! That is why I use Vanguard MMF for my emergency fund.

KlangFool
The only concern is a fraudulent ACATS transfer, which is much less likely than a fraudulent ACH pull.
That is your only concern. Not mine.

I do not care whether fraudulent ACH pull is likely or not. It is better to make it impossible.

To each its own.

KlangFool
I think you misunderstand. I am agreeing with you. ACH fraud is more likely than ACATS fraud. VMFXX is safer than HYSA.
Very much agreed. No ACH pull might be inconvenience as a "checking" account, but is indeed a safer feature as a "savings" account. Thus it's great for EF purpose, not perfect for daily banking purpose.
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