Ally Bank 3.3%, Vang Treasury MM 4.91%

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Topic Author
Bimmer
Posts: 179
Joined: Tue Mar 06, 2007 9:33 pm

Ally Bank 3.3%, Vang Treasury MM 4.91%

Post by Bimmer »

Hello All,

In current interest rate environment, I'm moving all my cash out of online savings accounts into Vanguard Treasury Money Market VUSXX. Even at lower tax brackets, the TEY of VUSXX is significantly higher than any online savings accounts.

Is VUSXX expected to remain at this rate if interest rates don't come down?

-Bimmer
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H-Town
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Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Post by H-Town »

How do you arrive at TEY 4.91%? What is your state tax rate?
Time is the ultimate currency.
retiringwhen
Posts: 3428
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Location: New Jersey, USA

Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Post by retiringwhen »

Bimmer wrote: Tue Jan 24, 2023 11:40 am Is VUSXX expected to remain at this rate if interest rates don't come down?
Predictions are hard, especially about the future.

Seriously, who knows?

Treasury rates have their own cycle of rates. What rates are you comparing them against?

VUSXX will track the rates for 30 to 90 day T-Bills about perfectly with about a 30 day lag as rates go up and down due to how the fund turns over its holdings.
Topic Author
Bimmer
Posts: 179
Joined: Tue Mar 06, 2007 9:33 pm

Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Post by Bimmer »

The VUSXX 7 day SEC yield is currently 4.24%. I should be in 35% federal tax bracket, 9% state and local tax rate. VUSXX is exempt from state and local taxes.

TEY = 4.24% * (1-35%)/(1-44%) = 4.92 %
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tibbitts
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Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Post by tibbitts »

Bimmer wrote: Tue Jan 24, 2023 12:04 pm The VUSXX 7 day SEC yield is currently 4.24%. I should be in 35% federal tax bracket, 9% state and local tax rate. VUSXX is exempt from state and local taxes.

TEY = 4.24% * (1-35%)/(1-44%) = 4.92 %
Since it takes about 30 seconds to move the funds back and forth, aren't you overthinking this in terms of potential changes in the future?
androiddd
Posts: 28
Joined: Sun Apr 09, 2017 2:12 pm

Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Post by androiddd »

Not sure about your math. The only thing that Vang Treasury is exempt from is State and local taxes. 1-.09= .91
4.24% / .91= 4.66 % which is still good but not 4.92%!
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