Vanguard Municipal Money Market VMSXX 1.39%

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bck63
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by bck63 » Sat Jun 29, 2019 3:57 pm

Electron wrote:
Mon May 20, 2019 2:02 pm
Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.

am
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am » Sat Jun 29, 2019 4:26 pm

bck63 wrote:
Sat Jun 29, 2019 3:57 pm
Electron wrote:
Mon May 20, 2019 2:02 pm
Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.
I consider FDIC insurance a non issue when considering vanguard money market funds. I feel like if we get to the point that we regret not having it for vanguard money market, then we have MUCH bigger issues to deal with...

bck63
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by bck63 » Sat Jun 29, 2019 5:32 pm

am wrote:
Sat Jun 29, 2019 4:26 pm
bck63 wrote:
Sat Jun 29, 2019 3:57 pm
Electron wrote:
Mon May 20, 2019 2:02 pm
Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.
I consider FDIC insurance a non issue when considering vanguard money market funds. I feel like if we get to the point that we regret not having it for vanguard money market, then we have MUCH bigger issues to deal with...
I was replying to the second part of Electron's comment, not the first. Should have clarified. FDIC insurance is, in fact a non-issue with money market funds, since they're not covered. I just prefer a fund that is backed by the full faith and credit of the US government. Actually, that may not apply to the Vanguard Federal MMF, since it contains repurchase agreements.

UpperNwGuy
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by UpperNwGuy » Sat Jun 29, 2019 5:36 pm

I personally think the "full faith and credit of the US government" is overrated on this board. I use Vanguard's Prime Money Market Fund, and I sleep very very well at night. I also invest in Total Bond and Intermediate-Term Tax-Exempt. I have no holdings in pure Treasuries.

am
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by am » Sat Jun 29, 2019 5:40 pm

bck63 wrote:
Sat Jun 29, 2019 5:32 pm
am wrote:
Sat Jun 29, 2019 4:26 pm
bck63 wrote:
Sat Jun 29, 2019 3:57 pm
Electron wrote:
Mon May 20, 2019 2:02 pm
Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.
I consider FDIC insurance a non issue when considering vanguard money market funds. I feel like if we get to the point that we regret not having it for vanguard money market, then we have MUCH bigger issues to deal with...
I was replying to the second part of Electron's comment, not the first. Should have clarified. FDIC insurance is, in fact a non-issue with money market funds, since they're not covered. I just prefer a fund that is backed by the full faith and credit of the US government. Actually, that may not apply to the Vanguard Federal MMF, since it contains repurchase agreements.
What I meant is that when a vanguard money market of any kind breaks the buck or prevents withdrawals, then there are much greater things to worry about. And I highly doubt this will ever happen. Like I said, Having or not having FDIC insurance is a non issue. I am not worried about losing a penny with vanguard money markets. For me equivalent to treasuries.

bck63
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by bck63 » Sat Jun 29, 2019 8:02 pm

am wrote:
Sat Jun 29, 2019 5:40 pm
bck63 wrote:
Sat Jun 29, 2019 5:32 pm
am wrote:
Sat Jun 29, 2019 4:26 pm
bck63 wrote:
Sat Jun 29, 2019 3:57 pm
Electron wrote:
Mon May 20, 2019 2:02 pm
Since we are forgoing FDIC insurance when investing in Money Market funds, I'm more comfortable with the taxable Federal and Treasury Money Market funds.
+1. The only money market funds I use are Fidelity FDLXX and Vanguard VMFXX.
I consider FDIC insurance a non issue when considering vanguard money market funds. I feel like if we get to the point that we regret not having it for vanguard money market, then we have MUCH bigger issues to deal with...
I was replying to the second part of Electron's comment, not the first. Should have clarified. FDIC insurance is, in fact a non-issue with money market funds, since they're not covered. I just prefer a fund that is backed by the full faith and credit of the US government. Actually, that may not apply to the Vanguard Federal MMF, since it contains repurchase agreements.
What I meant is that when a vanguard money market of any kind breaks the buck or prevents withdrawals, then there are much greater things to worry about. And I highly doubt this will ever happen. Like I said, Having or not having FDIC insurance is a non issue. I am not worried about losing a penny with vanguard money markets. For me equivalent to treasuries.
Totally agree!

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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by LadyGeek » Sat Jun 29, 2019 9:12 pm

This thread is now in the Investing - Theory, News & General forum (general discussion).
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Kevin M
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Kevin M » Mon Jul 01, 2019 12:43 pm

The national and CA muni MM fund yields already seemed to have reached the peak for this cycle, having flatlined at 1.75% and 1.50% respectively for the three days ending Friday 6/28. TEY SEC yields for me as of Friday:

2.61% = Treasury MM
2.48% = Muni MM
2.31% = CA Muni MM

So the muni MM TEYs didn't rise above my Treasury MM TEY this cycle, unless the cycle heads up again after a brief pause.
sperry8 wrote:
Fri Jun 28, 2019 6:09 pm
Kevin M wrote:
Fri Jun 28, 2019 3:40 pm
sperry8 wrote:
Fri Jun 28, 2019 2:49 pm
Rates are going up again (if math is correct). 7 day SEC Yield is now 1.75%. In 32% bracket that's 2.57% equivalent. Might transfer back in to pick up the extra basis points next week
Right. The national muni fund taxable equivalent yield (TEY) is approaching that of Treasury MM fund for me, but not quite there yet. Be sure to check TEY of the Treasury and Fed MM funds if you pay state income tax. Last time I switched, earlier this year, the CA muni MM TEY was only higher for me for about one week.
I don't pay State income tax (I live in FL) so I believe that makes Muni MM higher by ~20 basis points over Treasury MM (on a tax equivalent basis). Vanguard Prime MM is also higher than Treasury by 3 basis points. Is there a difference between Prime MM and Treasury?
Yes, assuming 32% is your marginal tax rate, and not just your tax bracket, then Muni MM currently has the highest TEY for you at 2.57%, compared to Prime at 2.35% and Treasury at 2.32%. Muni MM TEY crossed above Prime MM yield on 6/19, when it hit 2.38% compared to Prime at 2.37%.

Be sure you are doing the calculation with your marginal tax rate, and not just your tax bracket. For example, if you pay NIIT, you should add that to your federal marginal tax rate. Also need to include any phase-out or phase-in of deductions, credits, etc.

Last time it was higher than Prime for you was from about 4/22/2019 to about 5/13/2019, but the muni MM yield went much higher than what it appears to be peaking at for this cycle. Here's the way it looks for you since the beginning of the year.

Image

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Electron
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Electron » Fri Jul 26, 2019 12:32 pm

It looks like Treasury Bill yields have already discounted a Fed rate cut expected next week.

https://fred.stlouisfed.org/series/DGS3MO

The drop in yields over the last few months is more than I expected. It will be interesting to see what happens after the Fed decision.
Electron

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Kevin M
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Kevin M » Fri Jul 26, 2019 6:45 pm

Electron wrote:
Fri Jul 26, 2019 12:32 pm
It looks like Treasury Bill yields have already discounted a Fed rate cut expected next week.

https://fred.stlouisfed.org/series/DGS3MO
<snip>
No doubt!

Interesting to look at the 3m Tbill and the FFR together:
Image

We see that the Tbill yield anticipated the FFR rate increases on the way up, so would expect it to do so on the way down as well.

Looking back to last time short term yields went up, plateaued, then went down:

Image

This chart shows the 1-month average Tbill yield and FFR, as it's easier to see the trend than with the daily rates; we see the 3m Tbill leading the way down here as well.

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Ricchan
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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Ricchan » Tue Jul 30, 2019 8:15 am

Thanks for showing the graph of the FFR with the 3m treasury rate. I was curious and included the FFR with Vanguard Prime MM and Muni MM yields, from 2017 to now.

Image

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Re: Vanguard Municipal Money Market VMSXX 1.39%

Post by Kevin M » Wed Jul 31, 2019 11:09 am

Ricchan wrote:
Tue Jul 30, 2019 8:15 am
Thanks for showing the graph of the FFR with the 3m treasury rate. I was curious and included the FFR with Vanguard Prime MM and Muni MM yields, from 2017 to now.
Thanks for sharing that. Yeah, all the short term, relatively safe non-muni rates are going to track pretty closely. The munis dance to their own tune with the cyclical volatility.

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