Where do you put cash now? Vanguard's Prime Money Market is too low!

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andysnp
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Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by andysnp »

Where do you put your cash right now?

Vanguard's Prime Money Market is giving only .04 yield right now.

Thanks!
000
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by 000 »

Online FDIC insured high yield savings account at 0.8%.
absolute zero
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by absolute zero »

Same here. Still in an online savings account, now down to 0.8%. I'm assuming there aren't much in the way of alternatives.
esvee
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by esvee »

If you can get an AARP membership ($12 annual), Marcus is offering 1.1% for a No Penalty 8 month CD.
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topper1296
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by topper1296 »

I've given up on cashing yield for cash. Will making 0.08% vs 0.01% for example really make that much of a difference? I'm just accepting my low yield and leaving it because it's easier and I don't want the hassle of switching accounts around. :beer
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Kenkat
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Kenkat »

It’s 0.8, not 0.08. So it ends up being about $8 per thousand per year.
Lastrun
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Lastrun »

andysnp wrote: Fri Sep 04, 2020 1:43 pm Where do you put your cash right now?
Online banks will give you the best "bang for the buck" right now in terms of online savings, no-penalty CDs and 1 year CDs.

Also bonus chasing may be worth it. I think Citi has a $700 bonus on $50K running right now.

https://www.bankrate.com/investing/best ... t-bonuses/

Bankrate and Deposit Accounts are good websites.
7eight9
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by 7eight9 »

It depends on your timeframe for the cash. If you can take advantage of them I would give consideration to a multi-year guaranteed annuity (MYGA).

Explanation of MYGAs --- https://www.blueprintincome.com/resourc ... annuities/

Example --- Fixed Annuity Rates for September 2020 ---https://www.blueprintincome.com/fixed-annuities

Two year rates as high as 2.30% per above link.
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SethJane42
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by SethJane42 »

VUBFX has a minimal risk with a Vanguard risk level of 1, isn't bound by frequent trader rules, and the yield is a bit better than the money market.
Last edited by SethJane42 on Fri Sep 04, 2020 3:21 pm, edited 2 times in total.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by anoop »

topper1296 wrote: Fri Sep 04, 2020 2:13 pm I've given up on cashing yield for cash. Will making 0.08% vs 0.01% for example really make that much of a difference? I'm just accepting my low yield and leaving it because it's easier and I don't want the hassle of switching accounts around. :beer
That's my philosophy as well.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by neurosphere »

SethJane42 wrote: Fri Sep 04, 2020 3:16 pm VBUFX has a minimal risk with a Vanguard risk level of 1, isn't bound by frequent trader rules, and the yield isn't bad.
Typo. You mean VUBFX--> Vanguard ultra short term bond fund https://investor.vanguard.com/mutual-fu ... file/VUBFX
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by SethJane42 »

neurosphere wrote: Fri Sep 04, 2020 3:18 pm
SethJane42 wrote: Fri Sep 04, 2020 3:16 pm VBUFX has a minimal risk with a Vanguard risk level of 1, isn't bound by frequent trader rules, and the yield isn't bad.
Typo. You mean VUBFX--> Vanguard ultra short term bond fund https://investor.vanguard.com/mutual-fu ... file/VUBFX
Thanks! I'll correct.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by EnjoyIt »

topper1296 wrote: Fri Sep 04, 2020 2:13 pm I've given up on cashing yield for cash. Will making 0.08% vs 0.01% for example really make that much of a difference? I'm just accepting my low yield and leaving it because it's easier and I don't want the hassle of switching accounts around. :beer
I would agree with you for a few thousand it may not be worth the hassle. If we are looking at $50k+ maybe it is worth it for a few hundred bucks.

Earlier this year I moved over $100k in cash, money that I will need in the next 6 months over from vanguard money market to a high yield Savings earning currently 0.95% So far the decision has been worth well over $500 and increasing. The whole process took less than 1 hour and maybe add another 5 minutes during tax time to load in an extra 1099-int. Since I make less than $500/hr I think it was a good decision.
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willthrill81
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by willthrill81 »

In addition to a high-yield savings account, you can get a 12 month CD from Ally paying .80% right now (and a no-penalty 12 month CD paying .75%). The advantage there is that rate won't fall for 12 months, which the savings account's current .80% could (and already has this year).
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by patrick »

You can get 1.21% on a plain savings account from Varo Bank.

HMBradley pays 3% on their deposit accounts up to a limit of $100,000 provided that you have direct deposit and save 20% of all deposits each quarter.
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Stanczyk
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Stanczyk »

Varo is offering 1.21. Do you guys know anything it? I am thinking of moving my money there from ally.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by sycamore »

esvee wrote: Fri Sep 04, 2020 2:04 pm If you can get an AARP membership ($12 annual), Marcus is offering 1.1% for a No Penalty 8 month CD.
Alas, it's down to 0.85% now. https://www.marcus.com/us/en/savings/aarp-npcd
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Random Musings
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Random Musings »

Since being a loan shark should be frowned upon due to the illegality of it (plus you will have to hire some friendly employees to help encourage repayments at times), be a car title lender instead.

Who said making interest has to be boring?

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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by gjlynch17 »

Stanczyk wrote: Fri Sep 04, 2020 3:42 pm Varo is offering 1.21. Do you guys know anything it? I am thinking of moving my money there from ally.
I recently opened an account with Varo but have not transferred funds there yet. I received an e-mail from Varo this morning stating they are lowing their rate to 0.81% as of September 15.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Stanczyk »

gjlynch17 wrote: Sat Sep 05, 2020 6:12 am
Stanczyk wrote: Fri Sep 04, 2020 3:42 pm Varo is offering 1.21. Do you guys know anything it? I am thinking of moving my money there from ally.
I recently opened an account with Varo but have not transferred funds there yet. I received an e-mail from Varo this morning stating they are lowing their rate to 0.81% as of September 15.
Thank you for the update.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by mptfan »

I tried moving some cash to an online high yield savings account but it did not work for me. Yes, I got a few more dollars in interest on my cash but the downsides outweighed the benefits for me. Here are the downsides as I see them:

1) I have to keep track of another account at another financial provider, which means keeping track of yet another username and password, not to mention a different account agreement and more account statements and different security policies. For example, does the account provider offer two factor authentication without SMS texting? That's important to me.

2) I now have to log in to yet another account provider to update my finances and keep track of another account on my spreadsheet. Having to check yet another account and track the transactions and statements related to that account has made me realize how much I prefer simplicity over chasing a few extra dollars of interest.

3) In the event I need to access the savings I have to initiate an ACH transfer to my main checking account and wait 1-2 business days for the funds to be available to spend (which could be 3-4 days, depending on weekends and holidays).

4) I came to realize that I can get a similar amount, or more, of interest by investing in short term bond funds. One example is Schwab short term bond fund, SWSBX.

5) I have to make sure to keep my beneficiary designations updated on that account and juggle the percentages to coordinate with my other accounts. Also, I hope to live many more healthy and productive years, but in the event of my demise, I do not want to force my heirs to have to deal with lots of different accounts and account providers with the possibility that an online savings account may become an orphan.

In the end I decided that all of the hassle was not worth it and there is value in the simplicity of having fewer account providers.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Whakamole »

neurosphere wrote: Fri Sep 04, 2020 3:18 pm
SethJane42 wrote: Fri Sep 04, 2020 3:16 pm VBUFX has a minimal risk with a Vanguard risk level of 1, isn't bound by frequent trader rules, and the yield isn't bad.
Typo. You mean VUBFX--> Vanguard ultra short term bond fund https://investor.vanguard.com/mutual-fu ... file/VUBFX
The holdings (as of January 31 2020) is interesting. Asset backed securities/CMS composed 41.7% of the fund, and included rental car funding from Hertz (and other rental car companies), a lot of auto loan securities, etc. "GMF Floorplan Owner Revolving Trust" sounds like something that would have taken a hit when people found themselves out of work.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by tibbitts »

gjlynch17 wrote: Sat Sep 05, 2020 6:12 am
Stanczyk wrote: Fri Sep 04, 2020 3:42 pm Varo is offering 1.21. Do you guys know anything it? I am thinking of moving my money there from ally.
I recently opened an account with Varo but have not transferred funds there yet. I received an e-mail from Varo this morning stating they are lowing their rate to 0.81% as of September 15.
I really hope people realize that this shifting around of funds for incremental interest rate improvements is only useful as a hobby. Admittedly if you have enough funds then bonus-chasing can be profitable, but it still has to be a hobby you enjoy working at because you have to be so careful to avoid fees (like opening an account online and then getting dinged for a hefty low-balance fee during the few days it takes your ACH to arrive.)
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by jeffyscott »

tibbitts wrote: Sat Sep 05, 2020 9:08 am
gjlynch17 wrote: Sat Sep 05, 2020 6:12 am
Stanczyk wrote: Fri Sep 04, 2020 3:42 pm Varo is offering 1.21. Do you guys know anything it? I am thinking of moving my money there from ally.
I recently opened an account with Varo but have not transferred funds there yet. I received an e-mail from Varo this morning stating they are lowing their rate to 0.81% as of September 15.
I really hope people realize that this shifting around of funds for incremental interest rate improvements is only useful as a hobby. Admittedly if you have enough funds then bonus-chasing can be profitable, but it still has to be a hobby you enjoy working at because you have to be so careful to avoid fees (like opening an account online and then getting dinged for a hefty low-balance fee during the few days it takes your ACH to arrive.)
Oh, but look how much more you can earn, even with just a $1000 balance :mrgreen:

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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by abuss368 »

It is kind of hard to find a suitable replacement with the same level of risk. Presently we are using Vanguard Federal Money Market Fund.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by abuss368 »

I would have my cash at the bank tomorrow but I believe that is an even lower rate.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by abuss368 »

jeffyscott wrote: Sat Sep 05, 2020 9:43 am
tibbitts wrote: Sat Sep 05, 2020 9:08 am
gjlynch17 wrote: Sat Sep 05, 2020 6:12 am
Stanczyk wrote: Fri Sep 04, 2020 3:42 pm Varo is offering 1.21. Do you guys know anything it? I am thinking of moving my money there from ally.
I recently opened an account with Varo but have not transferred funds there yet. I received an e-mail from Varo this morning stating they are lowing their rate to 0.81% as of September 15.
I really hope people realize that this shifting around of funds for incremental interest rate improvements is only useful as a hobby. Admittedly if you have enough funds then bonus-chasing can be profitable, but it still has to be a hobby you enjoy working at because you have to be so careful to avoid fees (like opening an account online and then getting dinged for a hefty low-balance fee during the few days it takes your ACH to arrive.)
Oh, but look how much more you can earn, even with just a $1000 balance :mrgreen:

Image
That illustrates everything for us. It is almost more of a hassle than it is worth. With cash I look at it as safety first and return second.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Xrayman69 »

Paying off more mortgage monthly. Less of a hassle for our family than playing musical chairs with cash accounts. Current interest rate is 3.625% (30 year) and in process of refining down to 2.25% (15 year for which at our current contribution rate would be down to actually 8 years).
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by abuss368 »

Xrayman69 wrote: Sat Sep 05, 2020 10:07 am Paying off more mortgage monthly. Less of a hassle for our family than playing musical chairs with cash accounts. Current interest rate is 3.625% (30 year) and in process of refining down to 2.25% (15 year for which at our current contribution rate would be down to actually 8 years).
That is a good plan. I have less cash today as well as we have been aggressively paying down debt.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by CardinalRule »

It would be good to have a permanent mega thread on this topic. The question keeps coming up, in different threads, and we are all interested in the latest information on where to park cash.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by jeffyscott »

abuss368 wrote: Sat Sep 05, 2020 9:46 am
jeffyscott wrote: Sat Sep 05, 2020 9:43 am
tibbitts wrote: Sat Sep 05, 2020 9:08 am
gjlynch17 wrote: Sat Sep 05, 2020 6:12 am
Stanczyk wrote: Fri Sep 04, 2020 3:42 pm Varo is offering 1.21. Do you guys know anything it? I am thinking of moving my money there from ally.
I recently opened an account with Varo but have not transferred funds there yet. I received an e-mail from Varo this morning stating they are lowing their rate to 0.81% as of September 15.
I really hope people realize that this shifting around of funds for incremental interest rate improvements is only useful as a hobby. Admittedly if you have enough funds then bonus-chasing can be profitable, but it still has to be a hobby you enjoy working at because you have to be so careful to avoid fees (like opening an account online and then getting dinged for a hefty low-balance fee during the few days it takes your ACH to arrive.)
Oh, but look how much more you can earn, even with just a $1000 balance :mrgreen:

Image
That illustrates everything for us. It is almost more of a hassle than it is worth. With cash I look at it as safety first and return second.
Being retired, we don't keep a lot of cash in taxable savings (~$10K), but I did move to high yield savings accounts a couple of times in the last decade when money markets went to ~0% yields. In both cases there was a $200 bonus, but accounts also had competitive interest rates so the money could stay there. Current one is down to 0.65%, but I'm not going to bother to move to bump that up to 0.8-1%.

OTOH, my son keeps about $50K in emergency fund. So the benefit of moving can be a lot greater for him. Another option for him is to gradually migrate that to I-bonds.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
EnjoyIt
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by EnjoyIt »

abuss368 wrote: Sat Sep 05, 2020 10:23 am
Xrayman69 wrote: Sat Sep 05, 2020 10:07 am Paying off more mortgage monthly. Less of a hassle for our family than playing musical chairs with cash accounts. Current interest rate is 3.625% (30 year) and in process of refining down to 2.25% (15 year for which at our current contribution rate would be down to actually 8 years).
That is a good plan. I have less cash today as well as we have been aggressively paying down debt.
Same here. We have been diverting cash and dividends that would normally go into bonds instead towards the mortgage.
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cheerfulcharlie
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by cheerfulcharlie »

TLDR version: I use and recommend Vio Bank. Interest rate = 0.91% APY.

Long Version
I am guilty as charged as a bonus chaser. Any time I would see a savings account offering 0.1% APY higher, I would open a new savings account and transfer the little amount of cash I have to that bank. I fully realize that the amounts I make by being a bonus chaser are not that significant compared to the time and effort I expend doing all of this.

In most cases when I opened a new savings account, the banks would quickly dropped their rates to non-competitive rates compared to other savings accounts I already had, so I would end up transferring the cash back to one of my former savings accounts.

But, through all these shenanigans, I've noticed that Vio Bank is the one that consistently pays a higher interest rate than the other banks. They are paying 0.91% APY right now. Viobank.com.

Now, of course, you can make more interest if you go with savings accounts that require minimum balances or that have sneaky fees or some other crap like having to make 5 or 10 debit card purchases per month. I favor simplicity. I put little bit of $$$ in bank and you bank pay me some interest <-- that's what I look for.

In any case, Viobank.com has been working well for me. Every month, I check a couple web sites to compare savings account interest rates and for months now, I haven't seen anyone offering a higher interest rate than Vio until I say the post above about Varo Bank, but then per the posts above, it looks like Varo will be quickly reducing their promo rate soon anyways.

Like most banks in the savings account space, Vio Bank's web interface is quite simplistic (i.e. shitty), but I don't care. I just need a place to put my $$$ where I get some interest and I just need to be able to move my $$ in and out of that account. For that, Vio Bank meets my needs and seems to usually pay the highest interest rate out there from what I can tell (at least compared to other banks who do not require any monthly minimums or have other weird requirements).

This becomes less relevant for me now that I have an Interactive Brokers margin account now, because with that margin account, I have ready access to cash with super low interest rates (at the moment, only 2.59% right now). If I ever need a little bit of emergency cash for cash flow purposes, I could always just temporarily tap that account. So, this credit line reduces my need to have cash sitting around "just in case." I moved around $70k of stock to this broker using an ACATS transfer to transfer the stock "in-kind" without having to sell my shares and incur any capital gains. This stock serves as collateral in support of the margin account. Luckily, this will enable me to further reduce the cash in my Vio Bank savings account to keep my cash mostly fully invested over the long term. I estimate that I should be able to safely tap this margin account for up to $15k temporarily if I ever need to, without ever coming close to any margin requirement red zones (even if my stock temporarily crashes a large amount). And, I suppose if I ever wanted a larger margin account, I could just do another ACATS transfer of a small portion of some of my Vanguard VTI ETF to Interactive Brokers to support a larger margin requirement, but I don't expect to ever need more than this anyways.

I live way below my means and my monthly income provides a ready cash flow source to meet any immediate cash flow emergency needs, so this is another reason I will be even further reducing my savings account balance even further.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Robot Monster »

Whakamole wrote: Sat Sep 05, 2020 8:33 am
neurosphere wrote: Fri Sep 04, 2020 3:18 pm
SethJane42 wrote: Fri Sep 04, 2020 3:16 pm VBUFX has a minimal risk with a Vanguard risk level of 1, isn't bound by frequent trader rules, and the yield isn't bad.
Typo. You mean VUBFX--> Vanguard ultra short term bond fund https://investor.vanguard.com/mutual-fu ... file/VUBFX
The holdings (as of January 31 2020) is interesting. Asset backed securities/CMS composed 41.7% of the fund, and included rental car funding from Hertz (and other rental car companies), a lot of auto loan securities, etc. "GMF Floorplan Owner Revolving Trust" sounds like something that would have taken a hit when people found themselves out of work.
VUBFX's listed holdings are up-to-date as of 06/30/2020. Holdings now include: Kingdom of Saudi Arabia, Abu Dhabi Government International Bond, Republic of Colombia, Republic of Croatia, Republic of Hungary, State of Kuwait, Republic of Romania, Republic of Chile, United Mexican States [often referred to in popular culture as Mexico], State of Qatar...you get the idea. Pretty "interesting".
https://investor.vanguard.com/mutual-fu ... o-holdings
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Whakamole »

Robot Monster wrote: Sat Sep 05, 2020 11:10 am
Whakamole wrote: Sat Sep 05, 2020 8:33 am
neurosphere wrote: Fri Sep 04, 2020 3:18 pm
SethJane42 wrote: Fri Sep 04, 2020 3:16 pm VBUFX has a minimal risk with a Vanguard risk level of 1, isn't bound by frequent trader rules, and the yield isn't bad.
Typo. You mean VUBFX--> Vanguard ultra short term bond fund https://investor.vanguard.com/mutual-fu ... file/VUBFX
The holdings (as of January 31 2020) is interesting. Asset backed securities/CMS composed 41.7% of the fund, and included rental car funding from Hertz (and other rental car companies), a lot of auto loan securities, etc. "GMF Floorplan Owner Revolving Trust" sounds like something that would have taken a hit when people found themselves out of work.
VUBFX's listed holdings are up-to-date as of 06/30/2020. Holdings now include: Kingdom of Saudi Arabia, Abu Dhabi Government International Bond, Republic of Colombia, Republic of Croatia, Republic of Hungary, State of Kuwait, Republic of Romania, Republic of Chile, United Mexican States [often referred to in popular culture as Mexico], State of Qatar...you get the idea. Pretty "interesting".
https://investor.vanguard.com/mutual-fu ... o-holdings
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by JackoC »

Kenkat wrote: Fri Sep 04, 2020 2:16 pm It’s 0.8, not 0.08. So it ends up being about $8 per thousand per year.
Which sums it up. The hassle and 'liquidity' arguments against best online savings hold water if the amount is a few $k's. At $10k's and more, until you get to the level where $250k FDIC/NCUA insurance limit would mean an unmanageable number of accounts, those arguments don't hold water IMO. The amount I gain is well worth spending a little time on, more than some small differences in prices of consumer items that various threads here go on and on about. Likewise even at scale only say $50k bonus chasing can earn you past $1k (2%) per year without frenzied effort. Although bonus hoop jumping is more work than just setting up a 0.80% bank account, a few minutes work and one more line on an asset and/or password spreadsheet, so what? Keeping my cash reserves mainly in VUSXX made sense when its after tax return (almost all govt interest non-state taxable) was only slightly worse than best savings accounts at any given time, true only a few months ago. Now it would make no sense, for me, loads of banks far above it, and not all going to crash down to zero tomorrow. And if they actually did, I'd re-evaluate it then.

The one not so scale specific point is about short bond funds v savings accounts. That's a bit apples and oranges of course but they are partial substitutes. But they create a new taxable event for every withdrawal, for people who'd say one more line on asset spreadsheet is a big deal. And as discussed, the ones with rates really comparable to good bank accounts have some risk, short term treasury bond funds pay much less than good rates on FDIC/NCUA insured deposits. Also shorter term CD's would enter that picture.
NoRegret
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by NoRegret »

Personally, paying down mortgage at 3%.
Market timer targeting long term cycles -- aiming for several key decisions per asset class per decade
cheerfulcharlie
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by cheerfulcharlie »

SethJane42 wrote: Fri Sep 04, 2020 3:16 pm VUBFX has a minimal risk with a Vanguard risk level of 1, isn't bound by frequent trader rules, and the yield is a bit better than the money market.
30 day SEC Yield right now = 0.80%. After the 0.20% expense ratio, that leaves you with a return of 0.60% combined with a minimal risk to principal as evidenced by the average bond duration of the fund of 0.9 years. When interest rates eventually rise (ok, maybe, 3-5 years from now), for every 1% higher interest rates, your cash will lose approximately 0.9% of its principal.

This is clearly suboptimal compared to just parking your cash in a Vio Bank savings account with a return of 0.91% APY with no risk to principal (higher return, less risk).
Last edited by cheerfulcharlie on Sat Sep 05, 2020 4:14 pm, edited 1 time in total.
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Nate79
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Nate79 »

cheerfulcharlie wrote: Sat Sep 05, 2020 1:56 pm
SethJane42 wrote: Fri Sep 04, 2020 3:16 pm VUBFX has a minimal risk with a Vanguard risk level of 1, isn't bound by frequent trader rules, and the yield is a bit better than the money market.
30 day SEC Yield right now = 0.80%. After the 0.20% expense ratio, that leaves you with a return of 0.50% combined with a minimal risk to principal as evidenced by the average bond duration of the fund of 0.9 years. When interest rates eventually rise (ok, maybe, 3-5 years from now), for every 1% higher interest rates, your cash will lose approximately 0.9% of its principal.

This is clearly suboptimal compared to just parking your cash in a Vio Bank savings account with a return of 0.91% APY with no risk to principal (higher return, less risk).
SEC yield already includes fund expenses. Why are you subtracting the ER?
Scooter57
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Scooter57 »

Live Oak Bank is another online bank I have used for years. Their savings account is paying .85% now.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by gjlynch17 »

My current high yield savings are as follows:

Fitness Bank: 1.05%

Advantages:

-- Consistently higher rate than other online banks
-- Fast ACH transfers
-- Good customer service
-- Predictability in rate changes (only at the beginning of the month)

Disadvantages:

-- Minimum 12,500 daily average step requirement to obtain highest rates (10,000 for 65+) (Other rates range from 0.50% -- 0.95% for lower step counts)
-- Low ACH transfer limits

Marcus Bank: 0.90% (includes 0.10% AARP bonus)

Advantages:

-- Large, established online bank
-- AARP bonus gives them an edge over other large banks
-- Super-fast ACH transfers
-- High ACH transfer limits
-- No charge for wire transfers
-- Good customer service

Disadvantages:

-- Clunky website that results in difficulties in opening accounts

Live Oak Bank: 0.85%

Advantages:

-- Usually competitive rates
-- High ACH transfer limits
-- Good customer service

Disadvantages:

-- Only three linked external accounts available
-- Slower ACH transfers
cheerfulcharlie
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by cheerfulcharlie »

Nate79 wrote: Sat Sep 05, 2020 2:01 pm SEC yield already includes fund expenses. Why are you subtracting the ER?
Holy crap! I didn't realize that. Thanks for pointing that out -- I learned something!
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Tim_in_GA »

Keeping my cash at Citibank with 0.9% interest.
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by bog007 »

Carl von Clausewitz, ‘The greatest enemy of a good plan is the dream of a perfect plan.’
000
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by 000 »

abuss368 wrote: Sat Sep 05, 2020 9:44 am It is kind of hard to find a suitable replacement with the same level of risk. Presently we are using Vanguard Federal Money Market Fund.
abuss368 wrote: Sat Sep 05, 2020 9:46 am That illustrates everything for us. It is almost more of a hassle than it is worth. With cash I look at it as safety first and return second.
Personally, I consider FDIC insured accounts to be more safe than Vanguard Federal Money Market Fund.
mortfree
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by mortfree »

Cash will be going into the pockets of a contractor to finish my basement.

It has been sitting at CapOne where my “old” account is now getting 0.5%
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colodane
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by colodane »

Seems like only yesterday when all the Vanguard MM funds were yielding close to 5%. Those were the good old days for retirees like me. I was lazy and had quite a lot of $$ there.

But decided a few months ago to move most of my MM $$ to something with a measurable yield. I'm now mostly in VSGDX - the Vanguard Short Term Federal Bond fund. 30 day SEC yield of 0.92% currently. $50K minimum.

Yes, it is riskier than an online bank savings account that pays about the same return. But, again, I'm lazy. So didn't want the hassle of sending $$ outside of Vanguard.

I'm comfortable with the increased risk, but it certainly isn't for everyone. But it is convenient. Only time will tell, however, how low the yield will be in the future relative to the banks.

Not recommending it for all, but it is my current solution.
Last edited by colodane on Sat Sep 05, 2020 5:59 pm, edited 1 time in total.
Kruser64
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Kruser64 »

I'm just accepting what basically amounts to 0. Nil. Nada. Zip. Thankfully, there is no inflation! (According to the fed). :beer
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by abuss368 »

000 wrote: Sat Sep 05, 2020 5:41 pm
abuss368 wrote: Sat Sep 05, 2020 9:44 am It is kind of hard to find a suitable replacement with the same level of risk. Presently we are using Vanguard Federal Money Market Fund.
abuss368 wrote: Sat Sep 05, 2020 9:46 am That illustrates everything for us. It is almost more of a hassle than it is worth. With cash I look at it as safety first and return second.
Personally, I consider FDIC insured accounts to be more safe than Vanguard Federal Money Market Fund.
Agreed as there is FDIC protection which mutual funds lack. I also used eTrade years back but really am not motivated to undo the simplicity of having one account.
John C. Bogle: “Simplicity is the master key to financial success."
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Chrono Triggered
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Re: Where do you put cash now? Vanguard's Prime Money Market is too low!

Post by Chrono Triggered »

The stock market. :twisted:
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