Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by *3!4!/5! » Wed Jun 28, 2017 12:45 pm

House Blend wrote:BTW, there's another reason why having MMFs cross the 1% barrier should have Bogleheads worldwide dancing in the streets.

That's the threshold where the CAGR, rounded to two decimal places, is greater than the yield. For example, if the SEC yield of your MMF is exactly 0.90%, the CAGR is about 0.904%, which rounds to 0.90%. At 1%, the CAGR rounds to 1.01% [*].

Math geeks will recognize that this has to do with the fact that the quadratic term in the Taylor series for exp(x) is x^2/2. This evaluates to half a basis point when x = .01 (i.e., 1%).

[*] The fine print: SEC yield is annualized by multiplying by 365/7, and so does not account for compounding effects. Also, the real threshold for this rounded 1 basis point jump is closer to 1.01%, not 1%, since the exponential function is only an approximation to the effect of 365/7 compounding periods. And the quadratic term is an approximation to the approximation.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by joe8d » Wed Jun 28, 2017 7:01 pm

Just restarted my Prime MM.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by triceratop » Wed Jun 28, 2017 7:16 pm

House Blend wrote:BTW, there's another reason why having MMFs cross the 1% barrier should have Bogleheads worldwide dancing in the streets.

That's the threshold where the CAGR, rounded to two decimal places, is greater than the yield. For example, if the SEC yield of your MMF is exactly 0.90%, the CAGR is about 0.904%, which rounds to 0.90%. At 1%, the CAGR rounds to 1.01% [*].

Math geeks will recognize that this has to do with the fact that the quadratic term in the Taylor series for exp(x) is x^2/2. This evaluates to half a basis point when x = .01 (i.e., 1%).

[*] The fine print: SEC yield is annualized by multiplying by 365/7, and so does not account for compounding effects. Also, the real threshold for this rounded 1 basis point jump is closer to 1.01%, not 1%, since the exponential function is only an approximation to the effect of 365/7 compounding periods. And the quadratic term is an approximation to the approximation.
This analysis isn't complete without analysis of the Taylor remainder, or verifying that the contribution of remainder terms doesn't contribute to get a larger CAGR for e.g. .99%. This isn't an alternating series. ;)

I am starting to feel a little silly holding intermediate term treasuries and picking up only 76bp extra yield for 5 years of term exposures.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by RetireSomeday5 » Wed Jun 28, 2017 7:34 pm

Still not seeing the money market fund advantage? Using a 3 tier system, 1st tier is trad checking, 2nd tier is high yield savings (currently greater than money market) and 3rd tier savings is in a stable value fund, at about 1.8% currently.

Is there something I'm missing?

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by *3!4!/5! » Wed Jun 28, 2017 9:52 pm

linenfort wrote:I see investor shares are still 3,000 and the minimum for Admiral shares is five million. Ok, then!
And they even say their usual "Save even more by investing in lower-cost Admiral Shares.", so I'm sure a lot of people get a surprise when they click on that link.

I think the reason they don't call them "Institutional" shares, is that that might cause confusion with "Institutional" Money Market Funds, which is something different. Vanguard Prime Money Market Fund is a "Retail" (not "Institutional") Money Market Fund. And Vanguard Federal Money Market Fund is a "Government" Money Market Fund.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by *3!4!/5! » Sat Jul 01, 2017 2:29 pm

*3!4!/5! wrote:VMMXX now beats Ally online savings.
Now Ally jumped from 1.05% to 1.15% ahead of VMMXX 1.07%.

VMMXX had gone from 0.01% to 1.00% in 2 years, while online savings accounts had barely budged, but now it looks like competition is finally picking up between the banks, so we are seeing those rates finally start to move.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by MindBogler » Sat Jul 01, 2017 2:48 pm

*3!4!/5! wrote:
*3!4!/5! wrote:VMMXX now beats Ally online savings.
Now Ally jumped from 1.05% to 1.15% ahead of VMMXX 1.07%.

VMMXX had gone from 0.01% to 1.00% in 2 years, while online savings accounts had barely budged, but now it looks like competition is finally picking up between the banks, so we are seeing those rates finally start to move.
Yes! I just noticed this today when I looked at my Ally account. Hard to believe that 1.15% interest is actually exciting. I am looking forward to 2-3% when keeping an EF isn't such a drag. :beer

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by watchnerd » Sun Jul 02, 2017 2:34 pm

*3!4!/5! wrote: In 2 years VMMXX yield has increased from 0.01% to 1.00%, while Ally online savings account has increased from 1.00% to 1.05%.
It's actually now up to 1.15% for savings, all size accounts.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by walletless » Sun Jul 02, 2017 2:44 pm

Remember, Ally has a 11-month no-penalty CD at 1.50%. You can withdraw without penalty any time after 6 days, making it effectively a good place to park money rather than VMMXX.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by S17C » Mon Jul 03, 2017 7:14 pm

How often are interest payments added to VMMXX Prime MM accounts?

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by sport » Mon Jul 03, 2017 7:23 pm

S17C wrote:How often are interest payments added to VMMXX Prime MM accounts?
It's calculated daily and paid monthly.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by coincollector » Mon Jul 03, 2017 7:25 pm

MindBogler wrote:
*3!4!/5! wrote:
*3!4!/5! wrote:VMMXX now beats Ally online savings.
Now Ally jumped from 1.05% to 1.15% ahead of VMMXX 1.07%.

VMMXX had gone from 0.01% to 1.00% in 2 years, while online savings accounts had barely budged, but now it looks like competition is finally picking up between the banks, so we are seeing those rates finally start to move.
Yes! I just noticed this today when I looked at my Ally account. Hard to believe that 1.15% interest is actually exciting. I am looking forward to 2-3% when keeping an EF isn't such a drag. :beer
That is exactly what I was thinking, it's sad that we've been starved so long that 1% looks amazing. After all, ~5% is the return on the Prime Money Market fund over its lifespan. And yet we celebrate 1%, we are living in weird times my friend, weird times indeed.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by *3!4!/5! » Mon Jul 03, 2017 8:25 pm

^^^ Yeah, that's why I started the thread with
*3!4!/5! wrote:After almost a lost decade for Money Market Funds, we are finally up to "triple digit" yields (100 basis points).
We used to measure interest rates in percent, but the rates got so tiny we used basis points instead, and a lot of interest rates were just one measly basis point. Now we're up to and over one hundred basis points!! Wow! But, oh yeah, one hundred basis points is just one measly percent.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by welderwannabe » Mon Jul 03, 2017 9:09 pm

I am in the Municipal Money Market. In my tax bracket it beats Ally's Savings acct at 1.15. I am not even bothering with the short-term tax-exempt fund anymore. For an extra 15bp, it isn't worth the interest rate risk. The money market has replaced my short term bond holding for the time being.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by Scotttheking » Tue Jul 04, 2017 6:24 am

welderwannabe wrote:I am in the Municipal Money Market. In my tax bracket it beats Ally's Savings acct at 1.15. I am not even bothering with the short-term tax-exempt fund anymore. For an extra 15bp, it isn't worth the interest rate risk. The money market has replaced my short term bond holding for the time being.
It is too bad that vanguard doesn't offer a amt free muni money market.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by S17C » Tue Jul 04, 2017 11:15 am

I see that VMMXX prime money account has dividends at the end of the month. If someone withdraws a majority of their VMMXX account on the 27th or 28th (leaving just the minimum balance), then is that person's dividend payment on the 30th significantly impacted?

Also another question. If prime money market fund ever had to 'break the buck,' then is that part of the money gone forever, or can holding long-term potentially see the return of the NAV back to $1.00?

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by S17C » Tue Jul 04, 2017 1:03 pm

S17C wrote:If prime money market fund ever had to 'break the buck,' then is that part of the money gone forever, or can holding long-term potentially see the return of the NAV back to $1.00?
Community Bankers U.S. Government Money Market offered no choice but to be liquidated for a loss in 1994. In 2008, a Lehman Bros fund fell to 97 cents and another fund announced a liquidation. With a bank run on money market accounts starting, the US government insured the $1.00 NAV. The articles below, where this information comes from, says that it is damaging for a firm's reputation to 'break the buck' and they probably will do everything they can to avoid that.

http://www.investopedia.com/terms/b/bre ... e-buck.asp
http://www.investopedia.com/articles/mu ... k-buck.asp
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by acanthurus » Tue Jul 04, 2017 1:11 pm

Removed
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by Kenkat » Tue Jul 04, 2017 1:12 pm

I am just happy that I am earning more than 3 cents a month in interest from this fund.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by SeeMoe » Tue Jul 04, 2017 1:14 pm

My credit Union MM stubbornly pays a 0.20% dividend, and checking is 0.10%. Better than most banks though! So I have been depositing excess cash into our joint Prime Money Market account for a few months now. Partly for a 2018 AMG GLE43 (C4) coupe on order for September. But we will continue using the PMM as interest rates continue to rise, beating out the banks big time!

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by *3!4!/5! » Tue Jul 04, 2017 1:34 pm

Here's a theoretical question from the OP (it is the Theory forum after all).
*3!4!/5! wrote:Thoughts? Can anyone explain what exactly pushes Money Market yields versus what pushes online savings yields?
There've been some comments addressing this. There is a history stretching back decades (at least for Money Market funds versus online savings accounts), and they are quite different instruments, subject to different forces, with sometimes somewhat different yields in either direction.

There are also questions (as some comments address) of how this fits in with overall portfolio, regarding asset allocation and asset location, tax issues etcetera.

I think Money Market funds coming back after almost a lost decade is an interesting development, even if it's just in one corner of the bigger investment picture.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by triceratop » Tue Jul 04, 2017 1:36 pm

I removed some off topic comments. Please remember to keep this forum civil and a place for a cordial discussion of ideas. Here is the original post of the OP, to keep things on track:
(No, it didn't break the buck.) After almost a lost decade for Money Market Funds, we are finally up to "triple digit" yields (100 basis points).

In 2 years VMMXX yield has increased from 0.01% to 1.00%, while Ally online savings account has increased from 1.00% to 1.05%.

So the question is, will Money Market Funds again become a non-ridiculous place to place some cash. The yields still lag online savings accounts a little (some online savings are a bit higher than Ally), but perhaps Money Market yields may soon exceed online savings accounts. They are subject to different influences.

Any ideas where this is headed, and are people responding to these changes, and shifting where they park cash? Obviously there are better returns for more risk or less liquidity, but you need a little ready cash parked somewhere.

Thoughts? Can anyone explain what exactly pushes Money Market yields versus what pushes online savings yields?
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by S17C » Tue Jul 04, 2017 1:51 pm

Still wondering about this question:

VMMXX prime money account pays dividends at the end of the month. If someone withdraws a majority of their VMMXX account on the 27th or 28th (leaving just the minimum balance), then is that person's dividend payment on the 30th reduced because they redeemed before the dividend date?
Last edited by S17C on Tue Jul 04, 2017 1:52 pm, edited 1 time in total.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by ControlContentment » Tue Jul 04, 2017 1:52 pm

S17C wrote:Still wondering about this question about VMMXX:

VMMXX prime money account pays dividends at the end of the month. If someone withdraws a majority of their VMMXX account on the 27th or 28th (leaving just the minimum balance), then is that person's dividend payment on the 30th significantly reduced because they redeemed before the dividend date?
No. It's daily accrual.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by *3!4!/5! » Tue Jul 04, 2017 1:55 pm

S17C wrote:Still wondering about this question about VMMXX:

VMMXX prime money account pays dividends at the end of the month. If someone withdraws a majority of their VMMXX account on the 27th or 28th (leaving just the minimum balance), then is that person's dividend payment on the 30th significantly reduced because they redeemed before the dividend date?
No. You get credited daily based on daily balance, but receive it monthly (or if you sell 100% you get all the interest then).

In vanguard.com account go to
Balances & holdings--> Balances by date
and you can see the accrued dividends/interest as of any date.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by Kenkat » Tue Jul 04, 2017 1:55 pm

The point to the discussion is that for a long time, Vanguard Prime MM fund paid interest at a rate that was competitive or better than almost every other cash equivalent. I have held this fund since the early 90's when I discovered it paid far better than my bank's money market fund and often was close to a 6 month or 1 year CD. Then around 2009, that all changed - MM rates plunged and you could get 75 or even 100 basis points more in online savings accounts such as ING Direct (now Capital One 360) or Ally. On $50,000 in cash, that's $375-500 a year and that's enough for me to take action - which I did. Now it is swinging back and only now, after 8+ years is it a 10 basis point discussion. What happened there and why? Seems remarkable to me.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by LadyGeek » Tue Jul 04, 2017 2:21 pm

I removed some off-topic posts which were responding to the moderator's prior post. This thread has run its course and is locked.

Update: See below.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by LadyGeek » Sun Jul 09, 2017 9:37 pm

After a cooling-off period, this thread is now unlocked to continue the discussion.

Please stay on-topic and state your concerns in a civil, factual manner.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by Kevin M » Mon Jul 10, 2017 8:46 am

Kenkat wrote:<snip>What happened there and why? Seems remarkable to me.
I think this has been explained already. Money market rates are closely tied to the federal funds rate (FFR), as are the rates of other very short-term, marketable fixed-income (such as short-term Treasuries). When the Fed lowered the FFR close to 0%, money market rates followed. Now MM rates are following the FFR up as it is increased by the Fed.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by Engineer250 » Mon Jul 10, 2017 11:33 am

linenfort wrote:I never would have noticed the 1% breach if it hadn't been for this forum.
I thought everyone had forgotten Prime with the forced(?) "upgrade" at Vanguard to VMFXX, the federal MM fund for our sweep accounts.
The last post I remember seeing about it was something about Taylor holding on to Prime because of the way statements are reported or something.

I've previously bounced around from Prime to the state of PA's tax-exempt MMF to Federal to 6-month treasury bills. Will have to take another look.

I see investor shares are still 3,000 and the minimum for Admiral shares is five million. Ok, then!
VG did some weird things when it upgraded my account and my husband's account. Both obviously the "intake" account became VMFXX. But for some reason in mine (and not his) they moved the money I had sitting in that intake into its own VMMXX line on my holdings. I feel like I didn't have the normal minimum for the fund either so that wasn't it.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by welderwannabe » Mon Jul 10, 2017 12:13 pm

Engineer250 wrote: VG did some weird things when it upgraded my account and my husband's account. Both obviously the "intake" account became VMFXX. But for some reason in mine (and not his) they moved the money I had sitting in that intake into its own VMMXX line on my holdings. I feel like I didn't have the normal minimum for the fund either so that wasn't it.
Same thing happened to me. I ended up with a standalone Prime Money Market fund account with 46 cents in it. No big deal, I just sold it and it moved to the Federal settlement fund.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by linenfort » Wed Jul 12, 2017 11:16 am

I think I received a check for $0.02. I have it lying around somewhere, as I preferred to have the souvenir rather than the (lost time and) two cents.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by *3!4!/5! » Fri Jul 28, 2017 3:53 am

Oh no, the sky is falling!!
After its meteoric rise to 1.11%, VMMXX SEC yield has plunged back down to 1.10% !!!
https://personal.vanguard.com/us/funds/ ... &year=#res
It's over!! Interest rates are going down again!!
I can't handle the volatility!! :shock:

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by abuss368 » Fri Jul 28, 2017 7:41 pm

I had started another thread as I am considering moving our cash savings account at Wells Fargo to a Vanguard Prime Money Market fund. Our Wells Fargo account is yielding 0.03%. Am I crazy for staying with that when I learned the money market account is 1.10%?
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by triceratop » Fri Jul 28, 2017 7:43 pm

abuss368 wrote:I had started another thread as I am considering moving our cash savings account at Wells Fargo to a Vanguard Prime Money Market fund. Our Wells Fargo account is yielding 0.03%. Am I crazy for staying with that when I learned the money market account is 1.10%?
Yes, unless your goal is to minimize taxable income for some reason.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by abuss368 » Fri Jul 28, 2017 7:48 pm

triceratop wrote:
abuss368 wrote:I had started another thread as I am considering moving our cash savings account at Wells Fargo to a Vanguard Prime Money Market fund. Our Wells Fargo account is yielding 0.03%. Am I crazy for staying with that when I learned the money market account is 1.10%?
Yes, unless your goal is to minimize taxable income for some reason.
Ha! Good point but no actually. Many people are fooled into thinking there is no risk in cash. While it is not visible to the eye inflation impacts the purchasing power. Sometimes when I mention that, the reaction is one of surprise.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by triceratop » Fri Jul 28, 2017 7:52 pm

abuss368 wrote:
triceratop wrote:
abuss368 wrote:I had started another thread as I am considering moving our cash savings account at Wells Fargo to a Vanguard Prime Money Market fund. Our Wells Fargo account is yielding 0.03%. Am I crazy for staying with that when I learned the money market account is 1.10%?
Yes, unless your goal is to minimize taxable income for some reason.
Ha! Good point but no actually. Many people are fooled into thinking there is no risk in cash. While it is not visible to the eye inflation impacts the purchasing power. Sometimes when I mention that, the reaction is one of surprise.
That's true, but it seems irrelevant to the discussion we are having about whether you should switch to a higher-yielding cash equivalent.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by abuss368 » Fri Jul 28, 2017 8:48 pm

triceratop wrote:
abuss368 wrote:
triceratop wrote:
abuss368 wrote:I had started another thread as I am considering moving our cash savings account at Wells Fargo to a Vanguard Prime Money Market fund. Our Wells Fargo account is yielding 0.03%. Am I crazy for staying with that when I learned the money market account is 1.10%?
Yes, unless your goal is to minimize taxable income for some reason.
Ha! Good point but no actually. Many people are fooled into thinking there is no risk in cash. While it is not visible to the eye inflation impacts the purchasing power. Sometimes when I mention that, the reaction is one of surprise.
That's true, but it seems irrelevant to the discussion we are having about whether you should switch to a higher-yielding cash equivalent.
Is it? I suspect that the search for higher yield is a combination of better return which lowers the risk of inflation.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by triceratop » Fri Jul 28, 2017 9:12 pm

I mean, in most cases you would be crazy not to switch regardless of what inflation is doing.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by abuss368 » Fri Jul 28, 2017 9:13 pm

triceratop wrote:I mean, in most cases you would be crazy not to switch regardless of what inflation is doing.
Indeed!
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grog
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by grog » Tue Dec 26, 2017 4:07 pm

Vanguard prime money market page says it’s up to 1.34% (7 day avg yield). Can that possibly be right?

T bills are at 1.24% for one month, up to 1.75% for the one year. So I guess that would explain it.

lack_ey
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by lack_ey » Tue Dec 26, 2017 4:13 pm

grog wrote:
Tue Dec 26, 2017 4:07 pm
Vanguard prime money market page says it’s up to 1.34% (7 day avg yield). Can that possibly be right?

T bills are at 1.24% for one month, up to 1.75% for the one year. So I guess that would explain it.
Sure, and it owns plenty of commercial paper and CDs. The Treasury money market fund is up to 1.13% so this isn't much above that, even accounting for the 0.07% lower ER.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by garlandwhizzer » Tue Dec 26, 2017 7:02 pm

VMMXX's yield rapidly reflects recent raises in interest rates by the Fed. VMMSX is likely to be yielding over 2% by the end of 2018 if, as expected by most, the Fed raises rates 3 times in 2018. Unlike longer duration bonds, it will not suffer principal loss along in a rising rate environment. Most Bogleheads pay little heed to MM funds but in rising inflation/rising rate environments, MMF can sometimes outperform longer duration bonds over the short term.

Garland Whizzer

MnD
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by MnD » Tue Dec 26, 2017 7:56 pm

My on-line bank savings account is 1.30% so no surprise that VMMXX is 1.34%.
I think people forgot that bank and brokerage money market accounts can and do pay interest. :mrgreen:

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nisiprius
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by nisiprius » Tue Dec 26, 2017 10:16 pm

lazyday wrote:
Fri Jun 16, 2017 12:13 pm
If you haven't looked at ally in a while, they now allow you to close a cd online before maturity, and it seems that the funds are available immediately. The 11 month has no penalty for early withdrawal.

But of course you can't make autopayments from it or write checks from it, so it's not really a replacement for a checking or savings account.
Furthermore, note this language in the deposit agreement (my boldfacing and red type)
Early Withdrawals
n. You may not make a partial withdrawal of principal from a CD or IRA CD prior to the maturity date. If we consent to the closure of a CD or IRA CD prior to the maturity date, we will redeem the CD and impose a penalty.
Image

This language falls into the weird half-world: the bank has a right to deny you an early withdrawal, but I don't know how to assess the risk of their ever using that right. Allan Roth said in a column a few years ago that the bank had assured him verbally that their policy is to consent to early withdrawals.

In any case, under the agreement you do not have any unqualified right to an early withdrawal.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by Kevin M » Tue Dec 26, 2017 10:50 pm

nisiprius wrote:
Tue Dec 26, 2017 10:16 pm
Furthermore, note this language in the deposit agreement (my boldfacing and red type)
Early Withdrawals
n. You may not make a partial withdrawal of principal from a CD or IRA CD prior to the maturity date. If we consent to the closure of a CD or IRA CD prior to the maturity date, we will redeem the CD and impose a penalty.
But does that paragraph apply to the no-penalty CDs? The following paragraph seems to indicate not:
o. This penalty does not apply in the case of the Ally No Penalty CD, which does not allow withdrawals
during the first six (6) calendar days following the date the account is funded. Thereafter, you
may withdraw the full balance and accrued interest without penalty.
Also, it is stated multiple times on their website and in the product guide for the no-penalty CD that:
You may withdraw all your money, including interest earned, without any penalties, any time after the first 6 days
following the date you fund your account.
Ally Straight Talk Product Guide: Your No Penalty CD.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

Dead Man Walking
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by Dead Man Walking » Tue Dec 26, 2017 10:52 pm

nisiprius wrote:
Tue Dec 26, 2017 10:16 pm
lazyday wrote:
Fri Jun 16, 2017 12:13 pm
If you haven't looked at ally in a while, they now allow you to close a cd online before maturity, and it seems that the funds are available immediately. The 11 month has no penalty for early withdrawal.

But of course you can't make autopayments from it or write checks from it, so it's not really a replacement for a checking or savings account.
Furthermore, note this language in the deposit agreement (my boldfacing and red type)
Early Withdrawals
n. You may not make a partial withdrawal of principal from a CD or IRA CD prior to the maturity date. If we consent to the closure of a CD or IRA CD prior to the maturity date, we will redeem the CD and impose a penalty.
Image

This language falls into the weird half-world: the bank has a right to deny you an early withdrawal, but I don't know how to assess the risk of their ever using that right. Allan Roth said in a column a few years ago that the bank had assured him verbally that their policy is to consent to early withdrawals.

In any case, under the agreement you do not have any unqualified right to an early withdrawal.
A similar statement appears in the fine print of many certificates of deposit.

DMW

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triceratop
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by triceratop » Tue Dec 26, 2017 11:03 pm

Dead Man Walking wrote:
Tue Dec 26, 2017 10:52 pm
nisiprius wrote:
Tue Dec 26, 2017 10:16 pm
lazyday wrote:
Fri Jun 16, 2017 12:13 pm
If you haven't looked at ally in a while, they now allow you to close a cd online before maturity, and it seems that the funds are available immediately. The 11 month has no penalty for early withdrawal.

But of course you can't make autopayments from it or write checks from it, so it's not really a replacement for a checking or savings account.
Furthermore, note this language in the deposit agreement (my boldfacing and red type)
Early Withdrawals
n. You may not make a partial withdrawal of principal from a CD or IRA CD prior to the maturity date. If we consent to the closure of a CD or IRA CD prior to the maturity date, we will redeem the CD and impose a penalty.
Image

This language falls into the weird half-world: the bank has a right to deny you an early withdrawal, but I don't know how to assess the risk of their ever using that right. Allan Roth said in a column a few years ago that the bank had assured him verbally that their policy is to consent to early withdrawals.

In any case, under the agreement you do not have any unqualified right to an early withdrawal.
A similar statement appears in the fine print of many certificates of deposit.

DMW
But nisiprius' point was about this specific CD, and objecting to its recommended use as a true no-penalty CD with guaranteed ability to break the CD prior to maturity. It was not a general comment.
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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by rkhusky » Tue Dec 26, 2017 11:28 pm

This sentence from the Ally deposit agreement makes things clearer
Except for the Ally No Penalty CD, a withdrawal of the entire principal before maturity will be permitted only with Ally’s consent and an interest penalty that is described in More About Certificates of Deposit and IRA CDs, Section I.B.6, will apply.

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Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $)

Post by sperry8 » Fri Dec 29, 2017 1:04 am

MnD wrote:
Tue Dec 26, 2017 7:56 pm
My on-line bank savings account is 1.30% so no surprise that VMMXX is 1.34%.
I think people forgot that bank and brokerage money market accounts can and do pay interest. :mrgreen:
I hadn't paid attention to it in years. But at today's SEC yield of 1.36% APY - it's finally competitive. Sad we can't gain access to the Admiral version which requires $5mm! Do Flagship Select clients have access to Admiral without the min?
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