## Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory. Topic Author *3!4!/5! Posts: 1256 Joined: Fri Sep 02, 2016 1:47 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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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joe8d
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) Just restarted my Prime MM. All the Best, | Joe triceratop Moderator Posts: 5812 Joined: Tue Aug 04, 2015 8:20 pm Location: la la land ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

RetireSomeday5
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) Still not seeing the money market fund advantage? Using a 3 tier system, 1st tier is trad checking, 2nd tier is high yield savings (currently greater than money market) and 3rd tier savings is in a stable value fund, at about 1.8% currently. Is there something I'm missing? Topic Author *3!4!/5! Posts: 1256 Joined: Fri Sep 02, 2016 1:47 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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 $) *3!4!/5! wrote:VMMXX now beats Ally online savings. Now Ally jumped from 1.05% to 1.15% ahead of VMMXX 1.07%. VMMXX had gone from 0.01% to 1.00% in 2 years, while online savings accounts had barely budged, but now it looks like competition is finally picking up between the banks, so we are seeing those rates finally start to move. MindBogler Posts: 697 Joined: Wed Apr 17, 2013 12:05 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

*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.

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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) *3!4!/5! wrote: In 2 years VMMXX yield has increased from 0.01% to 1.00%, while Ally online savings account has increased from 1.00% to 1.05%. It's actually now up to 1.15% for savings, all size accounts. Tax Sheltered: 35% US Stock | 35% ex-US Stock | 30% TTM || Taxable: 35% US Stock | 35% ex-US Stock | 15% TTM | 15% Munis walletless Posts: 868 Joined: Fri Aug 15, 2014 4:55 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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.

S17C
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) How often are interest payments added to VMMXX Prime MM accounts? sport Posts: 7647 Joined: Tue Feb 27, 2007 3:26 pm Location: Cleveland, OH ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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

coincollector
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) MindBogler wrote: *3!4!/5! wrote: *3!4!/5! wrote:VMMXX now beats Ally online savings. Now Ally jumped from 1.05% to 1.15% ahead of VMMXX 1.07%. VMMXX had gone from 0.01% to 1.00% in 2 years, while online savings accounts had barely budged, but now it looks like competition is finally picking up between the banks, so we are seeing those rates finally start to move. Yes! I just noticed this today when I looked at my Ally account. Hard to believe that 1.15% interest is actually exciting. I am looking forward to 2-3% when keeping an EF isn't such a drag. That is exactly what I was thinking, it's sad that we've been starved so long that 1% looks amazing. After all, ~5% is the return on the Prime Money Market fund over its lifespan. And yet we celebrate 1%, we are living in weird times my friend, weird times indeed. Topic Author *3!4!/5! Posts: 1256 Joined: Fri Sep 02, 2016 1:47 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

^^^ 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.

welderwannabe
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) I am in the Municipal Money Market. In my tax bracket it beats Ally's Savings acct at 1.15. I am not even bothering with the short-term tax-exempt fund anymore. For an extra 15bp, it isn't worth the interest rate risk. The money market has replaced my short term bond holding for the time being. I am not an investment professional, but I did stay at a Holiday Inn Express last night. Scotttheking Posts: 208 Joined: Wed Apr 09, 2008 7:58 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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.

S17C
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) 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?

S17C
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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 $1.00 NAV. The articles below, where this information comes from, says that it is damaging for a firm's reputation to 'break the buck' and they probably will do everything they can to avoid that. http://www.investopedia.com/terms/b/bre ... e-buck.asp http://www.investopedia.com/articles/mu ... k-buck.asp Last edited by S17C on Tue Jul 04, 2017 1:07 pm, edited 1 time in total. acanthurus Posts: 382 Joined: Sun Aug 04, 2013 8:02 am ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

Removed
Last edited by acanthurus on Tue Oct 31, 2017 5:39 pm, edited 2 times in total.

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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) I am just happy that I am earning more than 3 cents a month in interest from this fund. SeeMoe Posts: 1036 Joined: Sat Jul 18, 2015 11:30 am Location: Near Philly.. ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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!

SeeMoe..
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*3!4!/5!
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) Here's a theoretical question from the OP (it is the Theory forum after all). *3!4!/5! wrote:Thoughts? Can anyone explain what exactly pushes Money Market yields versus what pushes online savings yields? There've been some comments addressing this. There is a history stretching back decades (at least for Money Market funds versus online savings accounts), and they are quite different instruments, subject to different forces, with sometimes somewhat different yields in either direction. There are also questions (as some comments address) of how this fits in with overall portfolio, regarding asset allocation and asset location, tax issues etcetera. I think Money Market funds coming back after almost a lost decade is an interesting development, even if it's just in one corner of the bigger investment picture. triceratop Moderator Posts: 5812 Joined: Tue Aug 04, 2015 8:20 pm Location: la la land ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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?
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

S17C
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) Still wondering about this question: VMMXX prime money account pays dividends at the end of the month. If someone withdraws a majority of their VMMXX account on the 27th or 28th (leaving just the minimum balance), then is that person's dividend payment on the 30th reduced because they redeemed before the dividend date? Last edited by S17C on Tue Jul 04, 2017 1:52 pm, edited 1 time in total. ControlContentment Posts: 86 Joined: Sat Dec 19, 2015 7:15 am ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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 $) S17C wrote:Still wondering about this question about VMMXX: VMMXX prime money account pays dividends at the end of the month. If someone withdraws a majority of their VMMXX account on the 27th or 28th (leaving just the minimum balance), then is that person's dividend payment on the 30th significantly reduced because they redeemed before the dividend date? No. You get credited daily based on daily balance, but receive it monthly (or if you sell 100% you get all the interest then). In vanguard.com account go to Balances & holdings--> Balances by date and you can see the accrued dividends/interest as of any date. Kenkat Posts: 4569 Joined: Thu Mar 01, 2007 11:18 am Location: Cincinnati, OH ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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 $) I removed some off-topic posts which were responding to the moderator's prior post. This thread has run its course and is locked. Update: See below. To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be. LadyGeek Site Admin Posts: 50308 Joined: Sat Dec 20, 2008 5:34 pm Location: Philadelphia Contact: ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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 $) Kenkat wrote:<snip>What happened there and why? Seems remarkable to me. I think this has been explained already. Money market rates are closely tied to the federal funds rate (FFR), as are the rates of other very short-term, marketable fixed-income (such as short-term Treasuries). When the Fed lowered the FFR close to 0%, money market rates followed. Now MM rates are following the FFR up as it is increased by the Fed. Kevin ||.......|| Suggested format for Asking Portfolio Questions (edit original post) Engineer250 Posts: 1067 Joined: Wed Jun 22, 2016 1:41 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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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I think I received a check for $0.02. I have it lying around somewhere, as I preferred to have the souvenir rather than the (lost time and) two cents. bogleheads, don't knock state lotteries. They helped defund the mafia. Topic Author *3!4!/5! Posts: 1256 Joined: Fri Sep 02, 2016 1:47 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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!!

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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) I had started another thread as I am considering moving our cash savings account at Wells Fargo to a Vanguard Prime Money Market fund. Our Wells Fargo account is yielding 0.03%. Am I crazy for staying with that when I learned the money market account is 1.10%? John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs triceratop Moderator Posts: 5812 Joined: Tue Aug 04, 2015 8:20 pm Location: la la land ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) triceratop wrote: abuss368 wrote:I had started another thread as I am considering moving our cash savings account at Wells Fargo to a Vanguard Prime Money Market fund. Our Wells Fargo account is yielding 0.03%. Am I crazy for staying with that when I learned the money market account is 1.10%? Yes, unless your goal is to minimize taxable income for some reason. Ha! Good point but no actually. Many people are fooled into thinking there is no risk in cash. While it is not visible to the eye inflation impacts the purchasing power. Sometimes when I mention that, the reaction is one of surprise. John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs triceratop Moderator Posts: 5812 Joined: Tue Aug 04, 2015 8:20 pm Location: la la land ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

abuss368
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) triceratop wrote: abuss368 wrote: triceratop wrote: abuss368 wrote:I had started another thread as I am considering moving our cash savings account at Wells Fargo to a Vanguard Prime Money Market fund. Our Wells Fargo account is yielding 0.03%. Am I crazy for staying with that when I learned the money market account is 1.10%? Yes, unless your goal is to minimize taxable income for some reason. Ha! Good point but no actually. Many people are fooled into thinking there is no risk in cash. While it is not visible to the eye inflation impacts the purchasing power. Sometimes when I mention that, the reaction is one of surprise. That's true, but it seems irrelevant to the discussion we are having about whether you should switch to a higher-yielding cash equivalent. Is it? I suspect that the search for higher yield is a combination of better return which lowers the risk of inflation. John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs triceratop Moderator Posts: 5812 Joined: Tue Aug 04, 2015 8:20 pm Location: la la land ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

I mean, in most cases you would be crazy not to switch regardless of what inflation is doing.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

abuss368
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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) triceratop wrote:I mean, in most cases you would be crazy not to switch regardless of what inflation is doing. Indeed! John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs grog Posts: 385 Joined: Sat Jul 20, 2013 1:09 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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.

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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) grog wrote: Tue Dec 26, 2017 4:07 pm Vanguard prime money market page says it’s up to 1.34% (7 day avg yield). Can that possibly be right? T bills are at 1.24% for one month, up to 1.75% for the one year. So I guess that would explain it. Sure, and it owns plenty of commercial paper and CDs. The Treasury money market fund is up to 1.13% so this isn't much above that, even accounting for the 0.07% lower ER. garlandwhizzer Posts: 2116 Joined: Fri Aug 06, 2010 3:42 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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 $) My on-line bank savings account is 1.30% so no surprise that VMMXX is 1.34%. I think people forgot that bank and brokerage money market accounts can and do pay interest. nisiprius Advisory Board Posts: 37353 Joined: Thu Jul 26, 2007 9:33 am Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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.

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 $) nisiprius wrote: Tue Dec 26, 2017 10:16 pm Furthermore, note this language in the deposit agreement (my boldfacing and red type) Early Withdrawals n. You may not make a partial withdrawal of principal from a CD or IRA CD prior to the maturity date. If we consent to the closure of a CD or IRA CD prior to the maturity date, we will redeem the CD and impose a penalty. But does that paragraph apply to the no-penalty CDs? The following paragraph seems to indicate not: o. This penalty does not apply in the case of the Ally No Penalty CD, which does not allow withdrawals during the first six (6) calendar days following the date the account is funded. Thereafter, you may withdraw the full balance and accrued interest without penalty. Also, it is stated multiple times on their website and in the product guide for the no-penalty CD that: You may withdraw all your money, including interest earned, without any penalties, any time after the first 6 days following the date you fund your account. Ally Straight Talk Product Guide: Your No Penalty CD. Kevin ||.......|| Suggested format for Asking Portfolio Questions (edit original post) Dead Man Walking Posts: 746 Joined: Wed Nov 07, 2007 6:51 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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.

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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### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not $) Dead Man Walking wrote: Tue Dec 26, 2017 10:52 pm nisiprius wrote: Tue Dec 26, 2017 10:16 pm lazyday wrote: Fri Jun 16, 2017 12:13 pm If you haven't looked at ally in a while, they now allow you to close a cd online before maturity, and it seems that the funds are available immediately. The 11 month has no penalty for early withdrawal. But of course you can't make autopayments from it or write checks from it, so it's not really a replacement for a checking or savings account. Furthermore, note this language in the deposit agreement (my boldfacing and red type) Early Withdrawals n. You may not make a partial withdrawal of principal from a CD or IRA CD prior to the maturity date. If we consent to the closure of a CD or IRA CD prior to the maturity date, we will redeem the CD and impose a penalty. This language falls into the weird half-world: the bank has a right to deny you an early withdrawal, but I don't know how to assess the risk of their ever using that right. Allan Roth said in a column a few years ago that the bank had assured him verbally that their policy is to consent to early withdrawals. In any case, under the agreement you do not have any unqualified right to an early withdrawal. A similar statement appears in the fine print of many certificates of deposit. DMW But nisiprius' point was about this specific CD, and objecting to its recommended use as a true no-penalty CD with guaranteed ability to break the CD prior to maturity. It was not a general comment. "To play the stock market is to play musical chairs under the chord progression of a bid-ask spread." rkhusky Posts: 6085 Joined: Thu Aug 18, 2011 8:09 pm ### Re: Vanguard Prime Money Market Fund (VMMXX) breaks 1.00 (% not$)

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 $) 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. 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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