Is it time to dump high yield savings for prime money market?

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pascalwager
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Re: Is it time to dump high yield savings for prime money market?

Post by pascalwager » Sun Apr 15, 2018 9:55 pm

BogleMelon wrote:
Thu Mar 22, 2018 11:44 am
MnD wrote:
Thu Mar 22, 2018 11:31 am
pascalwager wrote:
Wed Mar 21, 2018 9:50 pm
aj76er wrote:
Wed Mar 21, 2018 11:00 am
Not as convenient, but I'm thinking of rolling my Ally No-Penalty CDs into 3mo. T-bills.
Auction is next week, I think.
I did this (T-bills) for 15 years (also 6-mos bills) with 100% of my spare cash: $10k and $20k. I recently looked at the cash heat map on PortfolioCharts website. Shows that it at least beat inflation the whole time. Finally lump summed into stocks.
I'm going to do this as part of getting rid of two more financial institutions, a high yield on-line savings account and a brick and mortar checking and savings.

My brokerage has a FDIC bank checking account linked to brokerage with very good terms to replace brick and mortar checking. My high yield (and regular) "savings account" will then be a T-bill ladder in brokerage with automatic reinvest. My brokerage prime purchased money market account is not as good as Vanguard Prime but with this system, I think I will do a bit better than Vanguard Prime. Ditching two more financial institutions and 3 accounts is also big plus in my book. And no state tax on the interest.
Who is your brokerage?
Also what if you needed one of the T-bills earlier? Is it (liquid) enough?
You would need to wait for the auto-invest T-bill to near maturity--at most three- or six-months. (Six month bills usually provide higher yield.)

pascalwager
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Re: Is it time to dump high yield savings for prime money market?

Post by pascalwager » Sun Apr 15, 2018 10:12 pm

pascalwager wrote:
Sun Apr 15, 2018 9:16 pm
hoops777 wrote:
Sun Apr 15, 2018 11:42 am
pascalwager wrote:
Sat Apr 14, 2018 11:24 pm
I question the use of the word "dump" in the thread title. Yes, I know it's only an investment implementation, but it still seems unnecessarily harsh and disrespectful. I would have used, maybe, "relinquish".
With the way investors have been treated by their saving accounts I believe some disrespect is completely warranted :happy
Okay, then how about: "Is it time to dump FDIC protection for 22 bp of yield?"

I guess I could spread my money around, $50k each:

-bank HY savings (FDIC)
-Prime MM
-Treasury MM (Full Faith and Credit)
-state MM
-national MM

I think David Swensen does give approval to MM funds with credit risk.
Also, will consider Treasury Direct (4/13/18):

-1 month 1.64%
-3 month 1.76%
-6 month 1.97%
-12 month 2.12%

No state tax.

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Doc
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Re: Is it time to dump high yield savings for prime money market?

Post by Doc » Mon Apr 16, 2018 6:23 am

hoops777 wrote:
Sun Apr 15, 2018 5:17 pm
Doc wrote:
Sun Apr 15, 2018 2:38 pm
sperry8 wrote:
Sun Apr 15, 2018 11:48 am
What is the 1.61% one called?
"No longer available."
*Schwab no longer allows new enrollments into sweep money market funds (MMFs), with the exception of international accounts, Schwab Managed Accounts, Schwab Charitable accounts, and certain existing ERISA plans. Existing accounts with sweep MMFs will be migrated to the Bank Sweep feature over a period of years. Please see your Cash Features Disclosure Statement for additional details.
SWVXX is a money fund that is yielding 1.63.You have to buy and sell it like a mutual fund.
Thanks.

When they switched our settlement (sweep) fund to Schwab bank I didn't follow the up on the alternatives.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

NYCwriter
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Re: Is it time to dump high yield savings for prime money market?

Post by NYCwriter » Mon Apr 16, 2018 11:27 pm

My current back is Cap One. I switched from Citi awhile back, and the one advantage over Ally was a local branch. There's no fees, and they offer a MM paying 1.5+

I've found it ideal to create a system where my primary checking pays myself first, then my budget. My bank MM holds my emergency savings (I never touch it), and checking pays out to everything monthly. I have a savings account separate from MM. I also pay into Vanguard for what would normally go into my investing. (I'm holding some extra cash that normally gets added to bond funds.)

I don't earn a lot, and my pre-tax retirement deductions keep me from over-spending. One nice thing about Cap One is that you can create a separate savings sub-account for a specific goal, like a vacation, or a large purchase.

I'm looking into Advantage now, thanks for mentioning it. I'll have to check it against fees.

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grayfox
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Re: Is it time to dump high yield savings for prime money market?

Post by grayfox » Sat Apr 21, 2018 9:37 am

VMMXX is now up to 1.79%. It keeps edging up. We'll be at 2% in no time.

guyesmith
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Re: Is it time to dump high yield savings for prime money market?

Post by guyesmith » Sat Apr 21, 2018 9:52 am

grayfox wrote:
Sat Apr 21, 2018 9:37 am
VMMXX is now up to 1.79%. It keeps edging up. We'll be at 2% in no time.
Yep. My Vanguard PA Municipal Money Market is at 1.52% SEC. I was getting .90 APY at Ally with their Money Market Account.

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Doc
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Re: Is it time to dump high yield savings for prime money market?

Post by Doc » Sat Apr 21, 2018 9:54 am

grayfox wrote:
Sat Apr 21, 2018 9:37 am
VMMXX is now up to 1.79%. It keeps edging up. We'll be at 2% in no time.
18 June 2018 :D

http://www.cmegroup.com/trading/interes ... -fomc.html
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

Bulgogi Head
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Re: Is it time to dump high yield savings for prime money market?

Post by Bulgogi Head » Sat Apr 21, 2018 8:07 pm

If lack of FDIC insurance is not a concern, is there any reason to not transfer my cash savings from Synchrony Bank (1.55% interest) to Vanguard Prime Money Market (1.80%)?

guyesmith
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Re: Is it time to dump high yield savings for prime money market?

Post by guyesmith » Sat Apr 21, 2018 8:20 pm

Bulgogi Head wrote:
Sat Apr 21, 2018 8:07 pm
If lack of FDIC insurance is not a concern, is there any reason to not transfer my cash savings from Synchrony Bank (1.55% interest) to Vanguard Prime Money Market (1.80%)?
Nothing that concerned me. You can order checks for your taxable account and set it to pull from a specific fund.

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fortyofforty
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Re: Is it time to dump high yield savings for prime money market?

Post by fortyofforty » Sun Apr 22, 2018 2:48 pm

Doc wrote:
Sat Apr 21, 2018 9:54 am
grayfox wrote:
Sat Apr 21, 2018 9:37 am
VMMXX is now up to 1.79%. It keeps edging up. We'll be at 2% in no time.
18 June 2018 :D

http://www.cmegroup.com/trading/interes ... -fomc.html
No guarantee, but likely a safe bet.

Will a Fed interest rate hike mean more interest in your savings account?
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | Original Vanguard Diehard

pascalwager
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Re: Is it time to dump high yield savings for prime money market?

Post by pascalwager » Sun Apr 22, 2018 6:58 pm

Bulgogi Head wrote:
Sat Apr 21, 2018 8:07 pm
If lack of FDIC insurance is not a concern, is there any reason to not transfer my cash savings from Synchrony Bank (1.55% interest) to Vanguard Prime Money Market (1.80%)?
Don't forget to subtract the fund ER (0.16%) from the yield. For Prime MM: 1.79 minus 0.16 = 1.63% interest and no FDIC.

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ruralavalon
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Re: Is it time to dump high yield savings for prime money market?

Post by ruralavalon » Sun Apr 22, 2018 7:07 pm

pascalwager wrote:
Sun Apr 22, 2018 6:58 pm
Bulgogi Head wrote:
Sat Apr 21, 2018 8:07 pm
If lack of FDIC insurance is not a concern, is there any reason to not transfer my cash savings from Synchrony Bank (1.55% interest) to Vanguard Prime Money Market (1.80%)?
Don't forget to subtract the fund ER (0.16%) from the yield. For Prime MM: 1.79 minus 0.16 = 1.63% interest and no FDIC.
That is incorrect. The SEC Yield on a money market fund is after all expenses are deducted. Investopedia, "Seven day yield".
Last edited by ruralavalon on Sun Apr 22, 2018 7:12 pm, edited 1 time in total.
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pascalwager
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Re: Is it time to dump high yield savings for prime money market?

Post by pascalwager » Sun Apr 22, 2018 7:12 pm

ruralavalon wrote:
Sun Apr 22, 2018 7:07 pm
pascalwager wrote:
Sun Apr 22, 2018 6:58 pm
Bulgogi Head wrote:
Sat Apr 21, 2018 8:07 pm
If lack of FDIC insurance is not a concern, is there any reason to not transfer my cash savings from Synchrony Bank (1.55% interest) to Vanguard Prime Money Market (1.80%)?
Don't forget to subtract the fund ER (0.16%) from the yield. For Prime MM: 1.79 minus 0.16 = 1.63% interest and no FDIC.
That is incorrect. The SEC Yield on a money market fund is after all expenses are deducted.
Oops, guess I forgot how it works after not using MMs for so many years.

Pure Point Bank is now 1.75% APY, but $10,000 minimum.

jpsc
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Re: Is it time to dump high yield savings for prime money market?

Post by jpsc » Sun Apr 22, 2018 7:59 pm

When I compare high yield saving account - max you can get is 1.8% - taxable
Look at I-bonds, paying currently at 2.48%, tax deferred until you sell - no state/local tax.
so why putting in a bank ?

Bulgogi Head
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Re: Is it time to dump high yield savings for prime money market?

Post by Bulgogi Head » Sun Apr 22, 2018 8:45 pm

Does anyone know if there is a monthly transaction limit for PMMF? My current high yield savings account at Synchrony limits to six per month.

pascalwager
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Re: Is it time to dump high yield savings for prime money market?

Post by pascalwager » Sun Apr 22, 2018 11:20 pm

jpsc wrote:
Sun Apr 22, 2018 7:59 pm
When I compare high yield saving account - max you can get is 1.8% - taxable
Look at I-bonds, paying currently at 2.48%, tax deferred until you sell - no state/local tax.
so why putting in a bank ?
I-bond purchases are limited to $10k per year. Also, not liquid first year. Penalty to redeem for first five years. Appears that the Treasury is phasing them out, too.

ivk5
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Re: Is it time to dump high yield savings for prime money market?

Post by ivk5 » Mon Apr 23, 2018 2:49 am

Bulgogi Head wrote:
Sun Apr 22, 2018 8:45 pm
Does anyone know if there is a monthly transaction limit for PMMF? My current high yield savings account at Synchrony limits to six per month.
I don't think money market funds are subject to Reg D.
pascalwager wrote:
Sun Apr 22, 2018 11:20 pm
Appears that the Treasury is phasing them out, too.
Out of curiosity, do you have a source for this statement? Or is this just speculation?

I did hear some speculate that they were getting phased out based on long period of 0% fixed rate, but that reasoning seems weaker now that they raised fixed rate above zero again.

pascalwager
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Re: Is it time to dump high yield savings for prime money market?

Post by pascalwager » Mon Apr 23, 2018 10:35 am

ivk5 wrote:
Mon Apr 23, 2018 2:49 am
Bulgogi Head wrote:
Sun Apr 22, 2018 8:45 pm
Does anyone know if there is a monthly transaction limit for PMMF? My current high yield savings account at Synchrony limits to six per month.
I don't think money market funds are subject to Reg D.
pascalwager wrote:
Sun Apr 22, 2018 11:20 pm
Appears that the Treasury is phasing them out, too.
Out of curiosity, do you have a source for this statement? Or is this just speculation?

I did hear some speculate that they were getting phased out based on long period of 0% fixed rate, but that reasoning seems weaker now that they raised fixed rate above zero again. Just a few months ago.
I guess you could call it speculation, but I seem to recall that the (quite sensible) argument was presented by one of the BH founders. But I can't remember the details.

mbasherp
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Re: Is it time to dump high yield savings for prime money market?

Post by mbasherp » Mon Apr 23, 2018 10:52 am

pascalwager wrote:
Sat Apr 14, 2018 11:24 pm
I question the use of the word "dump" in the thread title. Yes, I know it's only an investment implementation, but it still seems unnecessarily harsh and disrespectful. I would have used, maybe, "relinquish".
I suppose I should apologize to both you and high yield savings accounts across the country, then. :beer

yeahman
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Re: Is it time to dump high yield savings for prime money market?

Post by yeahman » Mon Apr 23, 2018 12:05 pm

Any reason to get the prime over the municipal in a taxable if you're above the 12% bracket?

Whakamole
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Re: Is it time to dump high yield savings for prime money market?

Post by Whakamole » Mon Apr 23, 2018 12:32 pm

ivk5 wrote:
Mon Apr 23, 2018 2:49 am
Bulgogi Head wrote:
Sun Apr 22, 2018 8:45 pm
Does anyone know if there is a monthly transaction limit for PMMF? My current high yield savings account at Synchrony limits to six per month.
I don't think money market funds are subject to Reg D.
pascalwager wrote:
Sun Apr 22, 2018 11:20 pm
Appears that the Treasury is phasing them out, too.
Out of curiosity, do you have a source for this statement? Or is this just speculation?

I did hear some speculate that they were getting phased out based on long period of 0% fixed rate, but that reasoning seems weaker now that they raised fixed rate above zero again.
I would point to a few reasons why these could be getting phased out:
- Paper bond sales are no more (you can get them for tax refunds but that's it.)
- Similarly, there used to be programs to buy bonds with part of your paycheck, I think those are long gone.
- The program that let you keep track of bond ownership and values, the Savings Bond Wizard, is being shut down.
- For a while, getting paper bonds converted to electronic took a very long time (months), which may have been due to a lack of headcount.

I/EE bonds are a very small part of the US debt and may simply not be worth the cost to operate.

MnD
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Re: Is it time to dump high yield savings for prime money market?

Post by MnD » Mon Apr 23, 2018 1:53 pm

yeahman wrote:
Mon Apr 23, 2018 12:05 pm
Any reason to get the prime over the municipal in a taxable if you're above the 12% bracket?
I just moved from high yield savings into muni money market.
I was surprised at the after-tax yield advantage for the muni fund and I'm not in a super-high tax bracket.

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zaplunken
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Re: Is it time to dump high yield savings for prime money market?

Post by zaplunken » Mon Apr 23, 2018 8:45 pm

With the 2 year Treasury note at 2.479% when's Ally going to raise the online savings rate! It is stuck at 1.45%.

pascalwager
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Re: Is it time to dump high yield savings for prime money market?

Post by pascalwager » Mon Apr 23, 2018 10:43 pm

mbasherp wrote:
Mon Apr 23, 2018 10:52 am
pascalwager wrote:
Sat Apr 14, 2018 11:24 pm
I question the use of the word "dump" in the thread title. Yes, I know it's only an investment implementation, but it still seems unnecessarily harsh and disrespectful. I would have used, maybe, "relinquish".
I suppose I should apologize to both you and high yield savings accounts across the country, then. :beer
Not me. I don't/didn't work in the online banking industry.

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eye.surgeon
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Re: Is it time to dump high yield savings for prime money market?

Post by eye.surgeon » Mon Apr 23, 2018 11:28 pm

I just moved cash out of my GS 1.6% savings into Vanguards California muni tax exempt MM fund, being in the highest tax bracket the rates are finally competitive with online savings accounts.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett

WanderingDoc
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Re: Is it time to dump high yield savings for prime money market?

Post by WanderingDoc » Tue Apr 24, 2018 1:11 am

grayfox wrote:
Sat Apr 21, 2018 9:37 am
VMMXX is now up to 1.79%. It keeps edging up. We'll be at 2% in no time.
Hey, grayfox. Haven't seen you in a while! Any more news on your crypto journey?

I'll look into VMMXX. I still keep quite a bit of cash in a 1.35% Ally account. For some reason, psychologically it seems like I wouldn't be hit with the same tax burden as the MMF.
I'm not looking to get rich quick (crypto), I'm not looking to get rich slow (index funds).. I'm looking to get rich, for sure (real estate).

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Re: Is it time to dump high yield savings for prime money market?

Post by jpsc » Tue Apr 24, 2018 1:18 am

pascalwager wrote:
Sun Apr 22, 2018 11:20 pm
jpsc wrote:
Sun Apr 22, 2018 7:59 pm
When I compare high yield saving account - max you can get is 1.8% - taxable
Look at I-bonds, paying currently at 2.48%, tax deferred until you sell - no state/local tax.
so why putting in a bank ?
I-bond purchases are limited to $10k per year. Also, not liquid first year. Penalty to redeem for first five years. Appears that the Treasury is phasing them out, too.
True, if you have a lot of money, you can buy TIPS or US Treasury bonds - they still pay more than bank CD

jpsc
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Re: Is it time to dump high yield savings for prime money market?

Post by jpsc » Tue Apr 24, 2018 1:23 am

Whakamole wrote:
Mon Apr 23, 2018 12:32 pm

I/EE bonds are a very small part of the US debt and may simply not be worth the cost to operate.
I'm not sure about that - a lot of folks forget to cash their bonds when it mature in 30 years or they misplace their paper bonds.
The Treasury never sent a notice that say "Your bond is mature, please cash them"

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sperry8
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Re: Is it time to dump high yield savings for prime money market?

Post by sperry8 » Tue Apr 24, 2018 11:37 am

jpsc wrote:
Sun Apr 22, 2018 7:59 pm
When I compare high yield saving account - max you can get is 1.8% - taxable
Look at I-bonds, paying currently at 2.48%, tax deferred until you sell - no state/local tax.
so why putting in a bank ?
There are caps re the amount one can put into i-bonds annually. Above that, you need to put it somewhere.

As for online banks... you can get 2% APY (at Popular Direct).
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