Move savings to Prime Money Market Fund (VMMXX)

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vwgrrc
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Move savings to Prime Money Market Fund (VMMXX)

Post by vwgrrc » Tue Nov 06, 2018 10:38 pm

Hey all,

Have been watching VMMXX for a while and its yield is gradually increasing this year. Today, I just noticed its Distribution Yield calculated for the 11/1 distribution hits 2.25%, which ties the APY on my online saving account. 7-day SEC yield is 2.22% and compound yield is 2.24%. I'm thinking about moving all of savings to VMMXX so I can manage it in one place. Also, I think the yield should increase further. I understand the fund is not FDIC insured. But I view it as virtually risk-free.

A couple questions before doing so - Is the Distribution Yield sames as the APY on a saving account (in another word, should I switch now or wait until the compound yield exceed the APY on my saving account)? If I opt to make automatic dividend reinvestment, is it going to create more work at tax time, since it distributes monthly? Any reason I should not make the move? Thanks in ahead! :sharebeer

ivk5
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by ivk5 » Wed Nov 07, 2018 2:50 am

Just do it. Lots of us have. Lots of threads on this which you’ll find readily with a quick search. No tax issues with reinvestment of distributions since NAV is constant $1 for money mkt funds (no lot tracking / cap gains reporting).

I’d still be there if not for the Ally promo...

UpperNwGuy
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by UpperNwGuy » Wed Nov 07, 2018 7:04 am

I moved all my savings from savings accounts to Vanguard's Prime Money Market Fund about three months ago, and I'm happy with the results.

rkhusky
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by rkhusky » Wed Nov 07, 2018 7:33 am

vwgrrc wrote:
Tue Nov 06, 2018 10:38 pm
A couple questions before doing so - Is the Distribution Yield sames as the APY on a saving account (in another word, should I switch now or wait until the compound yield exceed the APY on my saving account)?
Unless you have millions in your savings account, the minuscule difference doesn't matter in terms of dollars.
vwgrrc wrote:
Tue Nov 06, 2018 10:38 pm
If I opt to make automatic dividend reinvestment, is it going to create more work at tax time, since it distributes monthly? Any reason I should not make the move?
You will just need to enter the total amount of dividends, just like total amount of interest in your savings account. And they will be taxed the same, at your income tax rate.

Kkgbear
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by Kkgbear » Wed Nov 07, 2018 7:35 am

VMMXX has an expense fee. Does your online savings have any fees?

ivk5
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by ivk5 » Wed Nov 07, 2018 7:39 am

Kkgbear wrote:
Wed Nov 07, 2018 7:35 am
VMMXX has an expense fee. Does your online savings have any fees?
The quoted yields are net of fees.

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Blueskies123
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by Blueskies123 » Wed Nov 07, 2018 7:51 am

PMM is 67% Yankee bonds: https://investor.vanguard.com/mutual-fu ... file/VMMXX

Here is a thread that explains what a Yankee bond is : viewtopic.php?t=86187

Your online savings account is FDIC guaranteed as you said, this account is not FDIC guaranteed. As long as you do not put the bulk of your savings in this account is fine.

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William4u
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by William4u » Wed Nov 07, 2018 10:40 am

FYI, Vanguard Federal MM has a 2.13% compound yield, and is just 11 bp behind Prime MM's 2.24% yield. Federal MM has some advantages over Prime MM.

For example, in many states Federal MM is tax advantaged for state tax (unlike Prime MM, which is taxed 100% as income for state taxes). So for many people after taxes Federal and Prime will be very similar in yield.

Also, for some people Federal MM might be easier, especially since it is the default sweep at Vanguard and works like a checking account for Vanguard Advantage Account holders. My check automatically gets deposited in Federal MM (you cannot do that for prime). I do not have to mess with a checking and savings account (the Federal MM works as both checking and savings in an Advantage Account).

For these reasons I prefer Vanguard's Federal MM over Prime MM.

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greg24
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by greg24 » Wed Nov 07, 2018 10:45 am

You can direct deposit your paycheck into PMM.

PMM also offers checkwriting.

The yields are usually competitive with the best online accounts.

I'm always surprised at how many threads there are asking about PMM. It is a great vehicle, and I've always assumed more Bogleheads used it.

wriley4409
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by wriley4409 » Wed Nov 07, 2018 10:55 am

If you live in a state with state and local income taxes, don't overlook VMFXX either. The effective yield after tax might be even higher than VMMXX.

Momus
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by Momus » Wed Nov 07, 2018 11:08 am

wriley4409 wrote:
Wed Nov 07, 2018 10:55 am
If you live in a state with state and local income taxes, don't overlook VMFXX either. The effective yield after tax might be even higher than VMMXX.
How do you know what % get tax, what's not?

I'm in CA

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leeks
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by leeks » Wed Nov 07, 2018 11:20 am

William4u wrote:
Wed Nov 07, 2018 10:40 am
Also, for some people Federal MM might be easier, especially since it is the default sweep at Vanguard and works like a checking account for Vanguard Advantage Account holders. My check automatically gets deposited in Federal MM (you cannot do that for prime). I do not have to mess with a checking and savings account (the Federal MM works as both checking and savings in an Advantage Account).
Is the checking account option in the category of things for which you have to have $500,000+ at Vanguard? The terms flagship, voyager, select, advantage, admiral, etc. are confusing to me as none are obvious terms for the status they describe.

lostdog
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by lostdog » Wed Nov 07, 2018 11:20 am

I like the Federal Money Market. What's even better is it's the sweep account.

cdu7
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by cdu7 » Wed Nov 07, 2018 11:29 am

A side question on this topic. Is there any real measurable difference between Vanguard Federal and Vanguard Treasury funds other than the minimum investment needed? Is treasury slightly safer is there some kind of tax advantage to one over the other? Why does treasury exist is what I’m asking here.

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ruralavalon
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by ruralavalon » Wed Nov 07, 2018 11:31 am

In my opinion Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 2.22%, is an excellent choice for savings and other cash needs.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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leeks
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by leeks » Wed Nov 07, 2018 11:37 am

I found the information and comparison tools on the Vanguard website very confusing for the different money market funds. I called vanguard asking for help distinguishing between the money market funds and the representative was not at all helpful regarding the tax status. She acted as if she didn't know what I was talking about and wouldn't concede that there might be any state/local tax benefit to any of them. I gave up and we are using Prime Money Market (VMMXX) for now. However, since we are in NYC (about 10% marginal state/local tax), the Federal Money Market (VMFXX) or Treasury Money Market (VUSXX) could return more after-tax, so I may need to revisit this.

wriley4409
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by wriley4409 » Wed Nov 07, 2018 11:47 am

Momus wrote:
Wed Nov 07, 2018 11:08 am
wriley4409 wrote:
Wed Nov 07, 2018 10:55 am
If you live in a state with state and local income taxes, don't overlook VMFXX either. The effective yield after tax might be even higher than VMMXX.
How do you know what % get tax, what's not?

I'm in CA
According to https://thefinancebuff.com/which-vangua ... -fund.html VMFXX would be 100% taxable in CA. You could consider VCTXX instead, which is not taxable at the federal, state, or local level. See https://investor.vanguard.com/mutual-fu ... file/VCTXX for more information.

IntangibleAssets
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by IntangibleAssets » Wed Nov 07, 2018 12:11 pm

It's been perfectly fine for me, made the switch ~ 5 months ago, interest gained as opposed to our local B&M CCU was an eye opener (nothing wrong with CCU's and FDIC, I just think the risk is very minimal in VMMXX)

Small tangential -- I didn't want to open another thread.

Moving funds from VMMXX to fund a Roth IRA all within vanguard should be straight forward, selecting one to go into the other correct? Anything I'm missing or not thinking about with doing that?

-IA

jeremyl
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by jeremyl » Wed Nov 07, 2018 1:00 pm

Because I see people state that they do direct deposit to prime or federal accounts as well as can write checks; does anyone use either of these as your "checking account"?

I didn't know if people just deposited a certain amount for savings or put their whole check in to get the most benefit on money being so called invested.

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Leif
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by Leif » Wed Nov 07, 2018 2:45 pm

leeks wrote:
Wed Nov 07, 2018 11:37 am
However, since we are in NYC (about 10% marginal state/local tax), the Federal Money Market (VMFXX) or Treasury Money Market (VUSXX) could return more after-tax, so I may need to revisit this.
I'm also in a high tax state. I used the Treasury MM fund which gives me a higher after tax return then Prime. Treasury MM requires $50K to open, but it can drop below $50K after opening. The Federal MM, I think, is $3K to open. The Treasury fund usually has a very slightly higher return then the Federal MM. Perhaps due to the 2 bp ER advantage.

PatrickA5
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by PatrickA5 » Wed Nov 07, 2018 3:08 pm

I'm in the process of moving my savings out of Ally back to Vanguard. I have the Vanguard Advantage checking account that's tied to the Federal Money Market fund. I'll probably put some into Prime Money Market, too. I got tired of dealing with Ally CD's when the Prime Money Market is close to the best CD's at Ally. I plan on leaving a very small amount in Ally just in case they have a Christmas special on their CD's that is too good to pass up.

I'm mainly doing this just to further simplify my finances. All of our retirement is at VG and it will be nice to have most everything at one place. We still have a B&M checking account at our regional bank, but only keep enough money in it to pay the bills.

PatrickA5
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by PatrickA5 » Wed Nov 07, 2018 3:16 pm

William4u wrote:
Wed Nov 07, 2018 10:40 am
FYI, Vanguard Federal MM has a 2.13% compound yield, and is just 11 bp behind Prime MM's 2.24% yield. Federal MM has some advantages over Prime MM.

For example, in many states Federal MM is tax advantaged for state tax (unlike Prime MM, which is taxed 100% as income for state taxes). So for many people after taxes Federal and Prime will be very similar in yield.

Also, for some people Federal MM might be easier, especially since it is the default sweep at Vanguard and works like a checking account for Vanguard Advantage Account holders. My check automatically gets deposited in Federal MM (you cannot do that for prime). I do not have to mess with a checking and savings account (the Federal MM works as both checking and savings in an Advantage Account).

For these reasons I prefer Vanguard's Federal MM over Prime MM.

How do I find out how much of Federal MM is taxable in my state? I found the PDF that showed the taxable percentages for their municipal funds, but nothing on Federal MM.

DesertInvestor
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by DesertInvestor » Wed Nov 07, 2018 3:22 pm

What do you think of municipal money market? That is where I have my cash.

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CalculatedRisk
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by CalculatedRisk » Wed Nov 07, 2018 4:03 pm

PatrickA5 wrote:
Wed Nov 07, 2018 3:16 pm
How do I find out how much of Federal MM is taxable in my state? I found the PDF that showed the taxable percentages for their municipal funds, but nothing on Federal MM.
Momus wrote:
Wed Nov 07, 2018 11:08 am
wriley4409 wrote:
Wed Nov 07, 2018 10:55 am
If you live in a state with state and local income taxes, don't overlook VMFXX either. The effective yield after tax might be even higher than VMMXX.
How do you know what % get tax, what's not?

I'm in CA
For % of state tax for various funds, see https://personal.vanguard.com/pdf/USGO_022018.pdf
For examples of calculations, see: viewtopic.php?f=1&t=260901 and
For XLS to calculation your own, see: viewtopic.php?f=1&t=262610&p=4194409#p4197486

3funder
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by 3funder » Wed Nov 07, 2018 4:07 pm

UpperNwGuy wrote:
Wed Nov 07, 2018 7:04 am
I moved all my savings from savings accounts to Vanguard's Prime Money Market Fund about three months ago, and I'm happy with the results.
+1

Dottie57
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by Dottie57 » Wed Nov 07, 2018 4:38 pm

I looked at the issuers of VMMXX holdings. 61% of issuers are labeled Yankee/foreign. Are these corporate entities? The rest if issuers seem to be government.

Never mind found the answer to yankee/foreign.

“Up to 50% of the fund’s net assets can be invested in Eurodollar and Yankee obligations, which are certificates of deposit issued in U.S. dollars by foreign banks and foreign branches of U.S. banks. The fund may invest up to 5% of its net assets in illiquid securities. These are securities that the fund may not be able to sell in the ordinary course of business”
Last edited by Dottie57 on Wed Nov 07, 2018 4:42 pm, edited 1 time in total.

wesgreen
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by wesgreen » Wed Nov 07, 2018 4:41 pm

Vanguard's Prime Money Market Fund works well as a checking account, but you're only allowed to write checks for at least $250.00.

bck63
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by bck63 » Wed Nov 07, 2018 5:57 pm

I use the Vanguard Limited Term Tax Exempt Fund for short-term savings. Very low volatility and has a tax-equivalent yield for me of 2.83%.

PatrickA5
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by PatrickA5 » Wed Nov 07, 2018 6:35 pm

CalculatedRisk wrote:
Wed Nov 07, 2018 4:03 pm
PatrickA5 wrote:
Wed Nov 07, 2018 3:16 pm
How do I find out how much of Federal MM is taxable in my state? I found the PDF that showed the taxable percentages for their municipal funds, but nothing on Federal MM.
Momus wrote:
Wed Nov 07, 2018 11:08 am
wriley4409 wrote:
Wed Nov 07, 2018 10:55 am
If you live in a state with state and local income taxes, don't overlook VMFXX either. The effective yield after tax might be even higher than VMMXX.
How do you know what % get tax, what's not?

I'm in CA
For % of state tax for various funds, see https://personal.vanguard.com/pdf/USGO_022018.pdf
For examples of calculations, see: viewtopic.php?f=1&t=260901 and
For XLS to calculation your own, see: viewtopic.php?f=1&t=262610&p=4194409#p4197486
Thanks for the info. Looks like the state tax benefit (using 2017 %) of the Federal MM over the Prime MM narrowed the difference enough that it really doesn't matter which one I choose. So, I'll probably just stick with the Federal MM fund since it's the sweep account for my Vanguard Checking account. Thanks again.

PatrickA5
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by PatrickA5 » Wed Nov 07, 2018 6:38 pm

wesgreen wrote:
Wed Nov 07, 2018 4:41 pm
Vanguard's Prime Money Market Fund works well as a checking account, but you're only allowed to write checks for at least $250.00.
If interested in a Vanguard Checking account, you might look into the VG Advantage account. No minimum check writing.

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BolderBoy
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by BolderBoy » Wed Nov 07, 2018 10:57 pm

DesertInvestor wrote:
Wed Nov 07, 2018 3:22 pm
What do you think of municipal money market? That is where I have my cash.
Likewise. I like it.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

vwgrrc
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by vwgrrc » Sat Nov 10, 2018 1:41 am

UpperNwGuy wrote:
Wed Nov 07, 2018 7:04 am
I moved all my savings from savings accounts to Vanguard's Prime Money Market Fund about three months ago, and I'm happy with the results.
Sounds good. How long does it take to withdraw fund from VMMXX to an outside checking account, if you place a sell order before market close?

vwgrrc
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by vwgrrc » Sat Nov 10, 2018 2:08 am

greg24 wrote:
Wed Nov 07, 2018 10:45 am
You can direct deposit your paycheck into PMM.
Show me how to do this please!

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ruralavalon
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by ruralavalon » Sat Nov 10, 2018 10:44 am

vwgrrc wrote:
Sat Nov 10, 2018 1:41 am
UpperNwGuy wrote:
Wed Nov 07, 2018 7:04 am
I moved all my savings from savings accounts to Vanguard's Prime Money Market Fund about three months ago, and I'm happy with the results.
Sounds good. How long does it take to withdraw fund from VMMXX to an outside checking account, if you place a sell order before market close?
2 business days in my experience.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

arf30
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by arf30 » Sat Nov 10, 2018 11:13 am

The settlement fund (VMFXX) has some minor advantages over prime money market (VMMXX):

- Can withdrawl money immediately (often 1 day ACH to most banks), vs the T+2 settlement of prime
- Similar or better return in medium/high tax states
- A bit safer - holds mainly US gov debt, not subject to redemption gates and liquidity restrictions
- It's the core position in the brokerage, so you just have to transfer money in and out, no extra buying/selling step

vwgrrc
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by vwgrrc » Sat Nov 10, 2018 11:25 am

bck63 wrote:
Wed Nov 07, 2018 5:57 pm
I use the Vanguard Limited Term Tax Exempt Fund for short-term savings. Very low volatility and has a tax-equivalent yield for me of 2.83%.
I would respectfully challenge if this is a good idea. For short-term savings (money goes in and out monthly), I think return of capital should be much more important than earning. Limited term TE still fluctuates quite a bit from that perspective. There're months it drops more than 1%. But if you're talking about money you don't need in the next 2-3 years. That makes more sense.

Also an update on the thread - VMMXX officially hits 2.25% yesterday. Moving my savings account now :sharebeer

vwgrrc
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by vwgrrc » Sat Nov 10, 2018 11:30 am

wesgreen wrote:
Wed Nov 07, 2018 4:41 pm
Vanguard's Prime Money Market Fund works well as a checking account
Is this only for Advantage level investor (500k+)?

bck63
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by bck63 » Sat Nov 10, 2018 12:32 pm

vwgrrc wrote:
Sat Nov 10, 2018 11:25 am
bck63 wrote:
Wed Nov 07, 2018 5:57 pm
I use the Vanguard Limited Term Tax Exempt Fund for short-term savings. Very low volatility and has a tax-equivalent yield for me of 2.83%.
I would respectfully challenge if this is a good idea. For short-term savings (money goes in and out monthly), I think return of capital should be much more important than earning. Limited term TE still fluctuates quite a bit from that perspective. There're months it drops more than 1%. But if you're talking about money you don't need in the next 2-3 years. That makes more sense.
Thanks and I totally agree. I should have clarified. The money I have in Limited Tax Exempt is a second-tier emergency fund. It would be for job loss or other catastrophic issue. Hopefully, I will never use it. I just feel better having a portion of my bond portfolio in shorter-term funds in case I have to access it. First-tier savings/emergency fund is in a CapitalOne360 online account. So I actually shouldn't have said "short-term savings."

Think the Limited Term is still a bad idea? I stick to intermediate term bonds for the rest of my bond portion. I am a novice and need suggestions. Thanks again.

Gertrude
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by Gertrude » Sun Nov 11, 2018 2:40 pm

Can anyone confirm if a portion of the prime mm is deductible for state tax returns? I thought a portion of it was federal and eligible to be deducted on state returns.

plats
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by plats » Sun Nov 11, 2018 3:36 pm

This site has it at 20% in 2017.
https://personal.vanguard.com/pdf/USGO_022018.pdf

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grabiner
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by grabiner » Sun Nov 11, 2018 4:14 pm

Gertrude wrote:
Sun Nov 11, 2018 2:40 pm
Can anyone confirm if a portion of the prime mm is deductible for state tax returns? I thought a portion of it was federal and eligible to be deducted on state returns.
This depends on your state. Some states require that 50% of a fund's holdings be exempt from state tax in order to get any state tax exemption. Treasury Money Market, Federal Money Market, and the state-specific funds in those states qualify. Prime Money Market, which is only 20% exempt from state tax, does not qualify in those states. (Even when it does qualify, it's a trivial difference; 20% of the current yield is 0.45%, which would save you 0.04% of the fund value in state tax if your state tax rate is 9%.)
Wiki David Grabiner

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William4u
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by William4u » Sun Nov 11, 2018 4:28 pm

PatrickA5 wrote:
Wed Nov 07, 2018 3:16 pm
William4u wrote:
Wed Nov 07, 2018 10:40 am
FYI, Vanguard Federal MM has a 2.13% compound yield, and is just 11 bp behind Prime MM's 2.24% yield. Federal MM has some advantages over Prime MM.

For example, in many states Federal MM is tax advantaged for state tax (unlike Prime MM, which is taxed 100% as income for state taxes). So for many people after taxes Federal and Prime will be very similar in yield.

Also, for some people Federal MM might be easier, especially since it is the default sweep at Vanguard and works like a checking account for Vanguard Advantage Account holders. My check automatically gets deposited in Federal MM (you cannot do that for prime). I do not have to mess with a checking and savings account (the Federal MM works as both checking and savings in an Advantage Account).

For these reasons I prefer Vanguard's Federal MM over Prime MM.

How do I find out how much of Federal MM is taxable in my state? I found the PDF that showed the taxable percentages for their municipal funds, but nothing on Federal MM.
69.86% from US Govt Obligations.

https://personal.vanguard.com/pdf/USGO_022018.pdf

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William4u
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by William4u » Sun Nov 11, 2018 4:28 pm

arf30 wrote:
Sat Nov 10, 2018 11:13 am
The settlement fund (VMFXX) has some minor advantages over prime money market (VMMXX):

- Can withdrawl money immediately (often 1 day ACH to most banks), vs the T+2 settlement of prime
- Similar or better return in medium/high tax states
- A bit safer - holds mainly US gov debt, not subject to redemption gates and liquidity restrictions
- It's the core position in the brokerage, so you just have to transfer money in and out, no extra buying/selling step
This is why I prefer Federal MM over Prime MM myself.

vwgrrc
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by vwgrrc » Sun Nov 11, 2018 5:40 pm

Anyone know if there's a way to direct deposit payroll to Prime MM?

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Leif
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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by Leif » Sun Nov 11, 2018 11:14 pm

William4u wrote:
Sun Nov 11, 2018 4:28 pm
PatrickA5 wrote:
Wed Nov 07, 2018 3:16 pm
William4u wrote:
Wed Nov 07, 2018 10:40 am
For these reasons I prefer Vanguard's Federal MM over Prime MM.
How do I find out how much of Federal MM is taxable in my state? I found the PDF that showed the taxable percentages for their municipal funds, but nothing on Federal MM.
69.86% from US Govt Obligations.

https://personal.vanguard.com/pdf/USGO_022018.pdf
I guess this is another reason to prefer the Treasury MM over the Federal MM. If you can overcome the initial $50K open, it normally has a slightly higher yield, 2 bp less ER, but is also 100% US obligations.

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Re: Move savings to Prime Money Market Fund (VMMXX)

Post by clown » Sun Nov 11, 2018 11:30 pm

vwgrrc wrote:
Sun Nov 11, 2018 5:40 pm
Anyone know if there's a way to direct deposit payroll to Prime MM?
If you hold Prime in a VG "Mutual Fund Account," it is the settlement account by definition -- into which you can deposit and from which you can withdraw. However, if you hold Prime in a VG "Brokeract Account" it is not the steelement account' instead, it is an investment that you purchase just as you would any other stock or bond or mutual fund held within the brokerage account.

So if you hold Prime in a MF Account, the answer is yes, but if you hold Prime in a Brokerage account, the answer is no.

Call your VG rep for specific instructions on depositing your check into Prime in a MF account.

smectym
Posts: 232
Joined: Thu May 26, 2011 5:07 pm

Re: Move savings to Prime Money Market Fund (VMMXX)

Post by smectym » Mon Nov 12, 2018 12:01 am

Leif wrote:
Sun Nov 11, 2018 11:14 pm
William4u wrote:
Sun Nov 11, 2018 4:28 pm
PatrickA5 wrote:
Wed Nov 07, 2018 3:16 pm
William4u wrote:
Wed Nov 07, 2018 10:40 am
For these reasons I prefer Vanguard's Federal MM over Prime MM.
How do I find out how much of Federal MM is taxable in my state? I found the PDF that showed the taxable percentages for their municipal funds, but nothing on Federal MM.
69.86% from US Govt Obligations.

https://personal.vanguard.com/pdf/USGO_022018.pdf
I guess this is another reason to prefer the Treasury MM over the Federal MM. If you can overcome the initial $50K open, it normally has a slightly higher yield, 2 bp less ER, but is also 100% US obligations.
Leif, agreed. Treasury is better than Federal—and both Treasury and Federal are on the whole better than Prime—because definitionally funds which invest solely in federal debt aren’t potentially subject to the “gates” (restrictions on withdrawals) and “fees” (haircuts on withdrawals) established under recent money market “reform” regulations. See the Vanguard cheat sheet. https://investor.vanguard.com/mutual-fu ... et-reform/

Don’t get me wrong: Vanguard Prime is a safe, well-run, conservatively managed, low-cost, high-yield money market fund. However: an all-treasury fund is safer still. Those who contemplate parking a significant sum in a money market fund for a significant length of time should certainly prefer a fund such as Vanguard Treasury Money Market (VUSXX). And the yield differential is derisory.

Smectym

User avatar
William4u
Posts: 1320
Joined: Fri Jun 01, 2012 3:02 pm

Re: Move savings to Prime Money Market Fund (VMMXX)

Post by William4u » Mon Nov 12, 2018 4:41 pm

smectym wrote:
Mon Nov 12, 2018 12:01 am
Leif wrote:
Sun Nov 11, 2018 11:14 pm
William4u wrote:
Sun Nov 11, 2018 4:28 pm
PatrickA5 wrote:
Wed Nov 07, 2018 3:16 pm
William4u wrote:
Wed Nov 07, 2018 10:40 am
For these reasons I prefer Vanguard's Federal MM over Prime MM.
How do I find out how much of Federal MM is taxable in my state? I found the PDF that showed the taxable percentages for their municipal funds, but nothing on Federal MM.
69.86% from US Govt Obligations.

https://personal.vanguard.com/pdf/USGO_022018.pdf
I guess this is another reason to prefer the Treasury MM over the Federal MM. If you can overcome the initial $50K open, it normally has a slightly higher yield, 2 bp less ER, but is also 100% US obligations.
Leif, agreed. Treasury is better than Federal—and both Treasury and Federal are on the whole better than Prime—because definitionally funds which invest solely in federal debt aren’t potentially subject to the “gates” (restrictions on withdrawals) and “fees” (haircuts on withdrawals) established under recent money market “reform” regulations. See the Vanguard cheat sheet. https://investor.vanguard.com/mutual-fu ... et-reform/

Don’t get me wrong: Vanguard Prime is a safe, well-run, conservatively managed, low-cost, high-yield money market fund. However: an all-treasury fund is safer still. Those who contemplate parking a significant sum in a money market fund for a significant length of time should certainly prefer a fund such as Vanguard Treasury Money Market (VUSXX). And the yield differential is derisory.

Smectym
Treasury MM would be great if...
1. It did not have a $50k min
2. I could withdraw money immediately to my bank (vs the T+2 settlement)
3. It were the default brokerage sweep fund, so you just have to transfer money in and out, with no extra buying/selling step.

Federal MM is the closest to Treasury MM that does not have these issues. I have my bills paid directly from Federal MM due to its being identical to a checking account. I can just put those checking and routing numbers in, and the bills are paid automatically from it. I can direct deposit my salary directly into Federal MM (pushed from my employer with no involvement from Vanguard). I don't think one can do that with Treasury MM.

scubablue
Posts: 25
Joined: Fri Feb 15, 2013 11:47 am

Re: Move savings to Prime Money Market Fund (VMMXX)

Post by scubablue » Tue Nov 13, 2018 10:54 am

William4u wrote:
Mon Nov 12, 2018 4:41 pm
smectym wrote:
Mon Nov 12, 2018 12:01 am
Leif wrote:
Sun Nov 11, 2018 11:14 pm
William4u wrote:
Sun Nov 11, 2018 4:28 pm
PatrickA5 wrote:
Wed Nov 07, 2018 3:16 pm


How do I find out how much of Federal MM is taxable in my state? I found the PDF that showed the taxable percentages for their municipal funds, but nothing on Federal MM.
69.86% from US Govt Obligations.

https://personal.vanguard.com/pdf/USGO_022018.pdf
I guess this is another reason to prefer the Treasury MM over the Federal MM. If you can overcome the initial $50K open, it normally has a slightly higher yield, 2 bp less ER, but is also 100% US obligations.
Leif, agreed. Treasury is better than Federal—and both Treasury and Federal are on the whole better than Prime—because definitionally funds which invest solely in federal debt aren’t potentially subject to the “gates” (restrictions on withdrawals) and “fees” (haircuts on withdrawals) established under recent money market “reform” regulations. See the Vanguard cheat sheet. https://investor.vanguard.com/mutual-fu ... et-reform/

Don’t get me wrong: Vanguard Prime is a safe, well-run, conservatively managed, low-cost, high-yield money market fund. However: an all-treasury fund is safer still. Those who contemplate parking a significant sum in a money market fund for a significant length of time should certainly prefer a fund such as Vanguard Treasury Money Market (VUSXX). And the yield differential is derisory.

Smectym
Treasury MM would be great if...
1. It did not have a $50k min
2. I could withdraw money immediately to my bank (vs the T+2 settlement)
3. It were the default brokerage sweep fund, so you just have to transfer money in and out, with no extra buying/selling step.

Federal MM is the closest to Treasury MM that does not have these issues. I have my bills paid directly from Federal MM due to its being identical to a checking account. I can just put those checking and routing numbers in, and the bills are paid automatically from it. I can direct deposit my salary directly into Federal MM (pushed from my employer with no involvement from Vanguard). I don't think one can do that with Treasury MM.
I just got off the phone with a Vanguard rep who told me in order to pay bills directly from my Federal MM sweep account, I would have to switch to a Vanguard Advantage account. Has this been others’ experience? Thanks for any insight.

arf30
Posts: 277
Joined: Sat Dec 28, 2013 11:55 am

Re: Move savings to Prime Money Market Fund (VMMXX)

Post by arf30 » Tue Nov 13, 2018 11:02 am

scubablue wrote:
Tue Nov 13, 2018 10:54 am
I just got off the phone with a Vanguard rep who told me in order to pay bills directly from my Federal MM sweep account, I would have to switch to a Vanguard Advantage account. Has this been others’ experience? Thanks for any insight.
Yup, you can write checks off a money market fund, but if you want a checking account with routing numbers, bill pay, debit card, checkwriting of any amount, electronic check deposit, etc you have to use the advantage account.

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