Vanguard New York Municipal Money Market Fund (VYFXX)

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radstar
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Vanguard New York Municipal Money Market Fund (VYFXX)

Post by radstar » Thu Aug 01, 2019 4:53 am

Hi,

I live in NY State and was thinking of parking some money in Vanguard New York Municipal Money Market Fund (VYFXX) for short term, which could be few months till market cool down for investing. What would be the advantages and disadvantages of doing this? Is it better than just leaving the money in Prime Money Market Fund in brokerage account, ready for transaction? Or is it not even worth the hassle if I'm going to invest in few months anyways?

Please advise. Thanks!
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Eric76
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Re: Vanguard New York Municipal Money Market Fund (VYFXX)

Post by Eric76 » Thu Aug 01, 2019 5:50 am

I have no opinion on that particular fund, but I do want to know when you expect the market to "cool down for investing." Seems to me this thread could have been posted anytime in the last decade or so.

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curiouskitty
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Re: Vanguard New York Municipal Money Market Fund (VYFXX)

Post by curiouskitty » Thu Aug 01, 2019 6:29 am

I think it’s a fine idea. If it ends up sitting a while, you could consider some longer term bonds but the fund you selected is good for the short term. A lot of the comparison comes down to your marginal tax rate as it determines whether taxable or municipal funds will have a better after tax return.

UpperNwGuy
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Re: Vanguard New York Municipal Money Market Fund (VYFXX)

Post by UpperNwGuy » Thu Aug 01, 2019 7:04 am

What is this market cool down you mention? I haven’t heard about it.

Uniballer
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Re: Vanguard New York Municipal Money Market Fund (VYFXX)

Post by Uniballer » Thu Aug 01, 2019 7:16 am

You should run the numbers on the alternative funds before sticking your money in VYFXX. Your marginal tax rates matter.

Look at Vanguard Treasury Money Market (VUSXX). It is paying 2.15% as of 7/31/2019, and it is exempt from state and local income taxes, so for New York taxpayers it is generally better than Prime Money Market (VMMXX). With VYFXX paying only 1.29% at the moment VUSXX should provide more after-tax interest regardless of your federal marginal tax rate, e.g. .0215x(1-.37)=.0135 (although there might be complicating circumstances for some taxpayers).

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radstar
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Re: Vanguard New York Municipal Money Market Fund (VYFXX)

Post by radstar » Thu Aug 01, 2019 11:04 am

I'm in the highest tax bracket, that's why leaning towards some tax efficient options.
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Uniballer
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Re: Vanguard New York Municipal Money Market Fund (VYFXX)

Post by Uniballer » Fri Aug 02, 2019 7:13 am

radstar wrote:
Thu Aug 01, 2019 11:04 am
I'm in the highest tax bracket, that's why leaning towards some tax efficient options.
That's why my example showed that, at present, VUSXX is paying more after federal income tax in the 37% bracket than VYFXX is paying.

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radstar
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Re: Vanguard New York Municipal Money Market Fund (VYFXX)

Post by radstar » Fri Aug 02, 2019 7:35 am

Thanks, that definitely makes sense.
"No one cares how much you know, until they know how much you care" - Anonymous

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