Savings/Money Market for parking cash

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crazycatman
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Savings/Money Market for parking cash

Post by crazycatman » Sun Jan 13, 2019 7:07 pm

I've got 200k sitting in a .25% retained asset account. I don't have any need for the money now, but I'd like to have access to it if I do.

I'm looking into Marcus (2.25%), Capital One (2%), and VMMXX (2.45%). They all seem fine, so is there a clear winner?

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fortfun
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Re: Money Market for parking cash

Post by fortfun » Sun Jan 13, 2019 7:08 pm

crazycatman wrote:
Sun Jan 13, 2019 7:07 pm
I've got 200k sitting in a .25% retained asset account. I don't have any need for the money now, but I'd like to have access to it if I do.

I'm looking into Marcus (2.25%), Capital One (2%), and VMMXX (2.45%). They all seem fine, so is there a clear winner?
I'd add Ally 2.3% no penalty cd. Completely liquid after 6 days. Insured.

UpperNwGuy
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Re: Savings/Money Market for parking cash

Post by UpperNwGuy » Sun Jan 13, 2019 7:45 pm

I recommend Vanguard Prime Money Market Fund.

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willthrill81
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Re: Savings/Money Market for parking cash

Post by willthrill81 » Sun Jan 13, 2019 8:07 pm

If you want liquidity, VMMXX is the way to go. If you don't anticipate needing the money for a year, 12 month CDs are yielding about 2.85%.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Topic Author
crazycatman
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Re: Savings/Money Market for parking cash

Post by crazycatman » Sun Jan 13, 2019 9:13 pm

willthrill81 wrote:
Sun Jan 13, 2019 8:07 pm
If you want liquidity, VMMXX is the way to go. If you don't anticipate needing the money for a year, 12 month CDs are yielding about 2.85%.
Could you elaborate on why VMMXX would be better than others?

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willthrill81
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Re: Savings/Money Market for parking cash

Post by willthrill81 » Sun Jan 13, 2019 11:49 pm

crazycatman wrote:
Sun Jan 13, 2019 9:13 pm
willthrill81 wrote:
Sun Jan 13, 2019 8:07 pm
If you want liquidity, VMMXX is the way to go. If you don't anticipate needing the money for a year, 12 month CDs are yielding about 2.85%.
Could you elaborate on why VMMXX would be better than others?
It's paying a higher yield, and it's perfectly liquid. Why would you not go with it over the others?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

ionenergy
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Joined: Tue Jul 03, 2018 12:47 pm

Re: Savings/Money Market for parking cash

Post by ionenergy » Mon Jan 14, 2019 12:14 am

Hi,
I’m new to just knowing VMMXX.

I have two questions
1. Does VMMXX yield higher than 2.45% ?(which I have on my high yield savings)
2. Is it possible to lose money with VMMXX?

Thanks in advance

michaeljmroger
Posts: 480
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Re: Savings/Money Market for parking cash

Post by michaeljmroger » Mon Jan 14, 2019 12:21 am

ionenergy wrote:
Mon Jan 14, 2019 12:14 am
Hi,
I’m new to just knowing VMMXX.

I have two questions
1. Does VMMXX yield higher than 2.45% ?(which I have on my high yield savings)
2. Is it possible to lose money with VMMXX?

Thanks in advance
1. No, it leads exactly that at the moment.
2. Yes, but unlikely.

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willthrill81
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Re: Savings/Money Market for parking cash

Post by willthrill81 » Mon Jan 14, 2019 12:36 am

michaeljmroger wrote:
Mon Jan 14, 2019 12:21 am
ionenergy wrote:
Mon Jan 14, 2019 12:14 am
Hi,
I’m new to just knowing VMMXX.

I have two questions
1. Does VMMXX yield higher than 2.45% ?(which I have on my high yield savings)
2. Is it possible to lose money with VMMXX?

Thanks in advance
1. No, it leads exactly that at the moment.
2. Yes, but unlikely.
Very unlikely.
Vanguard Prime Money Market Fund seeks to provide current income and preserve shareholders’ principal investment by maintaining a share price of $1. As such it is considered one of the most conservative investment options offered by Vanguard. Although the fund invests in short-term, high-quality securities, the amount of income that a shareholder may receive will be largely dependent on the current interest rate environment. Investors who have a short-term savings goal and seek a competitive yield may wish to consider this option.
https://investor.vanguard.com/mutual-fu ... view/vmmxx
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

ionenergy
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Joined: Tue Jul 03, 2018 12:47 pm

Re: Savings/Money Market for parking cash

Post by ionenergy » Mon Jan 14, 2019 1:05 am

Hi,

Does VMMXX also has any tax advantages?

michaeljmroger
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Re: Savings/Money Market for parking cash

Post by michaeljmroger » Mon Jan 14, 2019 1:23 am

ionenergy wrote:
Mon Jan 14, 2019 1:05 am
Hi,

Does VMMXX also has any tax advantages?
No, not really. If you’re in a high tax bracket, you might to consider a municipal or federal money market fund.

deskjockey
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Joined: Sat Dec 03, 2016 11:15 am

Re: Savings/Money Market for parking cash

Post by deskjockey » Mon Jan 14, 2019 2:21 am

It does have a small tax advantage, but only in certain states. About 20% of the income it generates is from U.S. Government obligations, so in some states that income is exempt from state taxes. Other states, like California, don't allow this exemption because the proportion of U.S. obligations owned by the fund is below their threshold.

mortfree
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Re: Savings/Money Market for parking cash

Post by mortfree » Mon Jan 14, 2019 2:22 am

Minor points.

Not FDIC insured
Expense ratio of 0.16
$3k minimum investment to start.

Admiral shares available with 5 million minimum.

deskjockey
Posts: 306
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Re: Savings/Money Market for parking cash

Post by deskjockey » Mon Jan 14, 2019 2:27 am

mortfree wrote:
Mon Jan 14, 2019 2:22 am
Minor points.

Not FDIC insured
Expense ratio of 0.16
$3k minimum investment to start.

Admiral shares available with 5 million minimum.
FYI, the expense ratio is already factored into the SEC yield, so it's a non-issue when comparing yields. VMMXX's SEC yield is 2.45% now, so that's what you compare to other savings vehicles--don't subtract the ER.

mortfree
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Re: Savings/Money Market for parking cash

Post by mortfree » Mon Jan 14, 2019 2:34 am

deskjockey wrote:
Mon Jan 14, 2019 2:27 am
mortfree wrote:
Mon Jan 14, 2019 2:22 am
Minor points.

Not FDIC insured
Expense ratio of 0.16
$3k minimum investment to start.

Admiral shares available with 5 million minimum.
FYI, the expense ratio is already factored into the SEC yield, so it's a non-issue when comparing yields. VMMXX's SEC yield is 2.45% now, so that's what you compare to other savings vehicles--don't subtract the ER.
Yes. I know. Thanks for your time

deskjockey
Posts: 306
Joined: Sat Dec 03, 2016 11:15 am

Re: Savings/Money Market for parking cash

Post by deskjockey » Mon Jan 14, 2019 2:56 am

mortfree wrote:
Mon Jan 14, 2019 2:34 am
deskjockey wrote:
Mon Jan 14, 2019 2:27 am
mortfree wrote:
Mon Jan 14, 2019 2:22 am
Minor points.

Not FDIC insured
Expense ratio of 0.16
$3k minimum investment to start.

Admiral shares available with 5 million minimum.
FYI, the expense ratio is already factored into the SEC yield, so it's a non-issue when comparing yields. VMMXX's SEC yield is 2.45% now, so that's what you compare to other savings vehicles--don't subtract the ER.
Yes. I know. Thanks for your time
I figured you did, but it's worth spelling out for the OP, who may not know.

Olemiss540
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Re: Savings/Money Market for parking cash

Post by Olemiss540 » Mon Jan 14, 2019 11:43 am

VUSXX (Vanguard Treasury Fund) has a current SEC yield of 2.3% and is state tax free which may increase your returns even more. This is where my cash is parked due to the rising interest environment and simplicity of not having to deal with penalties, chasing teaser rates, and my states income taxes.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

MnD
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Re: Savings/Money Market for parking cash

Post by MnD » Mon Jan 14, 2019 12:28 pm

crazycatman wrote:
Sun Jan 13, 2019 7:07 pm
I've got 200k sitting in a .25% retained asset account. I don't have any need for the money now, but I'd like to have access to it if I do.

I'm looking into Marcus (2.25%), Capital One (2%), and VMMXX (2.45%). They all seem fine, so is there a clear winner?
I just purchased at auction 91-day and 182 day t-bills this am at 2.45% and 2.53%. In my lowish state tax bracket that corresponds to a TEY of 2.57% and 2.65%. With $200K you may want to consider this - perhaps in the form of a ladder so some significant percentage matures every month. Of course T-bills are the most liquid security in the world if you need to sell one prior to maturity, the bid-ask spread generally being a small fraction of 1 cent.

Note that retained asset accounts are not FDIC insured but rather are backed by an individual insurance company likely backed up with a specific state guaranty fund system. I would get it out of that situation ASAP given the low return. All of the above options are safer than where it is now which is "safe" but a poor overall choice.

GeoffD
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Re: Money Market for parking cash

Post by GeoffD » Mon Jan 14, 2019 12:57 pm

fortfun wrote:
Sun Jan 13, 2019 7:08 pm
crazycatman wrote:
Sun Jan 13, 2019 7:07 pm
I've got 200k sitting in a .25% retained asset account. I don't have any need for the money now, but I'd like to have access to it if I do.

I'm looking into Marcus (2.25%), Capital One (2%), and VMMXX (2.45%). They all seem fine, so is there a clear winner?
I'd add Ally 2.3% no penalty cd. Completely liquid after 6 days. Insured.
I have one of those for the first 6 months expenses in my emergency fund. I've cashed it in a couple of times as rates have gone up.

ImmigrantSaver
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Re: Savings/Money Market for parking cash

Post by ImmigrantSaver » Mon Jan 14, 2019 5:11 pm

Olemiss540 wrote:
Mon Jan 14, 2019 11:43 am
VUSXX (Vanguard Treasury Fund) has a current SEC yield of 2.3% and is state tax free which may increase your returns even more. This is where my cash is parked due to the rising interest environment and simplicity of not having to deal with penalties, chasing teaser rates, and my states income taxes.
+1 I do the same

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