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Ally Bank 3.3%, Vang Treasury MM 4.91%

Posted: Tue Jan 24, 2023 11:40 am
by Bimmer
Hello All,

In current interest rate environment, I'm moving all my cash out of online savings accounts into Vanguard Treasury Money Market VUSXX. Even at lower tax brackets, the TEY of VUSXX is significantly higher than any online savings accounts.

Is VUSXX expected to remain at this rate if interest rates don't come down?

-Bimmer

Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Posted: Tue Jan 24, 2023 11:52 am
by H-Town
How do you arrive at TEY 4.91%? What is your state tax rate?

Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Posted: Tue Jan 24, 2023 12:02 pm
by retiringwhen
Bimmer wrote: Tue Jan 24, 2023 11:40 am Is VUSXX expected to remain at this rate if interest rates don't come down?
Predictions are hard, especially about the future.

Seriously, who knows?

Treasury rates have their own cycle of rates. What rates are you comparing them against?

VUSXX will track the rates for 30 to 90 day T-Bills about perfectly with about a 30 day lag as rates go up and down due to how the fund turns over its holdings.

Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Posted: Tue Jan 24, 2023 12:04 pm
by Bimmer
The VUSXX 7 day SEC yield is currently 4.24%. I should be in 35% federal tax bracket, 9% state and local tax rate. VUSXX is exempt from state and local taxes.

TEY = 4.24% * (1-35%)/(1-44%) = 4.92 %

Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Posted: Tue Jan 24, 2023 12:32 pm
by tibbitts
Bimmer wrote: Tue Jan 24, 2023 12:04 pm The VUSXX 7 day SEC yield is currently 4.24%. I should be in 35% federal tax bracket, 9% state and local tax rate. VUSXX is exempt from state and local taxes.

TEY = 4.24% * (1-35%)/(1-44%) = 4.92 %
Since it takes about 30 seconds to move the funds back and forth, aren't you overthinking this in terms of potential changes in the future?

Re: Ally Bank 3.3%, Vang Treasury MM 4.91%

Posted: Tue Jan 24, 2023 12:58 pm
by androiddd
Not sure about your math. The only thing that Vang Treasury is exempt from is State and local taxes. 1-.09= .91
4.24% / .91= 4.66 % which is still good but not 4.92%!