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Cash/Emergency Fund – what account to put it in?

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  • Avatar ottendave 
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    Team,

    I’d like to keep approx 1 month of expenses in my checking account but the remainder of my cash/emergency fund I’d like to put in the Vanguard Municipal Money Market Fund at Vanguard. My question is – where do I park this? In my taxable brokerage account? Or is there a better option?

     

    Thanks!

    #189571 Reply
    Avatar DCdoc 
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    Status: Physician
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    Joined: 06/14/2016

    Taxable brokerage is fine. I’m not sure what better option would exist, by definition muni bonds/muni money market should be in taxable.

    #189575 Reply
    Avatar EMscout 
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    Status: Physician
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    Joined: 01/13/2016

    Depending on your state of residence there are better options than the municipal money market.

    For instance VUSXX in high tax states will easily beat VMSXX

    #189595 Reply
    Avatar WorkforFIRE 
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    Status: Physician
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    Joined: 11/22/2018

    Can anyone explain why you would put money in a money market fund like VUSXC or VMMXX or VMSXX??
    The yield is lower than letting your cash sit in a PurePoint savings at 2.35%.

    #189604 Reply
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    Avatar Peds 
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    Joined: 01/08/2016

    Taxes…

    #189605 Reply
    Avatar EMscout 
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    Status: Physician
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    Peds is correct.
    There are a handful of money market funds that are tax exempt (fed or state) and depending on your fed/state tax rate, pay out better than any online savings account.

    #189608 Reply
    Avatar EMscout 
    Participant
    Status: Physician
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    Joined: 01/13/2016

    For instance. VUSXX pays me>2.5%. Not that significant, but why not take the extra cash.

    #189609 Reply
    Avatar sebBo13 
    Participant
    Status: Physician
    Posts: 19
    Joined: 05/16/2019

    In a state without state income tax does it make sense to put emergency fund money into money market funds or am I better off with a high yield savings account? I am in the 37% marginal tax rate bracket.

    Add on questions – I just checked on my Fidelity taxable account, VMSXX is “closed to new investments”. Is this just Fidelity not wanting to sell my a Vanguard fund? Is there a Fidelity equivalent?

    Thanks!

    #226023 Reply

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