By Dr. James M. Dahle, WCI Founder
We had a slow shift in the ED a few months ago. That means different things to different people, but in my ED when I'm on, it means we talk finance. While trying to prepare for a Zoom presentation I had that evening to a group of docs and APCs, I was cornered by a nurse, a clerk, and an X-ray tech. Before I get into the conversation, I need to provide you with a little background information.
First, I've helped five or ten ED nurses set up their 401(k) asset allocation over the last five years. That means showing them how to change from a portfolio that ranged from 100% cash to a dozen expensive actively managed mutual funds into what is typically a handful or less of low-cost, broadly diversified index funds in a stock/bond mix that ranges from 60%-90% stock. This is typically accompanied by a 1-2 hour discussion about successful long-term investing and an emphasis on increasing the contribution rate to the account (since most of them have a five-figure balance at mid-career).
Second, this conversation took place on October 18, 2022. The financial world is rapidly changing and who knows what it will look like by the time you read this. On the day of this conversation, here is what it looked like:
- YTD stock return: -23.27%
- YTD bond return: -16.49%
- Utah housing prices: Prices down 8.5%, days on market up from eight to 38 in the last five months
- YTD Bitcoin return since its last peak: -72%
- Ten-year Treasury rate: 4.02%
- Inflation rate: 8.20%
- Ally Bank savings account yield: 2.25% (plus a 1% bonus for new money up to $50,000 invested now and left in the account for six months)
- Vanguard Federal Money Market Fund yield: 2.83%
- Vanguard Municipal Money Market Fund yield: 2.28% (3.62% equivalent for those in the 37% bracket)
Bear Market Behavior
The conversation began with a nurse who told me what she had done with her 401(k) and asked me what I thought. Uh oh. My big worry was that she had panic-sold, selling after everything had gone down in price and going to cash. It turned out that was not the case. What she had done was cut her contribution rate from 16% of her salary (perhaps the highest of any nurse I have talked to) to 6%. Why had she done that? Her initial excuse was that “I could really use the money.” Well, there's probably some truth to that, especially given inflation over the last year. But that wasn't the real reason. When we drilled down on it, she had checked her balance four months ago, and she could calm her jitters then. But when she did it again recently, it was too much. It felt like she was stuffing money that she had really sacrificed today for her future down a rathole, and it hurt too much to see it then go down more in value.
What followed next was a long conversation that slowly drew in more and more staff members. The gist of the conversation was based on this quote from Warren Buffett:
“A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves. But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the ‘hamburgers' they will soon be buying.
When vacations, cars, and groceries become cheaper, we buy more of them. Why do we buy fewer stocks when their price goes down? Simply because we naturally extrapolate recent past returns into the near future. Because they have gone down, we assume they will continue to go down. And when they go up, we assume they will continue to go up. To a certain extent, this is even true, at least for a while. (It's called momentum investing.) But in the long run, buying shares at lower prices provides better returns.
Some of the highest-returning investments I have ever made came from the money I invested between October 2008-April 2009. The same goes for investments made in September 2011, December 2018, and March 2020. I have no doubt that the investments I made into stocks and bonds in September and October 2022 are going to have excellent long-term returns. That doesn't mean that stocks won't go down even further in the first six, 12, or even 18 months after being invested. But I'm not investing money that I need in six, 12, or 18 months. The investor matters more than the investment. How you behave in down markets is far more important than your particular chosen asset allocation. Don't just learn this lesson. Internalize it.
More information here:
Yes, Risk Tolerance Can Be Modified: You Just Have to Rewire Your Brain
The Value of a Financial Advisor
Next, the clerk mentioned that she and her husband had recently met with their financial advisor. The advisor had come into town and reached out to take them out to drinks. He opened the conversation with, “I like to meet with you both when I have good news . . . and when I have bad news.” The bad news, of course, was that their investments (along with the overall markets) had gone down sharply. I have no idea if the advisor is what I would describe as someone “giving good advice at a fair price” (probably not, given the level of assets we're talking about, this is almost surely a commissioned salesman masquerading as an advisor).
However, the advisor did at least one thing right: he reached out to prevent bad behavior (i.e. selling low in a bear market.) For a typical investor, this may be the most valuable function that an advisor performs, and if it prevents panic-selling, it's worth all of the fees and even commissions that the investor has paid over the years.
More information here:
How to Find a Good Financial Advisor at a Fair Price
Short-Term Savings Yields
The conversation turned from the subject of long-term investments to short-term investments as the radiology tech wondered if her savings account was any good. I asked the name of the institution. She shared the name of a local credit union. In fact, it turned out that all of the staff members had their savings in one local credit union or another. This is what I said:
“If you have not deliberately placed your cash into a non-local institution specifically to earn a higher yield, the return on your savings account rounds to zero.”
I was confident that would be the case, and sure enough, as we looked up the rate pages of each of the institutions, we found that they were all earning 0.05% on their savings. At one credit union, they could get that number as high as 0.40% if they had $250,000 or more sitting in the account. But not one of them was offering a yield over 1% no matter how much was in the account. Meanwhile, the going rate on cash at any reasonable, national, high-yield savings account or solid money market fund was 2%-3%. Mine, sitting in the Vanguard Municipal Money Market Fund, was earning the pre-tax equivalent of 3.62%, approximately 72 times the yield they were earning. This was something they could do in the midst of this bear market that would actually make a difference in their financial lives. Plus, it might distract them from selling low.
A quick internet search showed that there were 10-20 institutions nationwide offering 2%+ yields on savings accounts (as of January 2023, you could find plenty of institutions that were offering more than 3% and at least one offering more than 4%). Many were at institutions that I had never heard of, but there were plenty at trustworthy household names like Citi, Barclays, Capital One, Ally, and SoFi. They were all backed by the FDIC. The highest yield we found was at a place called UFB Direct, paying 3.11% at the time.
I told them that they didn't need to continually chase rates, moving money from one of these high-yield accounts to the next every month or two. The rank order was different last month, and it will change again next month as banks seek to fine-tune their deposit levels in a competitive environment. But they did need to pick one of them and link it to their checking account so that cash they didn't need for a few weeks or months could earn a higher yield than something that rounds to zero. They told me my next book should be called “Rounds to Zero.”
Money Market Fund Yields
The other alternative, of course, was to use a money market fund. I'm not talking about a money market account at your local bank or credit union. These seemingly misnamed accounts might pay more than the savings account (so you earn 0.10% instead of 0.05%), but it's still pathetic. I'm talking about going to Vanguard and buying shares of any of their excellent money market funds. Once I started talking about buying shares, some got intimidated.
“I don't know how to buy shares. That sounds hard.”
I logged into my account and showed how it literally takes 30 seconds and looks exactly like moving money between a savings account and a checking account. The barriers to successful investing can be surprisingly small.
Savings account yields tend to lag behind money market fund yields. When rates go down, money market yields typically fall first. When rates go up, money market yields typically rise faster. But the only way to know which one is higher at any given time is to actually look. I find that I tend to swap between my Ally Bank savings account and a Vanguard money market fund about once a year or so as yields fluctuate. Rates have been rising rapidly lately, so the Vanguard Federal Money Market Fund is currently outpacing the yield at every high-yield savings account at an institution I have actually heard of before. But that might not be the case in six or 12 months.
I didn't bother getting into a discussion about municipal (muni) bonds vs. non-muni bonds (and, of course, a muni money market account vs. a regular one), but that discussion is worth having here among white coat investors. Remember that the yield (i.e. the interest paid) on muni bonds (including the very short-term ones in a muni market fund) is always free of federal income tax. If the bonds are issued in your state, they are also free of state and local income tax, so it may be worth looking at a state-specific muni bond/money market fund if it is available.
You have to adjust the yield of a muni money market fund to a comparable pre-tax yield to know where to invest. Alternatively, and perhaps more accurately, you can adjust the taxable yields to get a post-tax yield. To be truly accurate, you should also include state taxes. In my case, my federal tax bracket is 37% and my state tax bracket is 5% for a total marginal tax rate of 42%.
- My after-tax yield on my savings account at Ally Bank is 2.25% * (1-42%) = 1.31%.
- My after-tax yield on the Vanguard Federal Money Market fund is 2.83% * (1-42%) = 1.64%
- My after-tax yield on the Vanguard Municipal Money Market fund is 2.28% * (1-5%) = 2.17%
We have a pretty clear winner.
If it is easier, you can simply calculate the pre-tax yields on your municipal money market funds.
- My equivalent pre-tax yield on the Vanguard Municipal Money Market fund is 2.28%/(1-37%) = 3.62%
Obviously, that compares very favorably to 0.05% at the credit union, 2.25% at Ally, and even 2.83% in the federal money market fund. Muni bond yields are doing particularly well compared to non-muni bonds lately. That's not always the case. The only way to know is to look at the yields and do the calculations every now and then.
To be technically correct, you would also have to correct the yields for the fact that treasuries, including the short-term treasury bills held in many money market funds, are state tax-free, but the difference is usually so trivial it can be ignored.
Whether to use a regular money market fund or a muni money market fund depends both on current yields and on your tax bracket. Let's just consider federal income tax for this exercise.
As you can see, if you were in the 22% bracket or higher on October 18, 2022, you would be better off in the municipal money market fund than the federal money market fund. That's probably a little abnormal. More typical would be that you would need to be in the 32% bracket or higher to benefit from using municipal securities. But you can see that the only way to be sure that your money is always earning the best yields is to compare rates and do calculations frequently.
What do you think? How do you help others to stay the course in a bear market? Where do you keep your short-term cash? Comment below!
Excellent as always, Jim. It must be fun and enlightening for those lucky docs, nurses, techs, etc who get to share a slow night in the ED with you. Thanks for being generous with your wisdom.
I’d like to make a small plug for SoFi. I enjoy banking with them for many reasons, and the yield is one of them. I currently earn 3.75% on my savings account. There’s an extra boost in that rate attributable to having direct deposit set up with them, which I would do even if there wasn’t an incentive. Another nice perk is that even my checking account earns 2.50% currently.
They also have overdraft protection (automatically sweeps money from savings to checking if you screw up) and a nice system of savings “vaults” similar to what some other banks like Ally have to help you visualize and meet savings goals. I have vaults for 529s, Backdoor Roth IRA, Emergency Fund, Insurance, Private Real Estate Investing/Reserves, Taxes, and Travel/Vacation, all of which (except for Emergency Fund) get automatic contributions from the checking account on the first of each month.
The web interface and app are both excellent. The debit card works nicely and has a large network of participating no fee ATMs . They also have a no annual fee credit card that comes with Mastercard World Elite status, which has some decent perks for a no fee card (https://www.mastercard.us/en-us/personal/find-a-card/world-elite-mastercard-credit.html). They have options for investments and loans, but I don’t currently use those. You also receive points for various activities within the app. These don’t amount to much, but I was pleasantly surprised the other day when I redeemed my points for $143.
If this is allowed in the comments, [it’s not, especially for a partner with whom WE have an affiliate relationship but readers can use https://www.whitecoatinvestor.com/sofi, just hit that link then click on products and it’ll help support WCI]
I tried to use SoFi for checking and savings. The main problem I had was that it was impossible to move the amounts of money in and out of the account that I needed to move. USAA no problem. A local bank, no problem. Vanguard, no problem. Even Ally let me move hundreds of thousands around in a given month. But despite asking SoFi repeatedly, it was a $50K limit. Be aware of that issue. Might not matter to many, but convenience matters a lot to me when it comes to banking. These are some of the SoFi limitations:
ATM Withdrawals: $610/day
Friend to friend transfers: $250/day
Transfers to other banks: $50,000 a month (I couldn’t find this one on the site, but this is my recollection of what it is.)
Vanguard’s federal money market is now at 4.29% (7-day SEC yield) and Ally Savings pays 3.3%.
I keep the bulk of my savings in Vanguard’s Treasury Money Market fund (VUSXX), which is at 4.25% at the moment, and it saves me a bit on state taxes as compared to VMFXX.
One aspect that many people don’t realize is that the reported yield accounts for the expense ratio, so you don’t have to subtract that from your expected return.
Cheers!
-PoF
How does it save you in taxes? Can you elaborate?
Sorry, I missed that part about savings in state taxes. Thank you!
Depends on the state. Remember that treasury bonds and bills are state tax-free. So it won’t save you a thing in Nevada, but could save you (boost your after-tax return by) up to 13.3% in California.
It lists 7 day returns as that number but lists YTD returns at 0.28%. How does one interpret that? My knee jerk is fluctuating retuns and inferior to a more steady online savings account return on the year (ie Barclays rate has been around 3% for all of 2023).
The YTD returns are the absolute returns in the last 25 days.
The “7-day return” or 7-day SEC yield are the average ANNUALIZED return in the last 7 days. In other words, that’s what you would expect to earn in a YEAR if the rate stays the same.
A quick way to compare apples to apples is to multiply the YTD returns of 0.28% in 25 days by 365/25 to annualize = 4.088%.
As a general rule in normal times, MMFs will beat savings accounts. There are lots of not normal times though. You can pretty much just compare the 7 day yield (4.29%) to the advertised rate on a savings account. It’ s not exactly the same thing, but it pretty much is.
The YTD return is simply what someone has earned if they’ve been in the account since the beginning of the year. So today is Jan 25. 0.28%/(25/365)= 4.09%. That’s been the annualized return for the last 25 days. So you would have beaten Barclays by an annualized 1.09% if you had used the MMF instead. Not a huge difference though. Maybe 0.21% instead of 0.28% YTD. The point of the article is to put your money into SOMETHING like the Barclays account or a Vanguard MMF rather than letting it sit in checking or some piddly savings account.
Thanks so much. I’m currently in FNBO Direct for savings for the reasons you stated. Seems like the VMFXX makes a lot of sense with me being in the 35% bracket and I’m already looking into this.
Thank you for a great post. I have 2 questions.
1. If I put money in VFMXX that I may need in 6-9 months, I difficult or lengthy is it to withdraw them?
2. If I withdraw them earlier(within <1 year), how does the interest work? Does interest work same as a savings account or is there a penalty for early withdrawal?
1. No. Takes 1-3 days to move it to your checking account. Or you can write a check out of the MMF itself.
2. Exactly like a savings account. No penalty.
A note regarding VMFXX (Vanguard federal MM) and VMSXX (Vanguard muni MM) is that the VMSXX SEC yield trend fluctuates up and then down pretty dramatically with about a one month or so period. The calculations that are done above may point to VMFXX being better for part of a month and then switch to VMSXX for the other part. Depends of course on tax rate. For a fair amount of money in cash, this can become significant. Bogleheads has some helpful plots, and VMFXX appears to be pretty linear, while VMSXX is very cyclic.
I’ve just started doing this dance of shifting between the two every couple of weeks.
Not really sure why VMSXX does this, but it can matter to some.
It’s not normally that dramatic, but we live in interesting times and that has certainly been true the last 3 months.
Thank you for the article. So to clarify, as a California resident, is VUSXX probably my best option?
I don’t know your tax bracket so I can’t say, but keep your eye on VCTXX the California Municipal Money Market Fund. It would be state and federal tax free but is only yielding 1.34% right now, much less than the national muni MMF at Vanguard. But the treasury fund is probably better than the federal one for you if we’re only looking at those.
Sorry not sure I follow. I’m a high income earner in California. Why would VCTXX be better than VUSXX if both are state tax free?
I’m not sure it is better, but it is state tax free AND federal tax free. You still have to run the numbers though. It’s yield right now is lower than I would expect so it may not be the best option for you at the moment, but keep an eye on it.
This is a great post — I think it would be spectacular if there could a web tool that automatically updates this chart with various fund options and tax brackets — especially given the the current volatility. Not sure if you’ve got any sophisticated web developers on your team…
I have one, but he’s pretty booked. Sounds like a huge project and given our inability to monetize it well it would be hard to justify doing.
This might help:
https://www.bogleheads.org/forum/viewtopic.php?t=401821
This might help:
https://www.bogleheads.org/forum/viewtopic.php?t=401821
What are your thoughts on 4 wk t bills? I’ve been laddering them so can get access to a quarter of it every week if I were to need it. No state tax but there are federal taxes. My last purchase had a 4.558% annual yield so seems better than the pre tax municipal money market fund return although not as liquid but could get access to all of it within 4 wks if needed.
I think it’s fine to use. More work than a MMF obviously.
VNYTX is the NY muni bond fund. I live in NYC.
I have thought about buying it over the years but a financial advisor always said not to buy because it will drop in principal (like all bond funds) when interest rates go up.
So are these muni bond funds really safe to park your money?
Or is it better to buy individual muni bonds like individual treasury bonds and individual I bonds?
Do you understand the difference between a muni BOND fund and a muni MONEY MARKET fund? The money market fund does not drop in principal when interest rates go up. This post is about money market funds, not bond funds.
So is VNYTX a muni money market fund?
Or is it a muni bond fund?
Can you recommend a muni money market fund, especially specific to NY?
Thanks!
Google tells me that VNYTX is the Vanguard Long Term Tax Exempt Bond Fund. No, that’s definitely NOT a money market fund. It’s like the opposite of a money market fund. Money market funds have very short duration/maturity. A long term bond fund has very long duration/maturity.
I can tell you about a NY specific money market fund, but whether I can recommend it or not is a different question. But the one to look at is VYFXX, the Vanguard New York Municipal Money Market Fund. ER 0.16%. Yield 1.49%. 253 holdings with an average duration of 8.0 days. I wouldn’t use it today over the Federal MMF but next month I might if the after-tax yield were then higher.
Sorry this is a really dumb question — but since these funds can function as a savings or even checking account are you still buying them in your regular taxable account that houses your other index funds and other investments? Or do you have to open a separate type of account to have them in?
Same account.
Where does VMRXX rate in all this?
I am in the 37% bracket, uninvested money I hold in Vanguard is in this (default settlement fund). 7 day is showing 4.3% now.
Any reason to move $ to another fund?
My state of residence for tax purposes is IN.
That’s one of the funds we’re talking about. Yes, a great option for those not in the highest tax brackets. You should probably be in the municipal money market fund like me.
I was trying to sort this out while working nights in the ED last night. I think I’m missing something; when you refer to the muni fund, you mean VMSXX? Vanguard shows a much lower yield (1.7%) and higher expense ratio for that fund. Even accounting for the 37% tax bracket VMRXX would have a higher return?
You’re not missing anything. The yield literally changed dramatically overnight. I see it now as 1.70% too. So now once more it makes sense for you and I to move the money back to the Federal Money market Fund (4.29%) because 4.29% * (1-37%) = 2.7% and 2.7% > 1.7%.
Not my fault but very interesting stuff has been going on with very short term muni bonds (the ones in MMFs) lately. Not sure why that is as I’ve never seen that spread move so much so quickly as the last six months.
It is a consistent cyclic trend with VMSXX, but the magnitude of fluctuations is increasing. The following graph from bogleheads shows a recent comparison plot:
https://i.postimg.cc/HnVp2DQD/Capture.jpg
The latest page of the full discussion is here with more plots:
https://www.bogleheads.org/forum/viewtopic.php?t=377188&sid=3aba0ca506f51b71a0db81e25fabe096&start=150
In normal times it wouldn’t be worth the hassle, but it is worth it for me now.
Wonder what will happen with the next interest rate bump.
When VMSXX starts to reverse course, it is probably a good bet to jump over quickly.
Ha ha. Great timing. Just finished writing a post explaining all this and part of my research included both those threads. The seasonality of fluctuations (January, July, April) was super interesting to learn about.
And moving my money back into the Federal MMF now….
Does it give you any pause that the $$ in the Money market funds you’re talking about is not FDIC insured?
No. Whether your bank account is backed by the Feds or whether the debt in the MMF is backed by the Feds really doesn’t matter much. Same thing backing them either way. Brokerages also have SIPC insurance.
Great post. I had a few questions that I haven’ t been able to sort out explicitly.
1) If you happen to leave your money in the MMF for > 1 year, are you then subject to long term capital gain rates? Trying to think about the best place to put money for 6-18 months and perhaps leaving it in one place is better than chasing gains…
2) I mainly use Fidelity, what are the ‘equivalent’ of VMFXX and VMSXX? SPAXX and FTEXX?
3) I was looking for a Maryland municipal MMF and found this SMDMX – I initially thought it was a Maryland state specific municipal MMF, however I think it is some other federal and Maryland tax exempt fund that has higher risk than a MMF (based on the periods of significant negative returns). Can you clarify what this is and if it belongs in this conversation?
Thank you!
1. No
2. I don’t know the tickers for any of those. But just look for the Fidelity MMFs. There will be 3 or 4 and they’re probably all fine.I’d use the Prime one (SPRXX) or the Municipal one (FTEXX) depending on after-tax rates. https://www.fidelity.com/mutual-funds/mutual-fund-spotlights/money-market-funds
3. That’s a bond fund, not a MMF. https://www.morningstar.com/funds/xnas/smdmx/portfolio
Hi
Thanks to this excellent article, I moved my emergency fund from a large bank savings account with minimal yield to a high yield savings account at Marcus. Unfortunately, Marcus just sent out a new deposit account agreement that seems to limit my ability to access my money at their discretion. see new agreement here. (https://www.marcus.com/content/dam/marcus/us/en/pdfs/Marcus_Deposit_Account_Agreement.pdf).
I am now planning to move my money back to my regular bank until I can find my emergency fund a new home. Of course I want a high yield but just as important I want to be able to access the entirety of the emergency funds should I need it in case of emergency!
My questions are:
1. Is it really safe to have my money in a MMF to be able to use it as an emergency fund?
2. Do you have a preference of a high yield savings account vs a MMF for emergency fund purposes?
3. My plan would be to park this money in whichever new account I set up and then basically set it and forget and hopefully never need to use it. Small fluctuations in yields would not bother me but large differences between the two types of accounts over a prolonged period would. Not sure if this affects question 2’s answer.
Thank you for your help!
I agree that liquidity matters even if it costs some yield.
1. Yes
2. Not particularly. Whichever has the higher yield is fine.
3. If you already have an account at Vanguard etc. then using a MMF there would save you from having to manage an additional account at another bank which sounds important to you. I think you should do that.
Just to clarify on how to put money into the VFMXX. I transfer money into vanguard. It goes to a settlement fund. Then I buy the shares of VFMXX? Or is the settlement fund also considered VFMXX? Thank you
VMFXX is the Federal Money Market Fund and also the settlement fund.
Thank you. Interestingly, after 2 weeks of being in the settlement fund, I received a dividend payment after buying the VMFXX fund. Not sure how to make sense of that
Yea, the dividends with MMFs can be a little weird in the months that you enter or exit.
I have cash in Marcus- 4.75% after a few referrals. At this point VMFXX yield is 4.5% whereas the VMSXX yield is 3.75%. I am in the 35% tax bracket. From reading your excellent article, I gathered that VMSXX would probably provide the best after-tax yield. Would you agree? Thank you.
Yes, I’m now back in the muni fund too. The math for you is 4.75% * (1-35%) < 3.75%.
I am confused about the risk associated with muni money market funds and what exactly causes their constantly changing yields.
Have been using Amex HYSA account but realize this is not tax efficient at all. Currently in the highest brackets for Fed 37% plus 3.8% net investment income and NJ at 10.75%.
The Fidelity New Jersey Municipal Money Market Fund FSJXX seems like a no brainer with a TEY currently of 5.64%.
Unsure if the Fidelity equivalents of VMFXX and VMSXX are the better option. Or even something like laddering short term tbills to at least save on the state taxes.
Thanks for the advice. Love reading your articles and still check in on your how to do a backdoor roth article yearly to make sure im not making any mistakes.
There’s an article coming out soon on it, but it’s not all explained by risk, more by supply and demand, especially in January, April, and July.
You just have to do the math periodically to see which is the best option for you. There’s another article coming out on how to do the math on all of those state, federal, and treasury MMFs.
Hi Dr Dahle,
Thanks for the excellent article. Your website has been life changing for me!! I gave gone through several posts over the past months and a couple of books, being fairly new to investing and being a financially “VERY illiterate” doc for years…… your work is really making a difference for people like me and the amount of information is time saving as well. Thanks a bunch!!!
I am in the 35% Federal tax bracket, State tax 4.95%. Total Marginal tax rate 39.95%
I currently have my emergency fund distributed between:
1- Ally money market account checking (50% of my E -fund): Current interest rate: 4.07 ( APY 4.15).
2- Ally saving account. Current rate: 3.78 (APY 3.85)
3- Three certificate of deposits ladder: all 5% APY ( 6 mo, 15 and 18 mo). One CD is with Ally. 2 with Synchrony.
I am looking into moving from Ally MMA to Vanguard MMF. I already have an investing account with Vanguard. I use their settlement fund to stack money for money ready to invest.
I believe I read principal can be lost with a MMF and I am hesitant. Is is worth for me to use the Vanguard MMF?
It would be extremely unusual to lose principal in a MMF. i.e. even in 2008, no “retail” money market fund lost principal.
Whether it’s worth yet another account for you or not only you can decide, but the yield is currently higher there.