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Is there a "Best" Money Market mutual fund to consider at Vanguard?

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  • #1

    Is there a "Best" Money Market mutual fund to consider at Vanguard?

    With my IRA maxed out for 2021, I want to park my extra cash somewhere like a savings account, but with better ROR than what I have at my credit union. I notice Vanguard has a few different options, but apart from comparing RORs between them, I'm not certain what other info I might use with a buy-and-hold strategy.

    Also, will I need to open a separate account in my portfolio to buy a MM mutual fund? I have a Money Market/settlement account in my IRA, but that seems tied to the same contribution limits as my VTSAX fund, so I don't think I'm allowed to contribute further to it.
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  • #2
    You will need to open a taxable brokerage account at vanguard. It will be a separate bucket from your IRA.

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    • #3
      Originally posted by Jluke View Post
      You will need to open a taxable brokerage account at vanguard. It will be a separate bucket from your IRA.
      Exactly. Totally separate account. NOT an IRA. You want a regular taxable account that has no limits on how much you can put in, and no restrictions on what and when you can take money out.

      All of that said, as much as I love Vanguard (we have well over 800K invested with them), their money market offerings are pathetic. I just looked. They have 4 funds and the "best" rate is 0.04%. Why not go with an online bank like Ally that is currently paying 0.5%. That's over 12 times higher.
      Steve

      * Despite the high cost of living, it remains very popular.
      * Why should I pay for my daughter's education when she already knows everything?
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      • #4
        I can't really comment on money markets, but my go-to index fund is VTSAX in all Taxable, Roth, and Rollover IRAs. But a lot depends on how long you plan on keeping it for buy-and-hold , or are you looking to take on a little more risk, or just stay head of inflation? Or have you thought out branching out to another sector like healthcare, REITs, etc? That may be another option for diversifying into Taxable account.
        "I'd buy that for a dollar!"

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        • #5
          Originally posted by cypher1 View Post
          I can't really comment on money markets, but my go-to index fund is VTSAX in all Taxable, Roth, and Rollover IRAs. But a lot depends on how long you plan on keeping it for buy-and-hold , or are you looking to take on a little more risk, or just stay head of inflation? Or have you thought out branching out to another sector like healthcare, REITs, etc? That may be another option for diversifying into Taxable account.
          VTSAX is another option - that's where my IRA is parked. I guess I'm a bit leery because I was treating this extra cash as my Rainy Day+ fund, and I'd be concerned about needing it in a moment when the market was really down. As for other sectors, I don't generally like to invest in things I don't understand, and don't have time to learn and track. Maybe there's nothing to REITs or healthcare stocks/MFs, but I like the broad-based index funds, so if it's not broke...

          Since I'll need to open a new brokerage account at Vanguard, I'll have a few days to think it over before Vanguard has it set up, so I'll think about it.

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          • #6
            Originally posted by AJSimon View Post

            VTSAX is another option - that's where my IRA is parked. I guess I'm a bit leery because I was treating this extra cash as my Rainy Day+ fund, and I'd be concerned about needing it in a moment when the market was really down. As for other sectors, I don't generally like to invest in things I don't understand, and don't have time to learn and track. Maybe there's nothing to REITs or healthcare stocks/MFs, but I like the broad-based index funds, so if it's not broke...

            Since I'll need to open a new brokerage account at Vanguard, I'll have a few days to think it over before Vanguard has it set up, so I'll think about it.
            As for your comfort level and focusing on index funds, I follow that similar strategy with the tendency to not over complicate my investing as well. Do you already have a decent EF amount that you're comfortable with? Or if you feel you may need this cash in under 5 years, then you probably shouldn't tie it to the market. I'm sure most on this forum would agree with that decision based on that time frame for 5 years or less.

            Otherwise if you're looking to protect against inflation or be ahead of MM interest rates, you may want consider something like active MF VIPSX (Inflation protected securities, ER .20%), or VTAPX (Short-Term Inflation Protected Securies, ER .06%), or ETF equivalent VTIP (ER .05%). I'm not actively invested with TIPS or ibonds but these suggestions may lean more in your direction.

            "I'd buy that for a dollar!"

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            • #7
              I don’t think the vanguard account is what you are really looking for.

              Notice I didn’t comment on money market funds with them.

              you might be better off with disneysteve’s recommendation- Ally

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