State specific money market fund?

[HHello]

I have an emergency fund with approximately 9 months of living expenses in a high yield online savings account with a current APY of 1.4%. It's a lot of money, so I was looking at alternative vehicles that might have a higher return with similar risk. Which is how I came across Vanguard's state specific money market funds. I live in NJ and could put my money in VNJXX.

However, I don't have enough knowledge about these things to tell from the information available whether this would be a good idea. The dividends are federal and state tax exempt, but the fund has a non-negligible expense ratio and I'm guessing is not FDIC insured. Can anyone provide some insight?

Some basics about me: - Total income ~$160k - AGI ~$125 (unsure how this will change under new tax laws) - File as single with no other exemptions

Thanks!

[kv968]

Yield wise it would basically be the same. With your AGI under current tax brackets you're in the 28% Federal and 6.37% for NJ.

VNJXX is showing an SEC yield of 1.05% so the taxable equivalent would be 1.41% for you which is just about what you're getting now in your current account. Granted there may be small underlying gains and losses in VNJXX due to the bonds it holds but those shouldn't be too significant either way due to the shortness of their maturity.

It couldn't hurt to put some money if you'd like for a possibly small increase in your returns but I wouldn't plan on it being much. And no, the fund isn't FDIX insured.