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Tax-exempt money market fund
Old 03-06-2008, 05:02 AM   #1
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Tax-exempt money market fund

I'm thinking of moving cash to a new Vanguard tax-exempt money market fund VMSXX- mainly for emergency cash and a place from which I DCA into other funds. Current cash reserves are at 3.74%, 3.96%, and 2.8% which is 2.5%, 2.65%, and 2.4% after tax. VMSXX is at 3.3%. Is there any reason not to do this?


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Old 03-06-2008, 10:33 AM   #2
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Don't see any real issues with it.

He had one of those rare smiles with a quality of eternal reassurance in it . . . It faced, or seemed to face, the whole external world for an instant and then concentrated on you with an irresistible prejudice in your favor. -- The Great Gatsby, F. Scott Fitzgerald
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Old 03-06-2008, 10:40 AM   #3
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Long ago I was warned against ever using tax free money market funds. It seems that during the savings and loans debacle of the 80's, the tax free's were the only ones at risk of failing.
I think it's that they have too many remarketed preferreds for yield.
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