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Vanguard Prime Money Market Fund?
05-01-2008, 12:28 PM
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#1
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Recycles dryer sheets
Join Date: May 2006
Posts: 98
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Vanguard Prime Money Market Fund?
I see that the Vanguard Prime money market fund is now yielding a whopping 2.41%. The Vanguard tax-exempt money market fund is yielding 2.51%.
Any reason not to shift the money over to the tax-free money market?
Or better yet, where are any of you parking cash for a better "safe" yield?
The plan is to invest 300k in the 5% managed payout fund over the next year, but it would sure be nice to make some decent $ - without taking significant principal risk - while just sitting...
Thanks...
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05-01-2008, 01:52 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 1,224
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How about ING Electric Orange: High Yield Checking Account from ING DIRECT
Currently yielding 3.4% APY. You would need to create more then one account to keep FDIC insured.
The reality there is no "safe" high yielding choice in todays interest rate climate.
DD
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05-01-2008, 04:31 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,702
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That tax exempt rate may just be a temporary thing. I remember a couple of years ago the tax exempt had a higher rate than the prime and it lasted all of about 3 weeks before dropping.
You're gonna laugh at me because I just shot a bunch of money into unlaunched funds, but I actually shifted a big chunk of cash OUT of the prime MM fund and into the treasury MM fund last month since the premium loss wasnt that big and I was getting a teeny bit nervous hearing about a few outfits propping up or preparing to prop up their MM funds that were based on the same sorts of underlying investments the Prime fund uses.
So on one hand ridiculously conservative...on the other...:
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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05-01-2008, 06:34 PM
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#4
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Recycles dryer sheets
Join Date: Oct 2007
Posts: 463
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cyclone6,
I'm leaving my current money in Vanguard Prime, but my motivation may be different than yours.
The MM funds are my emergency fund, so the money has to be readily available. If you want more yield, you can find six-month CDs with better yields.
I also have confidence that Vanguard's managers didn't and won't get sucked in to trouble reaching for higher yields. So I'm content to stick with my overall plan.
__________________
TickTock Rule Of Finance - heavily discount any promises of money/benefits to be paid to you in the future
"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
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05-01-2008, 07:45 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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As written before, I keep my emergency fund in Vanguard GNMA in a tax-deferred account. Volatility is low, rate is 4.8%, and it's tax-deferred. I don't think it has "significant principal risk". Sure it has more risk, but its held its own in the last couple of months while even TIPs have dropped significantly.
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05-01-2008, 07:51 PM
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#6
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Full time employment: Posting here.
Join Date: Mar 2007
Posts: 577
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Etrade savings acct is at 3.01 that's not 5. In a moment I'm looking into LOL suggestion above for myself.
__________________
I highjacked a rainbow and crashed into a pot of gold - Bon Jovi
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05-01-2008, 11:42 PM
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#7
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Recycles dryer sheets
Join Date: Nov 2007
Posts: 170
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Quote:
Originally Posted by LOL!
As written before, I keep my emergency fund in Vanguard GNMA in a tax-deferred account. Volatility is low, rate is 4.8%, and it's tax-deferred. I don't think it has "significant principal risk". Sure it has more risk, but its held its own in the last couple of months while even TIPs have dropped significantly.
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I just looked at the graphs for the past 10 years, and it looks like in May of the past two years, it dipped a little to about $10... guess with my bad luck, I'll move my money on June 1st.  I just added a chunk into the VG Prime MM, so my total is at $141K... it's supposed to be some remodeling that we're doing but hasn't happened yet! <sigh>
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05-02-2008, 01:50 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2007
Posts: 5,072
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Between the low interest rate and the weakening $... you are losing money in a MM account.
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05-02-2008, 06:50 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Houston
Posts: 1,448
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Rates on money market accounts always tend to spike towards the end of the month. However, depending on your marginal tax rate, the tax-exempt MMF may still be a better deal than the prime MMF, as they have been pretty close to each other in nominal terms for a while.
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