Emigrant Direct vs. Vanguard Prime

[BigMoneyJim]

I finally got around to opening an ED account but stopped in the middle due to some website concerns. After allaying my concerns and approving the website I decided to check Vanguard's current MM fund yields. Vanguard Prime is at 3.73% now, and ED is at 4%.

My longer term thoughts include investing in nonretirement Vanguard stock and bond funds, so I figure on opening a nonretirement account with them sooner or later (already have 401(k) and IRA going with them).

I don't intend to chase yield around (much) but want my money working as it should.

I like ED's higher yield but am familiar with Vanguard and already have online services there via my retirement accounts.

Any thoughts as to how Prime will compete with ED's rates going forward or what convenience and familiarity is worth in lieu of yield? I'm talking about less than $10k at the moment, and I'm moving it from an 0.75% yield account...before recent months there wasn't enough money to care about yields. This money needs to stay liquid, secure and available over the next 12 or so months.

Thanks!

 

[REWahoo]

BMJ.

ED has touted "The Highest Advertised Annual Percentage Yield for unrestricted day of deposit to day of withdrawal savings accounts" as a key element of their advertising campaign. Of course there is no guarantee this will continue, but I suspect ED rates will outpace Vanuard MMkt rates for some time to come.

If not, it's easy to transfer the money from ED to someone with better rates.

 

[BigMoneyJim]

If not, it's easy to transfer the money from ED to someone with better rates.

Good point. Sometimes it's easy (for me) to overthink these things.

 

[justin]

I passed on the ED account in favor of Vanguard's Federal MM (tax savings make it better in my case than Prime MM). ED hasn't boosted their rate in a while, but VG boosts theirs by 0.01% every day it seems (along with rising rates). ED is FDIC insured, whereas VG MM's aren't, but I'm sure VG will do everything in their power to keep the value constant at $1.00 for their MM funds.

I look at it like this: if I have $10,000 in a MM, I'll forgo $30 per year by picking VG over ED. But the VG account has tax benefits that reduce that amount. I constantly make automatic transfers to buy index funds by DCA'ing twice a month. I use the VG money market to fund these trades. If I had ED, I'd have to constantly go their, transfer money, etc. A lot of hassle for $30/year. Now, if you add enough zeros to your balance, it may be worth while to "chase yield" and pick ED. Not for me though.