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OleWarSkuleAlum
LSU Fan
Member since Dec 2013
5819 posts

Emergency Fund In MMF?
I’m thinking of moving my emergency fund approx $50k over to VMMXX. Since it’s yield is 2.5% right now it seems like a no brainer. Aside from the lack of FDIC coverage what’s the downside?
This post was edited on 2/7 at 7:10 pm


oatmeal
Colorado Fan
NOLA
Member since Apr 2014
281 posts

re: Emergency Fund In MMF?
I think your alternative is a t-bill. It’s insured and just as liquid. I could just be too drunk and not thinking clearly but yeah. I think time horizon for the MMF is the only other consideration.
Mmmm holy roller


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22
tigersnipen
LSU Fan
Member since Dec 2006
1944 posts

re: Emergency Fund In MMF?
Marcus by Goldman Sachs has a 2.35% no penalty CD and fdic insured.
This post was edited on 2/7 at 9:46 pm


Twenty 49
LSU Fan
Shreveport
Member since Jun 2014
10457 posts

re: Emergency Fund In MMF?
Capital One 360 Money Market account (FDIC insured) pays 2% right now. Up to 6 withdrawals a month. No fees.

You can get a 1 yr CD through them at 2.7%. If you have an emergency and crack into it early, it's just 3 months interest penalty. Break it into a few CDs so you may only need to crack one if your hot water heater blows up, etc.


OleWarSkuleAlum
LSU Fan
Member since Dec 2013
5819 posts

re: Emergency Fund In MMF?
I see a lot of suggestions for CDs? Why would I use a CD which is more restrictive than a MMF? I honestly don’t care about FDIC insurance because let’s be real Vanguard is too big to fail.


baldona
Auburn Fan
Florida
Member since Feb 2016
8407 posts

re: Emergency Fund In MMF?
Reason to use a CD would be better rates, that’s about all.


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tigersnipen
LSU Fan
Member since Dec 2006
1944 posts

re: Emergency Fund In MMF?
quote:

Why would I use a CD which is more restrictive than a MMF?


Look up the No-Penalty CDs. You can remove your contribution and interest at any time. If a MMF has the same or better rate then yes it isn't worth it. If the CD has a better rate then seems like you are leaving money on the table.
This post was edited on 2/8 at 4:19 pm


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10
gpburdell
Georgia Tech Fan
ATL
Member since Jun 2015
435 posts

re: Emergency Fund In MMF?
Do you have to sell VMMXX to transfer it out of your account first? Or is it treated like cash and always available for withddrawl? That would be the only downside I could think of.

I keep 1/3 of my emergency fund in cash/money market that I can withdrawal at any time at Fidelity. The other 2/3 I keep in short term treasury/corp bonds.


Fat Bastard
Boston College Fan
Member since Mar 2009
38711 posts

re: Emergency Fund In MMF?
the settlement fund at vanguard IS the federal money market fund. Easy to transfer money in and out. That is what I use to shuffle funds back and forth from my bank.

However the OP is not referencing the federal mm fund I use. He’s talking about the prime MM. I’d have to see if he can use that as a default settlement MM fund like I do with the federal. He may have to sell that to move money if it can’t be used as a settlement fund.
This post was edited on 2/8 at 6:25 pm


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cave canem
Mississippi St. Fan
land o sand
Member since Oct 2012
8567 posts

re: Emergency Fund In MMF?
quote:

Break it into a few CDs so you may only need to crack one if your hot water heater blows up, etc.




You are doing it wrong if you have to break a CD to replace a water heater, that is not an emergency, that is maintenance.


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bovine1
LSU Fan
Walnut Ridge,AR via Tallulah,LA
Member since Dec 2004
1005 posts

re: Emergency Fund In MMF?
Mine is in VMMXX and has been for years. I see no downside.


Fat Bastard
Boston College Fan
Member since Mar 2009
38711 posts

re: Emergency Fund In MMF?
quote:

Mine is in VMMXX and has been for years. I see no downside.




ok and? did you get it switched out with the federal MM like i discussed above as your new settlement fund? or are you having to sell as a regular fund in the brokerage account when you need money??


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Joshjrn
LSU Fan
Baton Rouge
Member since Dec 2008
12927 posts

re: Emergency Fund In MMF?
Ally is currently offering a 2.2% regular savings rate.


bovine1
LSU Fan
Walnut Ridge,AR via Tallulah,LA
Member since Dec 2004
1005 posts

re: Emergency Fund In MMF?
The Federal fund is the one they clear through. So transfer enough to it to clear trades and leave the rest in VMMXX. I don't consider that a big deal personally. If it bothers you just use the Federal Fund instead of Prime. I just went and checked and right now the Federal fund is paying 2.32% and Prime is paying 2.47%. I guess if I traded alot and it bothered me to make the transfers I'd just use the Federal fund.


bovine1
LSU Fan
Walnut Ridge,AR via Tallulah,LA
Member since Dec 2004
1005 posts

re: Emergency Fund In MMF?
Fellows I think slow and getting slower. I guess another question you should ask yourself is whether you should be trading with your emergency fund. if the answer is no then I see no downside to keeping it in Prime.


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Twenty 49
LSU Fan
Shreveport
Member since Jun 2014
10457 posts

re: Emergency Fund In MMF?
quote:

You are doing it wrong if you have to break a CD to replace a water heater, that is not an emergency, that is maintenance.


Yep, but the example was the "hot water heater blows up, etc."

Don't worry. I have plenty of cash on hand for either situation without the need to crack a CD.


bayou choupique
LSU Fan
the banks of bayou choupique
Member since Oct 2014
1026 posts

re: Emergency Fund In MMF?
i am building a house and have a pretty good down payment once i close. i am a capitol one customer. any reason not to let my down payment sit there (money market 360 account) and gain some interest until closing time?


RedHawk
Army Fan
Baton Rouge
Member since Aug 2007
6656 posts

re: Emergency Fund In MMF?
Mysavingsdirect is at 2.37 right now.


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Fat Bastard
Boston College Fan
Member since Mar 2009
38711 posts

re: Emergency Fund In MMF?
quote:

i am a capitol one customer.


as am I. i have my solo 401k with them

quote:

any reason not to let my down payment sit there (money market 360 account) and gain some interest until closing time?


no, leave it there. i use that MM account also to get some interest prior to making investments. all these MM are are so close you are splitting hairs if you move it over such a fractional amount. Just like i use the vanguard MM to hold emergency monies from my other taxable non retirement bank account.
This post was edited on 2/11 at 7:41 pm


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