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HYSA vs Money Market Account vs Money Market Fund for Emergency Fund
Posted on 5/25/23 at 11:10 pm
Posted on 5/25/23 at 11:10 pm
I bank with Ally and am fairly new to having excess cash that I can actually “save/invest”. Ally’s HYSA yields 3.85%, whereas their money market account yields 4.15%. I use fidelity for a few other services and noticed their VMFXX fund yields 5.15%
Current, I keep about 1 month of expenses in checking, and have 2 months in savings, split evenly across Ally’s money market and HYSA. I’m pretty good about limiting withdrawals from the money market or savings accounts unless absolutely necessary, which is few and far between.
Should I switch all of my emergency fund to the highest yielding account, the Fidelity VMFXX?
Are there any risks I’m not seeing? I would like to separate out “typical” risks for this move vs. risks deriving from a potential US default given the debt ceiling negotiations.
Current, I keep about 1 month of expenses in checking, and have 2 months in savings, split evenly across Ally’s money market and HYSA. I’m pretty good about limiting withdrawals from the money market or savings accounts unless absolutely necessary, which is few and far between.
Should I switch all of my emergency fund to the highest yielding account, the Fidelity VMFXX?
Are there any risks I’m not seeing? I would like to separate out “typical” risks for this move vs. risks deriving from a potential US default given the debt ceiling negotiations.
Posted on 5/26/23 at 10:38 am to blackoutdore
VMFXX is a Vanguard fund which would incur a transaction fee with Fidelity.
However, you could easily open a cash management account with Fidelity and keep your "checking" money in SPAXX (currently 4.74%) or FZFXX (4.73%), which are similar to VMFXX.
For the money in savings, you could invest in USFR or TFLO - both of which are floating rate treasury bond ETFs that have been providing a really nice, stable yield in the low 5%'s for some time. SGOV, an ultra short term treasury bond fund, is also popular with people looking for stable returns.
However, you could easily open a cash management account with Fidelity and keep your "checking" money in SPAXX (currently 4.74%) or FZFXX (4.73%), which are similar to VMFXX.
For the money in savings, you could invest in USFR or TFLO - both of which are floating rate treasury bond ETFs that have been providing a really nice, stable yield in the low 5%'s for some time. SGOV, an ultra short term treasury bond fund, is also popular with people looking for stable returns.
This post was edited on 5/26/23 at 10:51 am
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