Is it ok to park some Emergency Fund in Vanguard VMFXX?
Is it ok to park some Emergency Fund in Vanguard VMFXX?
As the title says. I'm wondering if it is ok to park cash that is designated for cash reserve in Vanguard VMFXX as I may need them in a couple of months.
My Emergency Fund should be between 20K-30K and now I have about 40K. I may have some expenses coming in the next couple of months for property tax for rentals. That would be between 10K -15K. So I was thinking to park it in Vanguard VMFXX and earn some extra money by parking it there.
Is it ok to put maybe 30K? Not really investing but when need it then pull it out.
Some general questions. As interest is higher than my back. Should I keep a portion of the Emergency Funds in VMFXX in the current market?
My Emergency Fund should be between 20K-30K and now I have about 40K. I may have some expenses coming in the next couple of months for property tax for rentals. That would be between 10K -15K. So I was thinking to park it in Vanguard VMFXX and earn some extra money by parking it there.
Is it ok to put maybe 30K? Not really investing but when need it then pull it out.
Some general questions. As interest is higher than my back. Should I keep a portion of the Emergency Funds in VMFXX in the current market?
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I think it’s okay. I personally do it.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Yes, it is OK.lepa71 wrote: ↑Tue Mar 21, 2023 9:18 am As the title says. I'm wondering if it is ok to park cash that is designated for cash reserve in Vanguard VMFXX as I may need them in a couple of months.
My Emergency Fund should be between 20K-30K and now I have about 40K. I may have some expenses coming in the next couple of months for property tax for rentals. That would be between 10K -15K. So I was thinking to park it in Vanguard VMFXX and earn some extra money by parking it there.
Is it ok to put maybe 30K? Not really investing but when need it then pull it out.
Some general questions. As interest is higher than my back. Should I keep a portion of the Emergency Funds in VMFXX in the current market?
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I hope so, because I have about half of our emergency fund in VMFXX.
“Having, first, gained all you can, and, secondly saved all you can, then give all you can.” - John Wesley
-
- Moderator
- Posts: 2332
- Joined: Sun Aug 09, 2015 11:19 pm
- Location: SF Bay Area
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
This topic is now in the Personal Investments forum.
- nisiprius
- Advisory Board
- Posts: 52216
- Joined: Thu Jul 26, 2007 9:33 am
- Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I certainly think so. Subject to the proviso that if you have a need for something done immediately, and the person says they "take cash, check, or Venmo," or a teller's check from a bank, you can probably get the money available faster if it's in a bank checking account. (Not sure exactly what the current story is on checkwriting features on Vanguard accounts, there was a recent change).
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I think VMFXX is a good choice. VUSXX may be a better choice. You have to decide what is better for you.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
- goodenyou
- Posts: 3602
- Joined: Sun Jan 31, 2010 10:57 pm
- Location: Skating to Where the Puck is Going to Be..or on the golf course
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I sure hope so. I have 7-figures in VMFXX waiting for a house purchase.
"Ignorance more frequently begets confidence than does knowledge" |
“At 50, everyone has the face he deserves”
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Yes, that strategy makes sense
"I started with nothing and I still have most of it left."
- goodenyou
- Posts: 3602
- Joined: Sun Jan 31, 2010 10:57 pm
- Location: Skating to Where the Puck is Going to Be..or on the golf course
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Yes. It is a settlement fund that can be linked to a checking account.
"Ignorance more frequently begets confidence than does knowledge" |
“At 50, everyone has the face he deserves”
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Another question.
How often does the interest get applied?
How often does the interest get applied?
-
- Posts: 3579
- Joined: Fri Jul 19, 2013 2:45 pm
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
There should be no difference in access. Plan on a minimum of two-three business days for transfers to your linked bank account which is pretty standard timing for transfers between any linked accounts.
- goodenyou
- Posts: 3602
- Joined: Sun Jan 31, 2010 10:57 pm
- Location: Skating to Where the Puck is Going to Be..or on the golf course
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Once a month.
"Ignorance more frequently begets confidence than does knowledge" |
“At 50, everyone has the face he deserves”
-
- Posts: 1029
- Joined: Tue Sep 21, 2010 9:13 am
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
If we sign up for checkwriting, VMFXX is the default account for withdrawal, but we are given the option to choose a backup account from which to withdraw if sufficient funds aren't in VMFXX. I chose VUSXX as my backup account. The minimum amount for each check is $250. It took three weeks for the checks to be mailed to my house.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I thought you would have to sell VUSXX and settle it in VMFXX before transfer into my bank's account. Which could take more time.Mike Scott wrote: ↑Tue Mar 21, 2023 10:19 am There should be no difference in access. Plan on a minimum of two-three business days for transfers to your linked bank account which is pretty standard timing for transfers between any linked accounts.
I'm not trying to chase all pennies.
-
- Posts: 1029
- Joined: Tue Sep 21, 2010 9:13 am
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I had similar concerns and checked with a rep about this before I did it recently, and it's true you can transfer directly from VUSXX into your checking account.lepa71 wrote: ↑Tue Mar 21, 2023 11:07 amI thought you would have to sell VUSXX and settle it in VMFXX before transfer into my bank's account. Which could take more time.Mike Scott wrote: ↑Tue Mar 21, 2023 10:19 am There should be no difference in access. Plan on a minimum of two-three business days for transfers to your linked bank account which is pretty standard timing for transfers between any linked accounts.
I'm not trying to chase all pennies.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
So without settling?evelynmanley wrote: ↑Tue Mar 21, 2023 11:29 amI had similar concerns and checked with a rep about this before I did it recently, and it's true you can transfer directly from VUSXX into your checking account.lepa71 wrote: ↑Tue Mar 21, 2023 11:07 amI thought you would have to sell VUSXX and settle it in VMFXX before transfer into my bank's account. Which could take more time.Mike Scott wrote: ↑Tue Mar 21, 2023 10:19 am There should be no difference in access. Plan on a minimum of two-three business days for transfers to your linked bank account which is pretty standard timing for transfers between any linked accounts.
I'm not trying to chase all pennies.
Does VUSXX still have tax-free from a state tax perspective? Where do I find the list of the states where it is tax-free? I thought I saw it somewhere.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I've seen a lot of reports with much faster ACH. I know if I issue instructions in the morning, it will hit my USAA account the next business day. From what I've seen in anecdotal reports, it seems to depend on the destination bank. That said, I wouldn't cut it close if the timing was really an issue. I can't imagine a scenario where I would need cash in the bank within one day but who knows.Mike Scott wrote: ↑Tue Mar 21, 2023 10:19 am There should be no difference in access. Plan on a minimum of two-three business days for transfers to your linked bank account which is pretty standard timing for transfers between any linked accounts.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I think you have to think through some specific scenario's for an emergency fund, but most of them involve loss of employment, big medical bills, etc. For all of those scenarios you have the time to move money around to get it in the right place to pay a bill. I would think even things like CD's, where you potentially could lose 3 months of interest but could access the funds would be fair game.
All models are wrong ... some are useful.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Does VUSXX still have tax-free from a state tax perspective? Where do I find the list of the states where it is tax-free? I thought I saw it somewhere.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Typically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments.
https://www.vanguard.com/pdf/USGOIN_2023.pdf
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I'm wondering if I even want to bother with VUSXX vs VMFXX. I'm in the 22% tax bracket.peteyboy wrote: ↑Tue Mar 21, 2023 1:40 pmTypically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments.
https://www.vanguard.com/pdf/USGOIN_2023.pdf
- retired@50
- Posts: 12830
- Joined: Tue Oct 01, 2019 2:36 pm
- Location: Living in the U.S.A.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
You'll pay Federal (22%) tax on either fund. Using VUSXX will only help with avoiding state taxes. What's your state income tax rate?lepa71 wrote: ↑Tue Mar 21, 2023 2:27 pmI'm wondering if I even want to bother with VUSXX vs VMFXX. I'm in the 22% tax bracket.peteyboy wrote: ↑Tue Mar 21, 2023 1:40 pmTypically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments.
https://www.vanguard.com/pdf/USGOIN_2023.pdf
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
-
- Posts: 6561
- Joined: Tue Jul 26, 2011 1:35 pm
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Yes, I do that too.
If I could get more into tax advantaged I would, but we
ended up with extra because we couldn't spend as much
during the pandemic.
If I could get more into tax advantaged I would, but we
ended up with extra because we couldn't spend as much
during the pandemic.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
lepa71 wrote: ↑Tue Mar 21, 2023 2:27 pmI'm wondering if I even want to bother with VUSXX vs VMFXX. I'm in the 22% tax bracket.peteyboy wrote: ↑Tue Mar 21, 2023 1:40 pmTypically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments.
https://www.vanguard.com/pdf/USGOIN_2023.pdf
It's really about the state tax. Personally, I see no reason to not put into VUSXX but the easiest is to just open a Vanguard account and transfer the funds into it - the settlement account uses VMFXX.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I already have vanguard accounts. I will need some money in a couple of months. I just wanted to park it there for a couple of months with 4.5%ish.peteyboy wrote: ↑Tue Mar 21, 2023 2:50 pmlepa71 wrote: ↑Tue Mar 21, 2023 2:27 pmI'm wondering if I even want to bother with VUSXX vs VMFXX. I'm in the 22% tax bracket.peteyboy wrote: ↑Tue Mar 21, 2023 1:40 pmTypically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments.
https://www.vanguard.com/pdf/USGOIN_2023.pdf
It's really about the state tax. Personally, I see no reason to not put into VUSXX but the easiest is to just open a Vanguard account and transfer the funds into it - the settlement account uses VMFXX.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Sounds like a plan to me.lepa71 wrote: ↑Tue Mar 21, 2023 2:55 pmI already have vanguard accounts. I will need some money in a couple of months. I just wanted to park it there for a couple of months with 4.5%ish.peteyboy wrote: ↑Tue Mar 21, 2023 2:50 pmlepa71 wrote: ↑Tue Mar 21, 2023 2:27 pmI'm wondering if I even want to bother with VUSXX vs VMFXX. I'm in the 22% tax bracket.peteyboy wrote: ↑Tue Mar 21, 2023 1:40 pmTypically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments.
https://www.vanguard.com/pdf/USGOIN_2023.pdf
It's really about the state tax. Personally, I see no reason to not put into VUSXX but the easiest is to just open a Vanguard account and transfer the funds into it - the settlement account uses VMFXX.
FYI, come next tax season take a look at that Vanguard US Obligations document for 2023. Even in VMFXX there will be some of the dividend that is not taxed at the state level that may apply to your situation. In 2022 it was about 38% that was state tax exempt (depending on your state of residence).
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Mine is 6.8% in MN.retired@50 wrote: ↑Tue Mar 21, 2023 2:31 pmYou'll pay Federal (22%) tax on either fund. Using VUSXX will only help with avoiding state taxes. What's your state income tax rate?lepa71 wrote: ↑Tue Mar 21, 2023 2:27 pmI'm wondering if I even want to bother with VUSXX vs VMFXX. I'm in the 22% tax bracket.peteyboy wrote: ↑Tue Mar 21, 2023 1:40 pmTypically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments.
https://www.vanguard.com/pdf/USGOIN_2023.pdf
Regards,
- retired@50
- Posts: 12830
- Joined: Tue Oct 01, 2019 2:36 pm
- Location: Living in the U.S.A.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Given that, and the current yields on the two funds, you'd be better off using VUSXX. More of the interest earned in VUSXX will be exempt from MN taxes.lepa71 wrote: ↑Tue Mar 21, 2023 3:54 pmMine is 6.8% in MN.retired@50 wrote: ↑Tue Mar 21, 2023 2:31 pmYou'll pay Federal (22%) tax on either fund. Using VUSXX will only help with avoiding state taxes. What's your state income tax rate?lepa71 wrote: ↑Tue Mar 21, 2023 2:27 pmI'm wondering if I even want to bother with VUSXX vs VMFXX. I'm in the 22% tax bracket.peteyboy wrote: ↑Tue Mar 21, 2023 1:40 pmTypically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments.
https://www.vanguard.com/pdf/USGOIN_2023.pdf
Regards,
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I can sell VUSXX and have it go directly to my linked checking account at my local bank.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
-
- Posts: 27
- Joined: Sat Jan 19, 2019 11:13 pm
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I recently did a test with this the vmfxx paid approximately 19.96 for the month on 10k to give you an idea on rate of return as far as tax implications I really can't say I do know that it is better than having it in a bank account. I am in the 22% bracket, and I live in Ny which is a HIGH COLA I believe 8% state tax rate. I am currently looking into starting a tbill ladder but it is a little confusing with my crappy chase account. The downfall with tbill ladder is less liquidity but better tax advantage it is a double edge sword
-
- Posts: 1029
- Joined: Tue Sep 21, 2010 9:13 am
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Yes, without settling back into VMFXX. Directly from VUSXX.lepa71 wrote: ↑Tue Mar 21, 2023 11:37 amSo without settling?evelynmanley wrote: ↑Tue Mar 21, 2023 11:29 amI had similar concerns and checked with a rep about this before I did it recently, and it's true you can transfer directly from VUSXX into your checking account.lepa71 wrote: ↑Tue Mar 21, 2023 11:07 amI thought you would have to sell VUSXX and settle it in VMFXX before transfer into my bank's account. Which could take more time.Mike Scott wrote: ↑Tue Mar 21, 2023 10:19 am There should be no difference in access. Plan on a minimum of two-three business days for transfers to your linked bank account which is pretty standard timing for transfers between any linked accounts.
I'm not trying to chase all pennies.
Does VUSXX still have tax-free from a state tax perspective? Where do I find the list of the states where it is tax-free? I thought I saw it somewhere.
Here's a recent thread about state tax and VUSXX:
Title of the thread: "VUSXX taxable for state and local now"
viewtopic.php?t=399695&start=50
Last edited by evelynmanley on Wed Mar 22, 2023 12:27 pm, edited 1 time in total.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Not necessarily. VUSXX might be partially or fully taxable for state and local, depending on your state's income tax laws. For example, in WI, any "Obligations of the United States government and its instrumentalities" are tax-free, but some states like CA require that at least 50% of the fund's assets come from US Gov't obligations, so for states like that, it won't be known for sure until the end of the yearevelynmanley wrote: ↑Wed Mar 22, 2023 6:48 am
VUSXX taxable for state and local now
viewtopic.php?t=399695&start=50
-
- Posts: 1029
- Joined: Tue Sep 21, 2010 9:13 am
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
That wasn't my statement; that was the title of the thread. I'll amend it. Sorry for any confusion!barreg wrote: ↑Wed Mar 22, 2023 11:46 amNot necessarily. VUSXX might be partially or fully taxable for state and local, depending on your state's income tax laws. For example, in WI, any "Obligations of the United States government and its instrumentalities" are tax-free, but some states like CA require that at least 50% of the fund's assets come from US Gov't obligations, so for states like that, it won't be known for sure until the end of the yearevelynmanley wrote: ↑Wed Mar 22, 2023 6:48 am
VUSXX taxable for state and local now
viewtopic.php?t=399695&start=50
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Why not consider a T-bill ladder? You would have the option of 4 week maturities if the funds were needed relatively quickly.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Perfectly okay
What Goes Up Must come down -- David Clayton-Thomas (1968), BST
- ruralavalon
- Posts: 26353
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
In my opinion that is a good idea.lepa71 wrote: ↑Tue Mar 21, 2023 9:18 am As the title says. I'm wondering if it is ok to park cash that is designated for cash reserve in Vanguard VMFXX as I may need them in a couple of months.
My Emergency Fund should be between 20K-30K and now I have about 40K. I may have some expenses coming in the next couple of months for property tax for rentals. That would be between 10K -15K. So I was thinking to park it in Vanguard VMFXX and earn some extra money by parking it there.
Is it ok to put maybe 30K? Not really investing but when need it then pull it out.
Some general questions. As interest is higher than my back. Should I keep a portion of the Emergency Funds in VMFXX in the current market?
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
You have to have time to build a ladder. Mine is a somewhat short-term thing.
I'm thinking to start a ladder but have not put too much thought into it.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I'm wondering if it is a good idea to use either fund as bonds allocation right now until the rates could go down.ruralavalon wrote: ↑Wed Mar 22, 2023 2:34 pmIn my opinion that is a good idea.lepa71 wrote: ↑Tue Mar 21, 2023 9:18 am As the title says. I'm wondering if it is ok to park cash that is designated for cash reserve in Vanguard VMFXX as I may need them in a couple of months.
My Emergency Fund should be between 20K-30K and now I have about 40K. I may have some expenses coming in the next couple of months for property tax for rentals. That would be between 10K -15K. So I was thinking to park it in Vanguard VMFXX and earn some extra money by parking it there.
Is it ok to put maybe 30K? Not really investing but when need it then pull it out.
Some general questions. As interest is higher than my back. Should I keep a portion of the Emergency Funds in VMFXX in the current market?
- ruralavalon
- Posts: 26353
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
What do you currently use in your fixed income allocation?lepa71 wrote: ↑Wed Mar 22, 2023 5:42 pmI'm wondering if it is a good idea to use either fund as bonds allocation right now until the rates could go down.ruralavalon wrote: ↑Wed Mar 22, 2023 2:34 pmIn my opinion that is a good idea.lepa71 wrote: ↑Tue Mar 21, 2023 9:18 am As the title says. I'm wondering if it is ok to park cash that is designated for cash reserve in Vanguard VMFXX as I may need them in a couple of months.
My Emergency Fund should be between 20K-30K and now I have about 40K. I may have some expenses coming in the next couple of months for property tax for rentals. That would be between 10K -15K. So I was thinking to park it in Vanguard VMFXX and earn some extra money by parking it there.
Is it ok to put maybe 30K? Not really investing but when need it then pull it out.
Some general questions. As interest is higher than my back. Should I keep a portion of the Emergency Funds in VMFXX in the current market?
I generally prefer an intermediate-term bond fund with good credit quality, and stick with it regardless of the yield on money market funds or current market conditions.
But in my opinion it's reasonable to include a very safe money market fund as part of a fixed income allocation.
I would not change the fixed income funds used based on changes in rates.
Wiki article "Bogleheads® investment philosophy", Never try to time the market.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
- White Coat Investor
- Posts: 17413
- Joined: Fri Mar 02, 2007 8:11 pm
- Location: Greatest Snow On Earth
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Is it okay if I park my car in my garage? Parking money is exactly what a money market fund is for.lepa71 wrote: ↑Tue Mar 21, 2023 9:18 am As the title says. I'm wondering if it is ok to park cash that is designated for cash reserve in Vanguard VMFXX as I may need them in a couple of months.
My Emergency Fund should be between 20K-30K and now I have about 40K. I may have some expenses coming in the next couple of months for property tax for rentals. That would be between 10K -15K. So I was thinking to park it in Vanguard VMFXX and earn some extra money by parking it there.
Is it ok to put maybe 30K? Not really investing but when need it then pull it out.
Some general questions. As interest is higher than my back. Should I keep a portion of the Emergency Funds in VMFXX in the current market?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
in 401k I have Fidelity® U.S. Bond Index Fund (FXNAX)ruralavalon wrote: ↑Thu Mar 23, 2023 2:16 pmWhat do you currently use in your fixed income allocation?lepa71 wrote: ↑Wed Mar 22, 2023 5:42 pmI'm wondering if it is a good idea to use either fund as bonds allocation right now until the rates could go down.ruralavalon wrote: ↑Wed Mar 22, 2023 2:34 pmIn my opinion that is a good idea.lepa71 wrote: ↑Tue Mar 21, 2023 9:18 am As the title says. I'm wondering if it is ok to park cash that is designated for cash reserve in Vanguard VMFXX as I may need them in a couple of months.
My Emergency Fund should be between 20K-30K and now I have about 40K. I may have some expenses coming in the next couple of months for property tax for rentals. That would be between 10K -15K. So I was thinking to park it in Vanguard VMFXX and earn some extra money by parking it there.
Is it ok to put maybe 30K? Not really investing but when need it then pull it out.
Some general questions. As interest is higher than my back. Should I keep a portion of the Emergency Funds in VMFXX in the current market?
I generally prefer an intermediate-term bond fund with good credit quality, and stick with it regardless of the yield on money market funds or current market conditions.
But in my opinion it's reasonable to include a very safe money market fund as part of a fixed income allocation.
I would not change the fixed income funds used based on changes in rates.
Wiki article "Bogleheads® investment philosophy", Never try to time the market.
- ruralavalon
- Posts: 26353
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I suggest sticking with that fund, a total bond market index fund which uses the Bloomberg Barclays U.S. Aggregate Bond Index, for your fixed income allocation.lepa71 wrote: ↑Thu Mar 23, 2023 6:06 pmin 401k I have Fidelity® U.S. Bond Index Fund (FXNAX)ruralavalon wrote: ↑Thu Mar 23, 2023 2:16 pmWhat do you currently use in your fixed income allocation?lepa71 wrote: ↑Wed Mar 22, 2023 5:42 pmI'm wondering if it is a good idea to use either fund as bonds allocation right now until the rates could go down.ruralavalon wrote: ↑Wed Mar 22, 2023 2:34 pmIn my opinion that is a good idea.lepa71 wrote: ↑Tue Mar 21, 2023 9:18 am As the title says. I'm wondering if it is ok to park cash that is designated for cash reserve in Vanguard VMFXX as I may need them in a couple of months.
My Emergency Fund should be between 20K-30K and now I have about 40K. I may have some expenses coming in the next couple of months for property tax for rentals. That would be between 10K -15K. So I was thinking to park it in Vanguard VMFXX and earn some extra money by parking it there.
Is it ok to put maybe 30K? Not really investing but when need it then pull it out.
Some general questions. As interest is higher than my back. Should I keep a portion of the Emergency Funds in VMFXX in the current market?
I generally prefer an intermediate-term bond fund with good credit quality, and stick with it regardless of the yield on money market funds or current market conditions.
But in my opinion it's reasonable to include a very safe money market fund as part of a fixed income allocation.
I would not change the fixed income funds used based on changes in rates.
Wiki article "Bogleheads® investment philosophy", Never try to time the market.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
Yes, but I think the actual ladder would be on 17 weeks' t-bills. 100% state tax-free.
-
- Posts: 15363
- Joined: Fri Apr 10, 2015 12:29 am
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
If you mean how long will it take to transfer funds to a bank account or exchange into a mutual fund, I think they are equivalent. If you mean to have the funds available for say an ETF purchase, then funds in VMFXX are ready to invest.
For an emergency fund or larger asset amount, I would prefer VUSXX on general principles.
Re: Is it ok to park some Emergency Fund in Vanguard VMFXX?
I'm strongly considering doing this as my current emergency fund is housed at Ally Bank. While Ally now pays 4% interest, the Federal MM Fund pays more. I have several questions to ask based on my below assumptions and would appreciate any comments and/or suggestions.
My wife and I both have tax-advantaged IRAs at Vanguard. Her IRA is on the Brokerage platform and mine on the old legacy Mutual Fund platform.
We each gave each other trading authority on our respective IRA's.
I believe it would be in our best interest to create a Taxable Brokerage Account and fund it initially from Ally to a Federal MM Fund for the following reasons:
1) we currently do not own Taxable Accounts but will most likely need one down the road for unused RMD distributions.
2) we need to be prepared how to manage Taxable Accounts; by taking this small step now accomplishes both current and future needs
3) as mentioned above, my IRA portfolio is on the old Mutual Fund platform. Now might be the best time to migrate over to Brokerage not only to satisfy Vanguard's pressure to move, but also have all of our holdings on the same platform.
4) Moving to the Brokerage platform may ease transition to another Brokerage should we decide to do so down the road.
Question(s):
1) I assume I can link both my Ally Bank account and my local checking account to this Taxable account. Correct?
2) Can our respective TIRA's be linked to this Taxable account for the purpose of RMD distributions and/or withdrawals (sells) of funds?
3) I am NOT considering creating this Taxable account as a JOINT account, but rather setting it up just like our TIRAs where I would make my wife a primary beneficiary with trading authority. Is this feasible?
Is there anything else I should consider?
My wife and I both have tax-advantaged IRAs at Vanguard. Her IRA is on the Brokerage platform and mine on the old legacy Mutual Fund platform.
We each gave each other trading authority on our respective IRA's.
I believe it would be in our best interest to create a Taxable Brokerage Account and fund it initially from Ally to a Federal MM Fund for the following reasons:
1) we currently do not own Taxable Accounts but will most likely need one down the road for unused RMD distributions.
2) we need to be prepared how to manage Taxable Accounts; by taking this small step now accomplishes both current and future needs
3) as mentioned above, my IRA portfolio is on the old Mutual Fund platform. Now might be the best time to migrate over to Brokerage not only to satisfy Vanguard's pressure to move, but also have all of our holdings on the same platform.
4) Moving to the Brokerage platform may ease transition to another Brokerage should we decide to do so down the road.
Question(s):
1) I assume I can link both my Ally Bank account and my local checking account to this Taxable account. Correct?
2) Can our respective TIRA's be linked to this Taxable account for the purpose of RMD distributions and/or withdrawals (sells) of funds?
3) I am NOT considering creating this Taxable account as a JOINT account, but rather setting it up just like our TIRAs where I would make my wife a primary beneficiary with trading authority. Is this feasible?
Is there anything else I should consider?