Newbie - Vanguard Money Market question

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Topic Author
vaggem
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Joined: Fri Apr 21, 2023 9:55 am

Newbie - Vanguard Money Market question

Post by vaggem »

I hope there are no dumb questions here. This may be one.

I would like to move my emergency fund (from a different institution) to the Vanguard Federal Money Market fund (VMFXX).

I have an existing Vanguard account, and my settlement fund is listed as VMFXX. Is this the actual money market account or do I need to open a new money market fund? I'd like to park my funds in VMFXX, with check writing privileges.

Please let me know what additional actions need to be taken.

Confused.

Thank you!
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Cheez-It Guy
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Re: Newbie - Vanguard Money Market question

Post by Cheez-It Guy »

vaggem wrote: Fri Jun 09, 2023 5:38 pm I hope there are no dumb questions here. This may be one.

I would like to move my emergency fund (from a different institution) to the Vanguard Federal Money Market fund (VMFXX).

I have an existing Vanguard account, and my settlement fund is listed as VMFXX. Is this the actual money market account or do I need to open a new money market fund? I'd like to park my funds in VMFXX, with check writing privileges.

Please let me know what additional actions need to be taken.

Confused.

Thank you!
In a Vanguard Brokerage Account, the settlement fund IS VMFXX. If you transfer money to the settlement fund, it will be in VMFXX. There is nothing more you need to do. You will earn the fund returns even for individual days. You can set up brokerage check writing against the settlement fund. This is actually the ONLY fund you can set up check writing against directly on the brokerage platform. Certain other funds can be selected as backups if you choose.
Last edited by Cheez-It Guy on Fri Jun 09, 2023 5:47 pm, edited 2 times in total.
jebmke
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Re: Newbie - Vanguard Money Market question

Post by jebmke »

I don't have experience with the check writing features but you can certainly move your EF to this account (settlement fund) and leave it there as long as you like.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Topic Author
vaggem
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Re: Newbie - Vanguard Money Market question

Post by vaggem »

Fantastic! I appreciate the feedback.
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Wiggums
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Re: Newbie - Vanguard Money Market question

Post by Wiggums »

vaggem wrote: Fri Jun 09, 2023 5:52 pm Fantastic! I appreciate the feedback.
Welcome to the forum
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tooluser
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Re: Newbie - Vanguard Money Market question

Post by tooluser »

Just as a "ditto" I have had my proceeds from a house sale there for about three months, and it does indeed pay the advertised interest without any other hoops to jump through. I have not set up any check writing. I would likely never have realized its benefits except through Bogleheads.

You might also look at VUSXX (Vanguard Treasury Money Market Fund) if you live in a high state income tax state. You might get a little more money due to the partial state tax exemption, but it does require extra steps to put money in and take it out. It is not 100% state tax free.
Last edited by tooluser on Sat Jun 10, 2023 7:11 pm, edited 1 time in total.
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ruralavalon
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Re: Newbie - Vanguard Money Market question

Post by ruralavalon »

Welcome to the forum :D .

vaggem wrote: Fri Jun 09, 2023 5:38 pm I hope there are no dumb questions here. This may be one.

I would like to move my emergency fund (from a different institution) to the Vanguard Federal Money Market fund (VMFXX).

I have an existing Vanguard account, and my settlement fund is listed as VMFXX. Is this the actual money market account or do I need to open a new money market fund? I'd like to park my funds in VMFXX, with check writing privileges.

Please let me know what additional actions need to be taken.

Confused.

Thank you!
Vanguard Federal Money Market Investor (VMFXX), current SEC Yield = 5.03%, is an excellent choice for your emergency fund.

You don't have to open a new fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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heartwood
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Re: Newbie - Vanguard Money Market question

Post by heartwood »

Here's a link to what Vanguard says about checkwriting. https://personal.vanguard.com/us/whatwe ... ng?lang=en

From personal experience I believe the first bullet is no longer operative. I've written drafts for $10 as trials and they went through, but perhaps because of Flagship status. My recent checks no longer have the $250 language printed on them.

The 5th bullet is important to me: "Checks are considered drafts. You may not be able to use them to get cash immediately from a bank, and you cannot use them to set up electronic banking or bill-paying services."

Basically, it's not a real checking account. You can write a paper check, but cannot use the routing/acct numbers for most things since as I understand it, it's a draft, not a check, against your account.

Perhaps someone with more financial services experience would comment on what the "words" mean.

I do use the drafts to pay lease rents and property taxes associated with my LLC and they work fine. For the remaining 99.9% of our financial lives we use checks or billpay from BOA or Fidelity, frequently moving funds from/to Vanguard. I believe all such EFT transfers must originate at Vanguard.
Topic Author
vaggem
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Re: Newbie - Vanguard Money Market question

Post by vaggem »

heartwood wrote: Sat Jun 10, 2023 12:52 pm Here's a link to what Vanguard says about checkwriting. https://personal.vanguard.com/us/whatwe ... ng?lang=en

From personal experience I believe the first bullet is no longer operative. I've written drafts for $10 as trials and they went through, but perhaps because of Flagship status. My recent checks no longer have the $250 language printed on them.

The 5th bullet is important to me: "Checks are considered drafts. You may not be able to use them to get cash immediately from a bank, and you cannot use them to set up electronic banking or bill-paying services."

Basically, it's not a real checking account. You can write a paper check, but cannot use the routing/acct numbers for most things since as I understand it, it's a draft, not a check, against your account.

Perhaps someone with more financial services experience would comment on what the "words" mean.

I do use the drafts to pay lease rents and property taxes associated with my LLC and they work fine. For the remaining 99.9% of our financial lives we use checks or billpay from BOA or Fidelity, frequently moving funds from/to Vanguard. I believe all such EFT transfers must originate at Vanguard.
Thank you for this information! I intend to use the account for unexpected expenses only. For example, our AC just needed an unexpected repair and I was able to write a check from my existing account (different institution). I'd like the same check writing flexibility with the Vanguard account (and would be able to float any expense under $250 without tapping into it). Essentially, I want to be able to pay on the spot with a check if needed instead of waiting for a transfer of funds back to my bank.

Thank you for bringing these nuances to my attention. Duly noted.
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