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Post by Capital on Apr 20, 2022 22:50:33 GMT
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bf22
Commander
Posts: 135
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Post by bf22 on Apr 20, 2022 23:13:44 GMT
I saw that. Why would one use that (instead of MM)?
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Post by retiredat48 on Apr 21, 2022 6:01:24 GMT
I saw that. Why would one use that (instead of MM)?
I used this at Fidelity during the 2008/9 financial crisis time. The benefit is that one gets $250,000 per account of FDIC insurance on the deposit. I got zero interest on the deposits. MM Fund has not such insurance. I have not yet reviewed the Vang'd cash sweep account option, but suspect it has same advantage. R48 |
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Post by Capital on Oct 11, 2022 22:26:21 GMT
I received my invitation today to change over to the " Vanguard Cash Deposit" for my brokerage account there. The opening yield is 2.1% and is to be the same type of arrangement as the Fidelity Cash Management Account with Program Banks. There are currently 4 Program banks with 3 more on the way.
The interest rate is higher than that of Fidelity; however, lower than the Federal Money Market Fund. I am opting to stay with the Federal Money Market Fund as I use this for my liquid reserve and want the higher yield. Now sitting back to see if this makes any difference to the yield that Fidelity will give - currently 1.58%. |
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Post by ECE Prof on Oct 12, 2022 1:10:42 GMT
Fido's SPAXX (my settlement account) offers 2.55% as of two days ago. It could be more today. VMFXX offers 2.79%. I have parked my cash in these accounts. They offer more distributions than the equity ETFs. So, my expected income from these accounts have doubled now. I do not see any advantage in the FDIC insured bank account options because we never had to use the FDIC thing in my life except for once, when a Tennessee Savings and Loan Association Bank was run over and went bankrupt (Bush I) and the accounts were paid in full.
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hondo
Commander
Posts: 145
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Post by hondo on Oct 12, 2022 16:52:54 GMT
I received the invitation this morning. I believe I will remain with the VG MM settlement fund at least for now, as I usually do not let money set there very long.
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Post by retiredat48 on Oct 12, 2022 18:09:37 GMT
I received my invitation today to change over to the " Vanguard Cash Deposit" for my brokerage account there. The opening yield is 2.1% and is to be the same type of arrangement as the Fidelity Cash Management Account with Program Banks. There are currently 4 Program banks with 3 more on the way.
The interest rate is higher than that of Fidelity; however, lower than the Federal Money Market Fund. I am opting to stay with the Federal Money Market Fund as I use this for my liquid reserve and want the higher yield. Now sitting back to see if this makes any difference to the yield that Fidelity will give - currently 1.58%. Thanks Capital...to me, this is a significant Vanguard additional feature. Yes, not needed perhaps 99.95% of the time. But when 2008 Lehman collapse came, and financial "crisis", my having money moved (within Fidelity) to FDIC insured bank accounts enabled better sleep. But rate was 0%. Now, getting an actual percent yield is the new feature...as well as the arrangement by Vanguard. R48 |
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Post by Capital on Oct 12, 2022 18:18:10 GMT
retiredat48 , I fully understand your position. I remember those scary times of 2008. None of my comments in my original post were meant to be negative of this feature. In fact, I use this feature at Fidelity in my Cash Management Account and in my HSA accounts. The day may come when I want this feature at Vanguard as well.
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Post by anitya on Oct 12, 2022 23:18:25 GMT
When your Treasury money market fund is yielding higher, the cash sweep option seems to be a double downgrade.
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Post by ECE Prof on Oct 13, 2022 0:35:59 GMT
When your Treasury money market fund is yielding higher, the cash sweep option seems to be a double downgrade. Yes, you are right. As the interest rate keeps creeping up, they end up dolling out more money to the investors. I assume that Vanguard uses this gimmick to pocket more of our money in their pocket in the name of "FDIC." |
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hondo
Commander
Posts: 145
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Post by hondo on Oct 13, 2022 21:37:10 GMT
When your Treasury money market fund is yielding higher, the cash sweep option seems to be a double downgrade. 10/13/22
VG Federal MM, VMFXX 7 day SEC 2.80% VG Treasury MM, VUSXX 7 day SEC 2.73%
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Post by retiredat48 on Oct 14, 2022 2:04:04 GMT
I will repeat my post:
"Yes, not needed perhaps 99.95% of the time.
But when 2008 Lehman collapse came, and financial "crisis", my having money moved (within Fidelity) to FDIC insured bank accounts enabled better sleep. "
R48
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Post by yogibearbull on Oct 15, 2022 22:06:51 GMT
Also remember that from 2008-10, the Fed insured m-mkt funds for unlimited amounts for 10 bps fee. Initially, Fido, Vanguard, etc objected that they didn't need it for their funds, but the Fed wanted all/most m-mkt funds to participate, especially the biggies. So, they made a rule then (through the SEC?) that all m-mkt funds will be required to state whether their funds had that Fed insurance (just as banks are required to state FDIC insurance/noninsurance). Then Fido, Vanguard, etc fell also in line.
After that event, m-mkt reforms followed that went into effect in 2016 that produced 3 types - government m-mkt, retail prime, institutional prime. But trouble again developed soon in 2020 and more reforms were introduced for prime m-mkt funds.
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Post by retiredat48 on Oct 16, 2022 16:55:20 GMT
yogibearbull,...is the 10bp fee still in place?? fee for government m-mkt funds, or just retail and instl prime? TIA R48
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Post by yogibearbull on Oct 16, 2022 17:36:49 GMT
yogibearbull ,...is the 10bp fee still in place?? fee for government m-mkt funds, or just retail and instl prime? TIA R48 No, that temporary support program and fee ended in 2010. |
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Post by Capital on Nov 5, 2022 9:44:34 GMT
retiredat48 , the more I think about this the more I am leaning toward converting to the Cash Sweep option for my core. It would give me two options for that cash. I can still buy the MM Fund with idle funds. Your comments led me to question myself. Thanks.
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Post by Chahta on Nov 5, 2022 15:43:54 GMT
retiredat48 , the more I think about this the more I am leaning toward converting to the Cash Sweep option for my core. It would give me two options for that cash. I can still buy the MM Fund with idle funds. Your comments led me to question myself. Thanks. Plus it saves 1 day if you want to deploy that cash right now. Think "I am gonna buy SQQQ today".  |
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Post by retiredat48 on Nov 6, 2022 16:25:48 GMT
retiredat48 , the more I think about this the more I am leaning toward converting to the Cash Sweep option for my core. It would give me two options for that cash. I can still buy the MM Fund with idle funds. Your comments led me to question myself. Thanks. ,...glad to have helped, commodore! I assume chahta is right...do we actually gain a day in money usage??!! I'm loaded with cash now, so this feature not as important. But may come a time in trading where quick turnaround is. R48 |
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