{"id":135,"date":"2007-04-08T12:03:25","date_gmt":"2007-04-08T16:03:25","guid":{"rendered":"https:\/\/stockherd.com\/moosepond\/?p=135"},"modified":"2010-02-15T13:08:22","modified_gmt":"2010-02-15T17:08:22","slug":"parking-your-safe-money","status":"publish","type":"post","link":"https:\/\/stockherd.com\/moosepond\/2007\/04\/08\/parking-your-safe-money\/","title":{"rendered":"Parking Your Safe Money"},"content":{"rendered":"

This is a response to a question by one of my young adult children. She was looking for a place to put some safe money (i.e.<\/span>, funds that she might need in the next 1-3 years) and wanted to obtain a better rate of interest than that offered by her bank.<\/p>\n

Vanguard money market funds are a good place to park money that you may need in the next 1-3 years. At your tax bracket, I would not worry about finding a tax-free fund. Tax free money market funds don’t become advantageous until you reach the 28% tax bracket or higher. You can ask Vanguard for a check book for your money market account and redeem shares by check. However, the check has to be $250 or more.<\/p>\n

Here are three suggestions. The fund are listed with the safest funds first. The spread between the Treasury-based fund and the prime rate fund is very small. It comes out to about a $25 per year difference on $10,000. So you might want to stay with safety (either Treasury or Federal). That way if the world goes nuts, your funds will be secure.<\/p>\n

<\/span> Vanguard Treasury Money Market Fund<\/span><\/a> (VMPXX<\/span>). It is currently yielding 4.84%<\/span>.<\/span><\/p>\n

Description<\/span>: <\/span>The Fund invests solely in high-quality, short-term money market securities whose interest and principal payments are backed by the full faith and credit of the U.S. <\/span>government. At least 80% of the Fund’s assets will always be invested in U.S. Treasury securities; the remainder of the assets may be invested in securities issued by U.S. governmental agencies. The Fund maintains a dollar-weighted average maturity of 90 days or less.<\/span><\/p>\n

Vanguard Federal Money Market Fund<\/a> (VMFXX<\/span>). It is currently yielding 5.06%<\/span>.
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\n<\/span><\/span>Description<\/span>: <\/span>The Fund invests primarily in high-quality, short-term money market instruments. At least 80% of the Fund’s assets are invested in securities issued by the U.S. <\/span>government and its agencies and instrumentalities<\/span>. Although these securities are high-quality, most of the securities held by the Fund are neither guaranteed by the <\/span>U.S. Treasury nor supported by the full faith and credit of the U.S. government. To be considered high-quality, a security generally must be rated in one of the two highest <\/span>credit-quality categories for short-term securities by at least two nationally recognized rating services (or by one, if only one rating service has rated the security). The Fund <\/span>maintains a dollar-weighted average maturity of 90 days or less. <\/span><\/p>\n

Vanguard Prime Money Market Fund<\/span><\/a> (VMMXX<\/span>). <\/span>It is currently yielding 5.09%<\/span>.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Description: The Fund invests primarily in high-quality, short-term money market instruments, including certificates of deposit, banker’s acceptances, commercial paper, and other money market securities. To be considered high-quality, a security generally must be rated in one of the two highest credit-quality categories for short-term securities by at <\/span>least two nationally recognized rating services (or by one, if only one rating service has rated the security). If unrated, the security must be determined by Vanguard to be <\/span>of quality equivalent to securities in the two highest credit-quality categories. The Fund invests more than 25% of its assets in securities issued by companies in the financial services industry. The Fund maintains a dollar-weighted average maturity of 90 days or less. <\/span><\/p>\n

The expense ratio is 0.29%. Other mutual fund families have similar offerings. For example, see Fidelity’s offerings<\/a>. Since Vanguard is the only large mutual fund family that is owned by its share holders, I tend to prefer it. Vanguard also offers some of the best index funds and exchange traded funds (ETFs) available.
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This is a response to a question by one of my young adult children. She was looking for a place to put some safe money (i.e., funds that she might need in the next 1-3 years) and wanted to obtain a better rate of interest than that offered by her bank. Vanguard money market funds […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_jetpack_memberships_contains_paid_content":false,"_links_to":"","_links_to_target":""},"categories":[52],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/posts\/135"}],"collection":[{"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/comments?post=135"}],"version-history":[{"count":2,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/posts\/135\/revisions"}],"predecessor-version":[{"id":436,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/posts\/135\/revisions\/436"}],"wp:attachment":[{"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/media?parent=135"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/categories?post=135"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockherd.com\/moosepond\/wp-json\/wp\/v2\/tags?post=135"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}