HYSA vs MMF

[aishel]

With interest rates sky high, I've been keeping my emergency fund in a HYSA (Vanguard Cash Plus) that earns 4.5% APY. But I've noticed that the 7-day yields have consistently been higher in MMFs on Fidelity (4.75%) as well as Vanguard (5.07%).

I honestly am not a fan of constantly moving money around and trying to remember when certain CDs mature, so I've just kept it mostly in my vanguard cash plus account, but with the interest rates holding high (and likely to go up at least once more), I'm thinking of moving it to the MMF for vanguard, which is a more than half a percentage point higher that the HYSA.

Any thoughts to this?

Edited to add fund names and expense ratios:
Fidelity MMF: SPAXX with expense ratio of 0.42%
Vanguard MMF: VMFXX with expense ratio of 0.11%

[ExGingi]

Highest current 7-day yield I found is Gabelli GABXX.
Vanguard VMRXX is usually the highest at Vanguard (officially not a retail fund, but E*Trade allows me to buy it, the retail version is VMFXX).
Fidelity SPRXX is best within the Fidelity family, but consistently lower than VMRXX or VMFXX.

You can also buy t-bills at auction and your broker might allow auto rollover.

[yaakovely]

USFR yield is 5.25% and TFLO yield is 5.16%.

[Redbull3]

I'm just keeping it in Primis which is a checking account giving 4.92 apy now, and has perks like foreign (non-primis) atm fee refunds, free cashier checks, stop payments, first 40 checks free, no overdraft fees.. very happy so far

[yaakovely]

I'm just keeping it in Primis which is a checking account giving 4.92 apy now, and has perks like foreign (non-primis) atm fee refunds, free cashier checks, stop payments, first 40 checks free, no overdraft fees.. very happy so far

You're sure its 4.92% APY? I'm still getting 5.1% APY with Primis checking.

[Redbull3]

Yeah I think you/others were grandfathered into something, I opened a couple months ago

[incendia]

Want 5% yields? After Fed hike, it may be time to ditch high-yield savings accounts for money-market funds

https://archive.ph/YxmKh

[AJK]

I'm just keeping it in Primis which is a checking account giving 4.92 apy now, and has perks like foreign (non-primis) atm fee refunds, free cashier checks, stop payments, first 40 checks free, no overdraft fees.. very happy so far

[Redbull3]

hmm ¯\_(ツ)_/¯

[Redbull3]

You're sure its 4.92% APY? I'm still getting 5.1% APY with Primis checking.

I just got an email that effective 7/28 it jumped to 5.07. Did yours go up too

[AJK]

I'm determining what to do with my current emergency fund (and, apropos to the DDMS post @Dan did on pulling money out of iBonds, what to do with the funds I eventually pull from there).

What folks need to remember:

Many people neglect to consider taxes when looking at HYSA vs MMF, and are foolishly chasing gross return and not net return.

For example, HYSA and CDs are taxed as ordinary income at your individual federal income tax rate. Assuming, as an example, 35% fed and 6.37% NJ, a 4.90% no-penalty CD from CIT will net you 2.87%. (Obviously, if you live in a lower or 0-income tax state, the numbers will differ.)

Some MMF's, however, invest in tax-advantaged securities. And on that note, I came across a great spreadsheet that considers the net rates of five of the more popular Vanguard funds that invest in tax-advantaged securities:

https://docs.google.com/spreadsheets/d/1Le96DFR_1m4BAyl8vmaiKq-Ok1UYxAGlmkuoGV_f-SI/edit#gid=1501350635.

Some of these will net me more than the 2.87% I'd get from CIT, or a HYSA.

That said, there could be an advantage to investing in a no-penalty CD in particular in that you're locked in at 2.87% if the rates go down, and you can pull out and reinvest elsewhere if rates go up. Is juicing your returns by approx half a percent by investing in one of these MMFs worth the squeeze? Up to you.

[ExGingi]

Many people neglect to consider taxes when looking at HYSA vs MMF, and are foolishly chasing gross return and not net return.

For example, HYSA and CDs are taxed as ordinary income at your individual federal income tax rate. Assuming, as an example, 35% fed and 6.37% NJ, a 4.90% no-penalty CD from CIT will net you 2.87%. (Obviously, if you live in a lower or 0-income tax state, the numbers will differ.)

Some MMF's, however, invest in tax-advantaged securities. And on that note, I came across a great spreadsheet that considers the net rates of five of the more popular Vanguard funds that invest in tax-advantaged securities:

https://docs.google.com/spreadsheets/d/1Le96DFR_1m4BAyl8vmaiKq-Ok1UYxAGlmkuoGV_f-SI/edit#gid=1501350635.

The spreadsheet lists VMRXX twice.
There was a time in recent months that VUSXX was showing a higher 7-day yield than VMRXX.
Obviously if any of this is for cash in ROTH IRA (or other tax qualified account), it's the gross yield that counts. (And if maxed out on ROTH, then PUAs on Life Insurance might be an attractive alternative - though there is a sales charge, so it's not for very short term).

[sruliL]

I'm determining what to do with my current emergency fund (and, apropos to the DDMS post @Dan did on pulling money out of iBonds, what to do with the funds I eventually pull from there).

What folks need to remember:

Many people neglect to consider taxes when looking at HYSA vs MMF, and are foolishly chasing gross return and not net return.

For example, HYSA and CDs are taxed as ordinary income at your individual federal income tax rate. Assuming, as an example, 35% fed and 6.37% NJ, a 4.90% no-penalty CD from CIT will net you 2.87%. (Obviously, if you live in a lower or 0-income tax state, the numbers will differ.)

Some MMF's, however, invest in tax-advantaged securities. And on that note, I came across a great spreadsheet that considers the net rates of five of the more popular Vanguard funds that invest in tax-advantaged securities:

https://docs.google.com/spreadsheets/d/1Le96DFR_1m4BAyl8vmaiKq-Ok1UYxAGlmkuoGV_f-SI/edit#gid=1501350635.

Some of these will net me more than the 2.87% I'd get from CIT, or a HYSA.

That said, there could be an advantage to investing in a no-penalty CD in particular in that you're locked in at 2.87% if the rates go down, and you can pull out and reinvest elsewhere if rates go up. Is juicing your returns by approx half a percent by investing in one of these MMFs worth the squeeze? Up to you.

6 month treasury bills are over 5% and not subject to state tax, only fed.