Is Cash Better Than A 4.61% Money Market Fund? | Fidelity's SPAXX, Schwab's SWVXX & Vanguard's VMFXX

[@DiamondNestEgg]

💎Get our popular bond course bundle & save $80: www.diamondnestegg.com/home#_paa2isucf 💎Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners 💎Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters 💎And join our super-supersaver membership for regular market updates & monthly live member Q&As kzbin.info/door/nexoc6tvesvcCEzZhmI-Agjoin >>>>>>>>>> WATCH NEXT >> Our Bond Courses vs KZbin Membership | Which Is Right For You: kzbin.info/www/bejne/fmbLZXivnZWboNE >> Bond Beginners Course Sneak Peak | I-Bonds vs TIPS: kzbin.info/www/bejne/q4mzq5WgmpaaaKc >> Bond Masters Course Sneak Peak | How To Build A Bond Ladder: kzbin.info/www/bejne/pmqTenejjdNkb9U >>>>>>>>>> SOURCES: investor.vanguard.com/investment-products/money-markets www.schwab.com/money-market-funds www.fidelity.com/mutual-funds/mutual-fund-spotlights/money-market-funds www.fidelity.com/bin-public/060_www_fidelity_com/documents/MMF_Compare-stable-floating-nav.pdf www.morningstar.com/ >>>>>>>>>> Here is the overview for Bond Beginners: 1. Bond Basics What A Bond Is & How A Bond Works Why Invest In Bonds New Issue vs Secondary Market Bonds Interest Rates & Bond Prices Current Yield & Yield To Maturity Always Remember This! Buying At Par, Above Par & Below Par Different Types Of Bonds Wrap-Up 2. The Risks Of Bond Investing Seven Key Bond Risks Credit Risk Interest Rate Risk Reinvestment Risk/Call Risk Inflation Risk Liquidity Risk Currency Risk & Country Risk Bond Risk Mitigation Strategies Wrap-Up 3. US Treasuries Overview What Are US Treasuries Why Invest In Treasuries Where Can You Buy Treasuries How Are Treasuries Taxed Wrap-Up 4. Treasury Bills What Are Treasury Bills (T-Bills) When Do T-Bill Auctions Happen Where Should You Buy At Auction Auto-Roll When Buying At Auction Where To Find Recent Auction Results High Rate vs Investment Rate Reopening Auctions Cash Management Bills (CMBs) Buying & Selling On Secondary Market Wrap-Up 5. Treasury Notes & Bonds What Are Treasury Notes & Bonds When Do Auctions Happen Buying Treasury Notes & Bonds Auction High Yield vs Interest Rate Floating Rate Notes (FRNs) Treasury Zeros (STRIPS) Wrap-Up 6. TIPS (Inflation-Protected) What Are TIPS When Do TIPS Auctions Happen Nominal vs Real Yields Negative Yields How Do You Adjust TIPS For Inflation Taxes On Phantom Income Secondary Market Liquidity Wrap-Up 7. I-Bonds (Inflation-Protected) What Are I-Bonds How Does I-Bond Interest Work I-Bonds vs TIPS The Annual I-Bond Limit Wrap-Up 8. Agency Bonds The Universe Of Bonds What Are Agency Bonds How Are Agency Bonds Taxed Treasuries vs Agencies Who Might Want To Consider Agencies Yield-To-Call & Yield-To-Worst Where Can You Buy Agency Bonds Wrap-Up 9. Municipal Bonds Our Bond Universe Gets More Complex What Are Municipal Bonds How Safe Are Munis How Are Munis Taxed The De Minimis Rule Social Security & Medicare Premiums Treasuries, Agencies & Munis Who Might Want To Consider Munis Wrap-Up 10. Corporate Bonds Our Bond Universe Is Complete What Are Corporate Bonds How Safe Are Corporates Corporate Bond Hierarchies Five Key Features Of Corporate Bonds How Are Corporates Taxed Treasuries vs Corporates, Etc. Who Might Want To Buy Corporates Wrap-Up >>>>>>>>>> Here is the overview for Bond Masters: 1. Stocks vs Bonds Historical Performance Are Bonds Really Less Volatile Why Invest In Bonds Accumulation vs Decumulation Allocation of Stocks vs Bonds Wrap-Up 2. Which Bonds Might Be Right For You Treasuries & Other Types of Bonds Nominal vs Real Yields Inflation vs Non-Inflation-Protected Taxable vs Tax-Advantaged Accounts Wrap-Up 3. Bond Ladders & Other Bond Strategies Normal vs Inverted Yield Curve What Is A Bond Ladder 5 Important Bond Laddering Questions Laddering When Rates Are Rising Laddering When Rates Are Falling Laddering When Rates Are Uncertain What Is A Bullet What Is A Barbell Wrap-Up 4. Holding to Maturity vs Selling Early Why Hold to Maturity When To Sell Early Before Maturity Tax Implications Of Selling Early Wrap-Up 5. Individual Bonds, Bond Funds, Etc. Why Buy Individual Bonds Why Buy Bond Funds Bond Fund Considerations Key Bond Fund Concepts CDs vs Treasuries Other High-Yield Investments Wrap-Up 6. Our B.E.S.T. Model Portfolios By Age Our B.E.S.T Model Portfolios By Age Model Portfolios In The Industry B.E.S.T Model Portfolio Difference How Much Do You Need To Retire? How I Use The Rules of 100, 110, & 120 B.E.S.T Model Portfolios (20s) B.E.S.T Model Portfolios (30s & 40s) B.E.S.T Model Portfolios (50s & 60s) B.E.S.T Model Portfolios (70s+) Wrap-Up 7. The Decumulation Phase What Is The Decumulation Phase? Bear Markets & Recessions What Can You Do In Bad/Bear Markets Decumulation Tax Considerations The 4% Rule The Bucket Strategy The Flooring Approach Jen’s Bucket Strategy With A Twist Wrap-Up >>>>>>>>>> Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY

[@brucesmith9144]

This is the best description of money market funds I’ve ever heard, particularly how the fund is managed. I have been using several government and a couple Treasury-exclusive money market funds over the years. As for HYSA backed by the FDIC, who knows what the current liquidity of FDIC is should there be a series of SVB-like failures. That’s almost never discussed but should be. _An educated consumer is our best customer_ as the late Sy Syms used to say.

[@KayKay14m]

I have a Fidelity account and SPAXX is used as my cash sweep account. I don't have to actively trade to earn that interest on my cash. If I open a new trade, the money for that trade comes out of SPAXX. If I close a trade, that money gets swept back into SPAXX automatically. Now, if we ever get to the point where SPAXX goes back to near zero, then I will have to increase my risk to get a better return.

[@TB_4]

Agreed, I use SPAXX as well for the same conveniences that you stated.

[@DavidLitman-ph9lu]

Also, you can now use SPAXX with bill pay, check writing and debit card, all while earning interest!

[@termita358]

Is SPAXX state tax exempt?

[@atkim122]

My Schwab SNSXX is the dry powder I use to purchase stocks. Earns 4.5% while it waits to be used. I prefer it over other Schwab MM because SNS is 99.99% treasuries and therefore interest isn't state taxed. I live in a high tax state where other interest taxed at 9.3%.

[@teacherdavid--eatplaylearn5013]

Is there a Fidelity fund that won't get state taxed？ Thank you for sharing God bless you 😇 🎁

[@df6806]

@@teacherdavid--eatplaylearn5013 SGOV ETF from ishares

[@SpaceClick]

@@teacherdavid--eatplaylearn5013 Yes, FDLXX is one. It was around 90% USGO last year. Note that you need to wait for Fidelity to release the report on the percentage of USGO at the beginning of each year (for the prior year) so that you know what percentage of interest income from the fund is state tax free. In years past FDLXX was 100% state tax free, and I believe it is on track to be around that this year. Note that this info is not on your 1099-INT from Fidelity, so you need to make sure you do the calculation yourself after you get the percentage from Fidelity. Search for "2023 Percentage of Income from U.S. Government Securities" to see what the 2023 document from Fidelity looked like.

[@christmilesis7077]

@@teacherdavid--eatplaylearn5013 FZFXX is Fidelity's U.S. Treasury Money Market fund that is exempt from state income tax.

[@jdjccs74]

Same... I wonder why @Diamond NestEgg did not at least give SNSXX a mention - the State Tax exemption alone makes it better than anything else - at least to those w/state income taxes. Zero Risk

[@Inkydinky-ei2uf]

Absolutely, the best explanation of MMFs I’ve come across. Such a succinct, authoritative, and clear explanation. Thank you!

[@Jakepattison42]

Most of my money is in ETFs. But I do have a small allocation to individual stocks that I have a strong conviction in. Strong foundation first.

[@wmwoods-l4f]

Individual stocks can beat ETFs like VOO, SPY, IVV if you play your cards right

[@linneisenhower2571]

Interesting, I didn’t know that money market funds are categorized as securities and thus insured to $500k, not $250k like cash. Thanks !

[@LurkerChild]

An S-tier video from an already outstanding channel! A well-explained and efficient primer on info that otherwise slips through the cracks. I use VMFXX almost exclusively as a settlement fund in tax-advantaged accounts until I can make longer term investments. I use SWVXX as both a settlement and short-term contingency fund in a taxable account.

[@DiamondNestEgg]

Thanks for sharing!

[@freeroamer9146]

I have a MM Fund (SNVXX) with Schwab. As Jenn mentioned it pays 4.35%. I use it to store cash as I wait for opportunities in the equities market. It's worked out nicely other than I have to wait until the next day before the funds can be used for purchases.

[@lkd06]

a rep at schwab told me I could put in an order to sell shares of the mm fund then immediately buy shares of an equity and it should go through with no waiting. If it doesn't , just call the trade desk and they'll push it through

[@daveycrocker4466]

@@lkd06good to know, thanks.

[@rshcam]

Since the market is a bit volatile, I am moving most of my MMF money to treasuries for the short term. Two advantages: 1. Better rate than MMF and less risk. 2. Defers tax on interest income to 2025.

[@RagedContinuum]

how does it defer tax?

[@marcedwards7110]

Also, for short term, look into Tbills. Get around 4.5% for a 4wk bill. Can just keep reinvesting if not needed. No state tax on these

[@rshcam]

​@@jodor6correct. Thanks. I should have clarified T-bills. And this is more short term to ride market volatility.

[@captnmike597]

Incredibly clear and well presented. Excellent graphics and a good allocation of time to the most important materials.

[@Ciborium]

Everything you said in your "Can you lose money in a MMF?" is accurate based on the research I have done. The one thing that you could have added is that, after 2008, the SEC increased the liquidity requirements of MMF to, I think, 10% of assets being liquidated in one business day and 10% in five business days. Or something like that, to prevent a case like the Prime Reserve Fund holding too many illiquid assets.

[@MVos-md3rp]

Wow! Professor of finance does it again! Thank you, super helpful.

[@poolmilethirty2859]

I know, right? Jenn should be teaching a required financials course to college freshmen. She's awesome and explains everything without putting you to sleep like the fidelity webinars I have sit through.

[@MVos-md3rp]

@@poolmilethirty2859 Each instrument gets a separate semester, lol!

[@mikeflair6800]

I love my Vanguard MM vmfxx and everything they own...almost as much as my ETF stock account. A 'dry powder account' that is actually paying 4.5% YTD, and the strength of the USA economy says these higher rates are likely to become baseline 2025 going forward. Since Vanguard is investor owned, you also get the 'corporate discount' by the lower fees paid, as you do in all Vanguard Funds.

[@gilbellamy7713]

I’m moving money from my HYD account to my SWVXX for a little extra yield and opportunities to invest in the stock market.

[@WingnutJSL]

Thank you for the information. You are very good at explaining these issues.

[@vl4lz]

SPAXX ROXX. We have a minimum of our accounts in the fund but the buy/sell directly from/to SPAXX keeps the amazing divs coming. Wasn't aware of any fund breaking the buck, so that was educational. Everyone needs a place to hide when the dominoes start falling. Nice to now have a better understanding of the risks!

[@gpags0205]

I was around in 08 and had my savings in Vanguard MM, took it out when it broke the buck and never looked back. Keep my savings in HYSA and T bill ladders.

[@gogo-bi9qh]

Good plan. Are you using Treasury Direct?

[@phlack1001]

Vanguard broke the buck? I never heard that one.

[@gpags0205]

@phlack1001 for a bit then I think Bush did something to prop it back up. And I think it was all mm funds@ brokerage not just Vanguard. Big run on people taking their $$ out.

[@gpags0205]

@@phlack1001 don't want to spread misinformation so I asked ChatGPT and got this answer-->No, money market funds at brokerage companies did not experience a widespread "breaking of the buck" during the Great Recession, although there was one notable exception that led to significant market concerns. The event you're referring to occurred in September 2008 when the Reserve Primary Fund, a prominent money market mutual fund, "broke the buck" by falling below the $1 per share value. The primary reason for this was the fund's exposure to Lehman Brothers debt, which became worthless when Lehman declared bankruptcy. This event caused panic and led to a temporary loss of confidence in money market funds. While the Reserve Primary Fund was the only major money market fund to break the buck during the Great Recession, it created a ripple effect in the broader financial markets. Investors feared that other funds could also be at risk, which led to a "run" on money market funds as investors sought to redeem their shares for cash. In response to this panic, the U.S. government intervened. The Federal Reserve and the Treasury took steps to stabilize the situation, including providing a temporary guarantee of money market fund shares through the Treasury's Temporary Guarantee Program, and the Federal Reserve created the Commercial Paper Funding Facility (CPFF) to ensure liquidity in the financial system. So, while the Reserve Primary Fund's breaking of the buck was a key moment, it was an isolated incident, and most other money market funds did not experience similar problems during the Great Recession. However, the event highlighted vulnerabilities in the money market fund industry, leading to regulatory changes to enhance stability and transparency in these funds after the crisis.

[@crash4dafun]

​@@gogo-bi9qh Was wondering the same about using Treasury Direct. We also use a HYSA at a Community Credit Union but would like to move some of it into T-bill ladders also.

[@daniellejones8460]

I have SPAXX w/ Fidelity and use it to build a short term emergency fund.

[@hykim6412]

Feel like 4.5% 4 week t-bill still better yet without paying fee(expense ratio) and federal tax BUT money market is good in case want to buy stock right away with good opportunity

[@freecycling6687]

Wow, is this a terrific video! I just checked this morning and SWVXX is 4.48%. But one-month new issue FDIC insured CD's are available at 4.5%. For all I know, this has been the situation for as long as I've had SWVXX, but this video taught me that I should take some action here. Fantastic!

[@kito1san]

Looks like swvxx would be better if it's 0.02% different. Less headache to deal with when that short term CDs expires and also swvxx is more liquid as you can also get out within the next business day.

[@pensacola321]

😂😂😂😂

[@freecycling6687]

@@kito1san Good points. Schwab now has an "auto rollover" feature that automatically repurchases CDs when they mature. I should've mentioned that because you're right, without that, I wouldn't bother. But they recently introduced it, so that's what makes this possible. And you're right about the ease of getting out, so I'll only use this for "cash" that I know is staying cash longer-term.

[@SpaceClick]

@@freecycling6687 Is the rollover without a gap (new auction purchase is made on same day as the old one matures)? If so, that's good to know, Fidelity has had that for a while now...

[@pamelakrueger7353]

So glad I found your channel. I've learned so much! Thank you!

[@networkteacher1]

I use SWVXX as an intermediate place to park cash that may be invested, or conversely, used for unexpected expenses. Given the low return after inflation and taxes, I don't consider it an investment as much as a cash management tool.

[@Kiliak1964]

How safe is the ETF TBIL as a place to park cash in between investments? TBIL basically buys/holds 3 month treasuries. What are the disadvantages to using TBIL in lieu of a money market account? As a practical matter, TBIL is more convenient than a money market because transactions occur immediately versus having to wait until the next day.

[@simplenothing]

I use SGOV for cash balances. I would expect they are as safe as Treasuries themselves.

[@Macbob-j6f]

Money market funds are lowering their interest rates as the Feds cut their interest rates. Every few days mine is paying less and less. Sill, a good place to park cash until ready to invest in something else. I like preferred stocks as they pay more than money markets, more stable than common stocks, and don’t cut their dividends. Just be sure to invest in stable companies and look for “cumulative “ preferred stocks.

[@heleb87]

I just park my money in a new Fidelity brokerage account. Thanks for the info.

[@stoobpendous]

I'm doing 3 and 6 month cds and swing trading a small portion of my cash.

[@Dave-cf4xq]

I put my cash in TBIL. Very low fees and slightly higher yield than MMFs.

[@DavidLitman-ph9lu]

Yes, similar to SGOV, which I have.

[@Dave-cf4xq]

​@@DavidLitman-ph9luLooks even better with the lower fees. Think I'll switch.

[@1879gym]

I enjoy your channel, your knowledge base ( Im always learning ) and delivery motivates me to always watch all you new clips…

[@cceerr11]

I have 7.75% local and state taxes and prefer FDLXX (99% state excluded) over SPAXX (

[@Jason-mh4nf]

Thanks for yet another good video. I personally park the cash in FLDXX as it’s exempted from NY state taxes. It’s a manual process, as Fidelity doesn’t offer it as one of the default options.

[@SpaceClick]

It's a manual process to buy it, but selling it happens automatically when you need cash for something, like transfers or buying a security, so no need to sell it first.

[@chichi2472001]

I'm so glad I found you. You have a wealth of knowledge. Thank you.

[@daveg6530]

Excellent presentation and explanation of money market funds and their intricacies. Thank you!

[@stevekeyes9402]

My local bank pays 4.50 APY on its Money Market account. Minimum balance is 50.00

[@medavide1449]

What is the bank?

[@mr.george7687]

Excellent explanation of MM funds for Dummies like me !

[@MarionBlair]

Thanks for addressing this. Vanguard's VMFXX is misleading with its name "VANGUARD FEDERAL MONEY MARKET FUND". I asked them why "Federal" in the title. The rep. couldn't answer that. SPIC, federally mandated but not FDIC.

[@jeanraymond9114]

In Canada ISAs are much better than money market funds . The returns are clearer , no fees in F series , and 100K per issuer is guaranteed by government insurance .

[@johnpuccetti6019]

We just bought $65K in Schwab swvxx.

[@richardhay645]

Have had a SPAXX for a while and plan to connect with SPAXX

[@RobertLupo]

With BND's one year return of 2.75% and Spaxx paying around 4.5% I just don't "get" investing in bonds.

[@morganzoeclanthem2847]

Oh my heavens thanks for the explication of the holding company!! I called about this and they couldn't answer (was a Charles Swab)

[@SagewomanSmiling]

Cash is in FDLXX (Fidelity Treasury Only Monkey Market Fund). It’s ~90% state tax exempt which is beneficial for those of us that live in high tax states (CA, NY, or CT). SPAXX hasn’t met the minimum investment in U.S government securities required to exempt the distribution from tax in California, New York, or Connecticut. Con? Fidelity doesn’t offer it as a core position so you must manually invest.

[@gogo-bi9qh]

I was considering that, but also thinking just getting short term t-bills with auto-roll for better rate.

[@SagewomanSmiling]

@ I keep short term t-bills as well. I keep a small amount in FDLXX for liquidity/emergency fund.

[@DiamondNestEgg]

Thanks for sharing!

[@sandrahoward5512]

Great video! I have my money in SWVXX and am able to simultaneously sell cash secured puts. Double dipping is wonderful!

[@sandrahoward5512]

@ I have cash in SWVXX and Schwab allows me to use that same cash to sell cash secured puts. I’ve been doing it all year.

[@bobmcconahy2058]

I use this strategy as well. The double dipping gets the monthly yield to about 1% per month using around a 20% delta on the puts at 0 DTE on a major index. If I get assigned, I’ll use the money market fund to cover the short position, then wheel the position until the call gets assigned. When the cash from the call is settled, it’s back to swvxx to start again. Theoretically, you could have a capital loss but using an index like spy or qqq, over the long term the index will rise.

[@sandrahoward5512]

@@bobmcconahy2058 , it’s wonderful, but I miss those 5% SWVXX rates.

[@ItsWaterCooled]

Why not just swap cash in and out of a treasury ETF as needed? They trade just like a stock and pay divs montly (i use BIL and SGOV but there are others). They pay around 5.2%. Thats what I do, then I sell some when I add to stock positions, etc, I try to never let money sit in cash account at brokerage as thats like giving away free money if you arent managing it.

[@TheGarageisFull]

Get your 42 day CMB today .If you can’t wait 42 days,Treasury direct has a 40 day CMB that closes tomorrow.🤷🏻‍♂️

[@philippagliaro6314]

Vanguard life strategy funds are wonderful- Low cost and thousands of securities in 1 investment

[@wade74567]

I had been investing in 6 month t bills but when the rate became less than the mmf, I questioned if I should continue or just use the mmf. I looked at using the shorter term t bills, but figured the time that the money wasn't invested (time between maturity and reinvestment) brought realized returns down enough they really weren't worth it to me (okay, I might come out slightly ahead factoring in state taxes and even that was questionable).

[@SpaceClick]

Fidelity has auto-roll with no gap between maturity and buying the next t-bill for the US Treasury weekly auctions. The only caveat is that it buys the same face value as the old T-bill, so any interest from your maturing T-bill that isn't needed to buy the new one is left in your core account.

[@Nicole-zv7ee]

Jen, please do a video letting us know your thoughts about international bonds.

[@ATHJD07]

Yes please - some Israel, India and Europe govt bonds look interesting, but I can't figure out how to calculate whether they could beat US Agencies rates bearing in mind the possible tax obligations.

[@kito1san]

Swvxx seems to be paying out end of the month now instead in the 15th and 30th like the others. Is this the same in comparison and is this a problem?

[@goldl3147]

Such a wonderful review on money market funds, thank you 🙏

[@makeiteasydiy5424]

Excellent, I've been looking for this detailed information. Thank you

[@SurfCityBill]

Excellent illustration of how these products work.

[@SamMcKinley]

Because of this channel I have these

[@danlayman2194]

Perfect Timing for This Video. Much Appreciated

[@BillGrant-e5s]

Thank you for your great info... regarding "safe" funds for "cash" I'm wondering why you didn't include these two funds SGOV and BIL ... even though they are not money market funds, EVERYONE should know about them ... thanks again... Bill in Connecticut

[@DiamondNestEgg]

We'll add them onto our list - thanks

[@crudesense]

Diamond Nestegg I just transfered via EFT to Fidelity a large sum of money to my brokerage account and was unable to invest in SPAXX online. I had to have a Fidelity rep do it for me. Also I am blocked from any withdrawals until Dec. 11, 2024. Have you ever had this happen to you? Is Fidelity having a "run on the bank"?

[@Gayleski]

This was so helpful! Thank you!

[@GenkiDamaSSJ]

Great video. Learned some things. Are HYSAs safe? Most of them seem to have popped up out of nowhere and have terrible customer service reviews. Even if they are FDIC insured, couldn't a bunch going bust at once have your money tied up for some time?

[@RetrieverTrainingAlone]

SPAX 52 Week Avg Return 5.03% Nuvision 8-month CD APY today is 5.5%

[@robertmccully2792]

Money Market Funds are not insured by the Federal Deposit Insurance Corporation (FDIC),, However Certificates Of Deposit (CDs) are insured by the Federal Deposit Insurance Corporation (FDIC).

[@stephencarmody5425]

Investing in SGOV with 20% of my portfolio

[@nunuvyurbiz123]

I invest in SNSXX at Schwab and FDLXX at Fidelity, while I am subject to high state taxes. Most of it is at Schwab. I wonder if there is some benefit to splitting it evenly between different brokers, but from the 2008 example it sounds like if one MM fund has an issue, then it ripples throughout the MM industry. So there may not be any benefit, at least with respect to the risk of breaking the buck.

[@CD318]

Great job--love your videos.

[@Sam9wilson9]

❤ been riding it out with SPAXX

[@philippagliaro6314]

Even 30 % equities 70 % in bonds - Great for a retired person-Jen inflation is a real risk !

[@Tenn1951]

For my brokerage accounts, I keep most of my spare cash in VMRXX. The only difference with VMFXX is a 1 basis point increase in yield. I use SPAXX at Fidelity, and keep some funds in a Schwab purchase treasury MM. All of these MM funds are just started to adjust down in yield to reflect the last 25 basis point FF rate cut. I expect SPAXX to be around 4.15% when the Fed meets in December and would sink below 4% provided the FED cuts again. A higher yield when rates are declining, which also avoids the MM funds expense ratio, is to ladder 1, 2 and 3 month Treasury Bills purchased at auction with some of the cash. The 3 month was auctioned today at a 4.532% IR.

[@arcstrikeful]

T- bills are more attractive for residents of states with (higher) income taxes

[@Tenn1951]

@@arcstrikeful Dividends paid by a MM fund that owns only individual U.S. treasuries will be exempt from state taxes. A state may tax dividends paid by a treasury MM fund that are derived from repurchase agreements involving treasuries. I had a family member living in a state that would tax all of the income paid by a treasury MM fund when a threshold was exceeded, which, as I recall, was more than 50% of income derived from repurchase agreements. The T Bills purchased at auction, using a broker that does not charge a commission, does avoid the MM expense ratio. I have bought commission free treasuries at auction and in the secondary market in my Fidelity, Schwab and Vanguard accounts.

[@robgerety]

Very helpful. I am going to make a change for my "cash" held in a money market fund inside my IRA.

[@DiamondNestEgg]

Glad it was helpful!

[@Leslie_Carol]

What are you going to change? I have quite a bit in SPAXX and I'm now wondering if I should get it out of there ...

[@robgerety]

@@Leslie_Carol I am going to use SNVXX for the time being to hold cash for future investment opportunities as they arise.

[@deepaksubramony5438]

VUSXX dividend is 80% state income tax exempt, while cash interest is 0% state income tax exempt.

[@disch972]

Very good video Jennifer!🙂

[@TheLethargicAge]

What about FDLXX? It only invests in T-bills and avoids the repo market. Wouldn’t it be the safest choice?

[@kw7292]

FRSXX is what I have been using

[@ericwuichner8168]

Another stellar video....... I'm learning so much...... THANKS!

[@Tenn1951]

Another issue is that states with income taxes will tax dividends paid by treasury money market funds to the extent the income is sourced from repurchase agreements involving treasury securities. When I last looked, SNOXX does generate some income using repurchase agreements whereas SNSXX owns only individual treasuries. The issue is relevant only when owned in a taxable account and the investor lives in a state that taxes income derived from repurchase agreements. (see Supreme Court decision in Nebraska v. Lowenstein)

[@gulfstrmcaptbob4124]

is the treasury money market at Vanguard just as safe as buying a treasury bill directly

[@RK-ng9pd]

I would love to know your brilliant thoughts on the 2-5mil FDIC Wealthfront, vanguard cash management accounts.. as well as the Marcus, moomoo, Robinhood gold ones

[@David_Arteman]

Great video. Thanks for sharing and explaining.

[@donleelee8782]

Awesome Education. Thank you. 💯

[@jerryb5995]

I got my 2025 Roth contribution sitting in VMFXX right now

[@ronjr831]

Thanks. Very informative video about money market funds.

[@victoriaschwarz6972]

Thank you! I learned a lot.

[@CEMunn]

I also have FDRXX at Fidelity. What is the difference?

[@commonsense6967]

No state tax in FL😊

[@wadeemmadeem]

Please also mentioned the expenses. They varied.

[@Tecno22]

I use FDRXX (little better yield than SPAXX) with Fidelity and VMRXX (little better yield than VMFXX) in my brokerage account..

[@SpaceClick]

If it is a taxable account and you have a state income tax, FDLXX at Fidelity may have a higher after-tax yield since it is mostly state tax free. I assume there are also state tax-free funds at Vanguard.

[@trexstout626]

What do you think of the Fidelity FZCXX fund vs the SPAXX fund? Can you compare the two?

[@barrells99]

Hi Jen. I really enjoy your videos. Fidelity has a very interesting MM fund , FDLXX. Could you comment on the tax implications for those of us who reside in high tax states like NY? 😢

[@SpaceClick]

The implication is that FDLXX is 100% (or close to it) state tax free, so it's after-tax yield will probably beat out any other MM fund that is state taxable even if that fund has a higher pre-tax yield.

[@lloyd1z]

Do you have any comments on investing in BIL the SPDR® Bloomberg 1-3 Month T-Bill ETF to hold your "cash" vs the MMF? Thanks so much for your insights.

[@jimk7964]

Presently using MM funds but will likely begin dollar cost averaging into SP500 index after it declines to 4125

[@jimmcclure7727]

Good luck with that. IMHO, it'll NEVER get there.

[@SpaceClick]

@@jimmcclure7727 You underestimate the incoming administration! 🙂

[@987654321act]

Me too!

[@tinzincz2332]

What happens if the custodian bank for a money market fund fails?

[@morganzoeclanthem2847]

Thanks what holding are in SNOXX are they not like SPAXX?

[@sirjaymill]

Ok, clicked on it for the wrong reason, misread the title. But, now even more confused. If I have a money market account at a credit union, is that just a marketing name? Or is it similar to a money market fund account with swab and is the word fund and account similar or totally different.

[@SpaceClick]

Money Market Accounts and Money Market Funds are a bit different. One is more like a regular bank account and the other is more like an investment. One difference is that MMAs are insured by the FDIC/NCUA, and MMFs are not. MMAs are considered lower risk than MMFs (although both are considered low risk). Generally MMFs pay a higher interest rate than MMAs. I encourage you to search for the difference using Google, there are many sites out there that explain it better than I.

[@edwardsherman6309]

Another excellent video!

[@YIWOTY]

Fantastic video!

[@jimdigio9765]

T bills...exempt from state and local tax. Mmf are not. 3 to 4 months out, safe!!!!

[@bobcurran4236]

Great video, i own BIL, is that exempt from my nj state tax, ty-b

[@CEMunn]

Is SPAXX federally taxed?

[@someparts]

Excellent work

[@philippagliaro6314]

Even if they even invested 10 % in Us Stocks- Social Security could be saved with out cuts to benefits- People need to wake up !

[@SpaceClick]

Or loose a significant amount if the market crashes.

[@VTI777]

GR8 info's... thx!

[@mike-gq1gt]

how safe is newtek? the reviews doesn’t seem to be very good. any information or anyone have use it?