Author Topic: First time using Vanguard; settlement fund options?  (Read 2305 times)

Justin

  • 5 O'Clock Shadow
  • *
  • Posts: 1
First time using Vanguard; settlement fund options?
« on: November 21, 2014, 08:18:22 PM »
I'm throwing some cash in to VTSAX, but I'm not quite sure which option to pick when asked to choose a settlement fund type:
I've been sitting on this money for a long time for no real reason. I'm debt-free and on stable ground financially. I understand these accounts are used to hold earnings, and I'm planning to re-invest all for now, but is there an advantage to one or the other? I'm in my mid-twenties with a solid emergency fund, but I would (maybe) like these earnings to be easily withdrawn if needed? Hopefully that didn't sound too ignorant, ha.

I'd be grateful for your thoughts!


FabricStache

  • 5 O'Clock Shadow
  • *
  • Posts: 34
  • Location: Sunny Southern California
Re: First time using Vanguard; settlement fund options?
« Reply #1 on: January 28, 2015, 09:52:48 PM »
Hi Justin,
I'm a newbie too and was looking into the same thing.  I did find this post asking a different questions about the same funds.

http://forum.mrmoneymustache.com/ask-a-mustachian/vmmxx-vs-vmsxx-and-expense-ratio-vs-return/msg237300/#msg237300

They have different expense ratio.  One is tax-exempt.  Not sure what that means in your situation.  But if you're going to move the money out right away I wonder if it makes any difference.  Maybe me posting this will help bring it up again so someone else more knowledge might chime in.

MDM

  • Walrus Stache
  • *******
  • Posts: 9720
Re: First time using Vanguard; settlement fund options?
« Reply #2 on: January 29, 2015, 12:05:32 AM »
Look closely at the two links in the OP.

With today's interest rates, you can get 0.01% in one or 0.01% in the other. 

For those in the "picture worth 1000 words" camp, see the "Hypothetical growth of $10,000" charts for both over the past 4-5 years.

Until the interest rate environment changes drastically...it doesn't matter.  Ours happens to be VMMXX, with a current balance of $0.05.