The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Justin on November 21, 2014, 08:18:22 PM
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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:
- Vanguard Prime Money Mark Fund (https://personal.vanguard.com/us/funds/snapshot?FundId=0030&FundIntExt=INT) (VMMXX)
- Vanguard Tax-exempt Money Market Fund (https://personal.vanguard.com/us/funds/snapshot?FundId=0045&FundIntExt=INT) (VMSXX)
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 I'm in my mid-twenties with a solid emergency fund, but I would (maybe) like these earnings to be easily withdrawn if needed?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!
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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.
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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.