Holding Fund for Auto-Investments

[nouseforausername]

Is there an optimal account type from which to have auto-investments withdrawn?

Vanguard requires automated investments to be drawn from outside accounts, which isn't ideal for reaping the full benefits of interest / ROI on the holding fund (for lack of a better term). I've been using a retail bank's money market account to hold enough funds for a few months of auto investments, which gets replenished from my salary direct deposits.

This has to have been covered elsewhere, but I can't find it. If so, might someone please link to the discussion / let me know if there's a more optimal system?

[ChickenStash]

I just have Vanguard pull straight from the checking account where my paycheck is direct deposited and spread across my fund selections. The schedule is timed to pull the day after payday so it doesn't sit around long enough to matter. I also have a direct deposit setup to go to Vanguard and a scheduled task to sweep that into my fund selections the day after - probably going to get rid of this and add it to the withdrawal task, instead.

The money will sit and relax in their money market fund for a business day or two depending on when everything runs but the interest earned in such a short time is negligible.

[nouseforausername]

@ChickenStash  thanks for that -- makes sense, and the best method seems to be to avoid holding any funds earmarked for auto investment too long in the first place. I guess I've been treating my money market (auto investing) account as a back-up to my emergency fund, and holding a bit too much in it.

[cool7hand]

For us, we find it more mentally healthy not to try to split hairs that are already so thin.