What do you think about Vanguard's new Cash Plus acct? (currently 3.65%)

[FIREin2018]

https://investor.vanguard.com/accounts-plans/vanguard-cash-plus-account

i've been with Vanguard for decades.
just Got an email this week  from them about this acct.

I have a few thousand in cash sitting in their after tax brokerage acct which doesn't pay much interest.
it's there in case the market drops alot and i buy.

What do you think about the Cash Plus acct?

[MustacheAndaHalf]

I prefer Vanguard Federal Money Market Fund.  Idle cash in my brokerage account goes into it.

"Vanguard Cash Plus Account    3.65% annual percentage yield"
"Money market funds     4.26% SEC yield"
https://investor.vanguard.com/investment-products/cash-investments

[2Birds1Stone]

I prefer Vanguard Federal Money Market Fund.  Idle cash in my brokerage account goes into it.

"Vanguard Cash Plus Account    3.65% annual percentage yield"
"Money market funds     4.26% SEC yield"
https://investor.vanguard.com/investment-products/cash-investments

This......I use VUSXX because it's mostly Fed Tax exempt.

[jrhampt]

Is there any downside to using a MM account?  Are there circumstances where you could lose money?

[dividendman]

I've got all my cash in SGOV, 100% state tax exempt short term t-bills, currently yielding about 4.5%.

[dividendman]

I prefer Vanguard Federal Money Market Fund.  Idle cash in my brokerage account goes into it.

"Vanguard Cash Plus Account    3.65% annual percentage yield"
"Money market funds     4.26% SEC yield"
https://investor.vanguard.com/investment-products/cash-investments

This......I use VUSXX because it's mostly Fed Tax exempt.

I think you mean state tax since they're federal bonds.

[Tigerpine]

Is there any downside to using a MM account?  Are there circumstances where you could lose money?

You could lose money if the fund "breaks the buck" and you need cash.  It's quite rare.
https://www.investopedia.com/articles/mutualfund/08/money-market-break-buck.asp

[TyGuy]

Following. I am looking for a better option than my Wealthfront account to hold my emergency fund.

[2Birds1Stone]

I prefer Vanguard Federal Money Market Fund.  Idle cash in my brokerage account goes into it.

"Vanguard Cash Plus Account    3.65% annual percentage yield"
"Money market funds     4.26% SEC yield"
https://investor.vanguard.com/investment-products/cash-investments

This......I use VUSXX because it's mostly Fed Tax exempt.

I think you mean state tax since they're federal bonds.

Right, but the dividends from these funds are also exempt from Fed tax but count towards AGi, or am I missing something?

[dividendman]

I prefer Vanguard Federal Money Market Fund.  Idle cash in my brokerage account goes into it.

"Vanguard Cash Plus Account    3.65% annual percentage yield"
"Money market funds     4.26% SEC yield"
https://investor.vanguard.com/investment-products/cash-investments

This......I use VUSXX because it's mostly Fed Tax exempt.

I think you mean state tax since they're federal bonds.

Right, but the dividends from these funds are also exempt from Fed tax but count towards AGi, or am I missing something?

Yeah that's not correct. While the fund pays "dividends" it's actually interest, so ordinary income, it is fully taxable as ordinary income federally but exempt from state income tax.

[2Birds1Stone]

Thank you for clarifying!