Anyone try a Vanguard Cash Plus account?

[IronWing]

I've been reading up on it and I'm trying to figure out if the bank sweep is something the account holder has to actively manage or if it's all behind the scenes and the account presents as a regular savings account to the holder. The current interest rate is a bit higher than I'm getting from my current savings account so I might give it a go.

Vanguard Cash Plus Account | Vanguard

Vanguard Cash Plus Account is a cash management account designed to offer a competitive yield on your short-term savings.

investor.vanguard.com

 

[Brainonska511]

I thought this is just something that replaces the settlement fund. So instead of your settlement fund being the federal money market, it would become this FDIC insured account. I never bothered moving to that account, because the yields aren't as good as the federal money market, and if something goes wrong with that fund, probably have bigger things to worry about.

Edit: though, at 4.6%, maybe I'll reconsider. Though, I think the yield is still lower than the Fed MM.

 

[Shmee]

Sounds like a pretty good deal, from first glance. IDK anything about it really though, and if there are any catches. Other options to consider with similar return rates are US treasury I-bonds, and also holding USDC on coinbase.

The advantage to the I-bonds are no state taxes on them, and you only pay federal tax upon their redemption. They are longer term though, minimum one year, and with a small penalty to cashout before 5 years. I should mention that the rates vary with inflation.

With USDC on Coinbase, you currently get 5.15% APY. You can trade with it as well on the exchange, but you don't have to. Note that this is only for USDC, not USDT or the actual USD. Though they are tradable/interchangeable at a one to one ratio.

 

[Brainonska511]

Sounds like a pretty good deal, from first glance. IDK anything about it really though, and if there are any catches. Other options to consider with similar return rates are US treasury I-bonds, and also holding USDC on coinbase.

The advantage to the I-bonds are no state taxes on them, and you only pay federal tax upon their redemption. They are longer term though, minimum one year, and with a small penalty to cashout before 5 years. I should mention that the rates vary with inflation.

With USDC on Coinbase, you currently get 5.15% APY. You can trade with it as well on the exchange, but you don't have to. Note that this is only for USDC, not USDT or the actual USD. Though they are tradable/interchangeable at a one to one ratio.

I-Bonds aren't very liquid, and there is a maximum per year purchase. There are various US treasury funds that could be of interest if you want something more liquid than buying bonds. (Or create ladders of T-bills for the short term)

For Vanguard brokerage accounts, the other settlement fund option is VMFXX - their Federal money market fund - which has a 7-day yield of ~5.2% (thus, about 0.6% higher than the cash plus account). Since some of the fund invests in US obligations (not the repurchase agreements), some interest will be state tax free (depending on your state). And this fund is extremely liquid, like a savings account. The only real downside is no FDIC insurance for this fund, but if it broke the buck, we'd all probably have bigger problems. Though, the OP could always open the cash plus account to use as the settlement fund, and then just invest separately in VMFXX.

I wouldn't even consider putting any money I was interested in keeping in anything touching crypto or digital coins.

 

[IronWing]

I-Bonds aren't very liquid, and there is a maximum per year purchase. There are various US treasury funds that could be of interest if you want something more liquid than buying bonds. (Or create ladders of T-bills for the short term)

For Vanguard brokerage accounts, the other settlement fund option is VMFXX - their Federal money market fund - which has a 7-day yield of ~5.2%. Since some of the fund invests in US obligations (not the repurchase agreements), some interest will be state tax free (depending on your state). And this fund is extremely liquid, like a savings account. The only real downside is no FDIC insurance for this fund, but if it broke the buck, we'd all probably have bigger problems.

I wouldn't even consider putting any money I was interested in keeping in anything touching crypto or digital coins.

The Cash Plus account isn't a settlement account. You still need a separate settlement account for trading.

 

[Brainonska511]

The Cash Plus account isn't a settlement account. You still need a separate settlement account for trading.

Apologies, I'm thinking of the Cash Deposit Account.