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Money market funds would likely be appropriate (I believe Vanguard actually does this for you, rather than keeping cash lying around).

• icedchai 7y ago
  They do. Though note that VMMXX (Vanguard Prime Money Market) pays a bit more than VMFXX (Vanguard Federal Money Market.) VMFXX / Federal is their default settlement fund, so if you have large cash holdings it is still advantageous to put it into alternate funds.
  • jogjayr 7y ago
    Unrelated question: VMMXX has a higher yield (2.35% currently) compared to VMFXX (2.29%) but also has a higher expense ratio (0.16% vs 0.11%). Do these cancel each other out?
    • icedchai 7y ago
      No, the yields are net of expenses so VMMXX is still slightly higher performing.