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I did some cursory reading on money market funds (MMFs) and I don't quite get the advantage if rates are roughly the same? For instance, if there is a high-yie
by soupfordummies 3y ago
I did some cursory reading on money market funds (MMFs) and I don't quite get the advantage if rates are roughly the same?
For instance, if there is a high-yield savings account (HYSA) option that gives 5.3% interest and a MMF that gives 5.4% (with a 0.1% expense ratio), would I not receive the same amount of interest in practice?
Not trying to disagree with you or anything, just making sure I understand the vehicle.
- naniwaduni 3y agoUsually, taxation differences. Also, MMF yields are generally quoted net of expense ratios already, you don't subtract them out a second time.
- latchkey 3y ago5.3% https://www.viobank.com/cornerstone-money-market-savings https://www.viobank.com/cornerstone-money-market-savings
- balderdash 3y agoFrom a practical standpoint they’re the same - it’s the at the margin (MMF is likely to “reset” more quickly than a high yield savings account, you’re also risking it “breaking the buck” in times of extreme stress, + a lot of the income in a MMF you won’t pay state tax on, on the other hand an HYSA is FDIC insured)