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For money markets, it's typically vanguard. Other brokers that are not bad for sweep include IBKR, Fidelity, Schwab, etc. But vanguard will always have higher

by dmoy 2y ago

For money markets, it's typically vanguard. Other brokers that are not bad for sweep include IBKR, Fidelity, Schwab, etc. But vanguard will always have higher interest on cash. Marcus is FDIC insured savings though, which has slightly different implications. There's websites that compare current highest savings rates (nerdwallet, bankrate, whatever). Going in the other direction, there are things like SGOV or Treasury-only money markets, if you live in a state that has higher income tax. Since the treasuries are exempt from state income tax. Going even farther than that direction, there's muni bonds, funds, or money markets. At which point you're probably back to Vanguard for the best rates. (But again, not the same exact characteristics as a savings account)

ryandrake 2y ago
You can also directly buy short term US treasury bills, which are paying roughly 5.25%, are auctioned weekly, have an extremely liquid secondary market, no fees, and essentially risk-free (backed by the US government).
loeg 2y ago
> Going even farther than that direction, there's muni bonds, funds, or money markets. At which point you're probably back to Vanguard for the best rates. (But again, not the same exact characteristics as a savings account) Yeah, very different product. Muni bonds are riskier than treasuries and much longer term than money market funds / treasury bills. E.g., VWSTX ("ultra short term muni") has an average maturity of over a year and 45% of portfolio is worse than AA. Vs VMFXX (money market) with an average maturity of 11 days and the entire portfolio is backed by the US government, which is essentially as good as it gets.
- junar 2y ago
  For the sake of completeness, it important to recognize that muni money market funds exist, such as VMSXX, VCTXX, and VYFXX. My impression is that the current yields of these funds are not high enough to justify for most taxpayers, compared to other funds. But since everyone is different, it can be helpful to sit down and do the math for your individual situation. https://thefinancebuff.com/best-vanguard-money-market-fund-your-tax-rates.html https://thefinancebuff.com/best-vanguard-money-market-fund-y...
junar 2y ago
Agree in general, with minor caveats: * Schwab's roboadvisor product has decent rates for cash sweep, but their self-directed brokerage has the rather weak rate of 0.45%. * The first $10k at IBKR earns 0%. Also, IBKR Lite also has a weaker rate (3.83%) compared to IBKR Pro (4.83%). Of course, with a bit of extra effort, you can buy SGOV etc. in your brokerage for better rates. [1] https://www.schwab.com/cash-investments https://www.schwab.com/cash-investments [2] https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php https://www.interactivebrokers.com/en/accounts/fees/pricing-...

by dmoy 2y ago

ryandrake 2y ago

You can also directly buy short term US treasury bills, which are paying roughly 5.25%, are auctioned weekly, have an extremely liquid secondary market, no fees, and essentially risk-free (backed by the US government).

loeg 2y ago

> Going even farther than that direction, there's muni bonds, funds, or money markets. At which point you're probably back to Vanguard for the best rates. (But again, not the same exact characteristics as a savings account) Yeah, very different product. Muni bonds are riskier than treasuries and much longer term than money market funds / treasury bills. E.g., VWSTX ("ultra short term muni") has an average maturity of over a year and 45% of portfolio is worse than AA. Vs VMFXX (money market) with an average maturity of 11 days and the entire portfolio is backed by the US government, which is essentially as good as it gets.

junar 2y ago
For the sake of completeness, it important to recognize that muni money market funds exist, such as VMSXX, VCTXX, and VYFXX. My impression is that the current yields of these funds are not high enough to justify for most taxpayers, compared to other funds. But since everyone is different, it can be helpful to sit down and do the math for your individual situation. https://thefinancebuff.com/best-vanguard-money-market-fund-your-tax-rates.html https://thefinancebuff.com/best-vanguard-money-market-fund-y...

junar 2y ago

Agree in general, with minor caveats: * Schwab's roboadvisor product has decent rates for cash sweep, but their self-directed brokerage has the rather weak rate of 0.45%. * The first $10k at IBKR earns 0%. Also, IBKR Lite also has a weaker rate (3.83%) compared to IBKR Pro (4.83%). Of course, with a bit of extra effort, you can buy SGOV etc. in your brokerage for better rates. [1] https://www.schwab.com/cash-investments https://www.schwab.com/cash-investments [2] https://www.interactivebrokers.com/en/accounts/fees/pricing-interest-rates.php https://www.interactivebrokers.com/en/accounts/fees/pricing-...