The Savings Game: Making the most on your money-market funds
f you want to invest in a money-market fund, I strongly recommend that you consider Vanguard.
First, I want you to know that I am not employed by Vanguard, and if you do invest in Vanguard’s money-market fund, I will receive no compensation.
As you know, the stock market is volatile, and many investors are now investing in conservative vehicles such as money-market funds because they want to minimize capital risk and remain liquid, while also earning a reasonable rate of return. Currently you can obtain a net return of over 4% if you select the right financial firm offering money-market funds.
As of the day I wrote this column (May 5), I have already made a significant investment in the Vanguard Federal Money Market Fund (VMFXX), and I don’t lose any sleep over that investment. The seven-day SEC yield is 4.24%, taking into consideration a yearly expense ratio of 0.11%. Although the rate can change daily, that return has been consistent over the last month.
In a recent article in the Wall Street Journal, Jason Zweig, a well-respected journalist, indicated in the headline of his article, ”Your Money-Market Fund is Ripping You Off.” In the article, he pointed out, with examples, how well-respected financial firms are using many techniques to avoid paying their customers a competitive return.