Hello again, Investors!
I wanted to share a story about a recent suggestion from one of our readers, John.
He said: “You’re putting your money in cash in the Schwab SWVXX the problem is you’re paying 0.35% management fee and I believe your interest is 4.95%
So here’s a better one put it in the Vanguard VMFXX first of all you’ll get a return of about 5.03% and your management fee is only0 .11%
I gotta help my buddy Russ, who usually looks up simply safe for me whenever I requested on the show so I gotta help Bro Russ 😀”
Much appreciated John and it sounds like a great idea, right?
Quick Comparison
So, I decided to look into VMFXX, and here’s a quick comparison:
Vanguard VMFXX
Name: Vanguard Federal Money Market Fund (VMFXX)
What it is: A money market fund that invests in U.S. government securities.
Why it’s good: It’s very safe because it invests in government-backed securities.
Current Yield: 5.29%
Expense Ratio: 0.11%
Inception Date: 7/13/1981
Historical Performance: 5Y Total Return ~11.26%
Schwab SWVXX
Name: Schwab Value Advantage Money Fund (SWVXX)
What it is: A money market fund that invests in high-quality, short-term investments.
Why it’s good: It usually offers more yield than government-only funds but still focuses on safety.
Current Yield: 4.76%
Expense Ratio: 0.34%
Inception Date: 4/30/1992
Historical Performance: 5Y Total Return ~11.22%
The Discovery
I went to my Schwab account, all set to follow John’s advice, only to find out that I couldn’t buy VMFXX through Schwab.
VMFXX is a Vanguard product, and you can only buy it through a Vanguard brokerage account.
Since I’m not interested in opening a new brokerage account just to buy this, I’m sticking with SWVXX.
Why You Can’t Buy VMFXX at Schwab
Different Companies: Vanguard and Schwab are separate companies. Each has its own products.
Banking Products: Money market funds are considered banking products. You can only buy Vanguard’s VMFXX through Vanguard, Schwab’s SWVXX through Schwab, and Fidelity’s SPAXX through Fidelity.
Fun Fact: Why the “XX”?
Have you ever wondered why there’s an “XX” at the end of these ticker symbols?
It’s actually a way to distinguish money market funds from other types of investments.
The “XX” signals that it’s a money market fund, while a single “X” at the end of a ticker symbol usually indicates a mutual fund12.
The Takeaway
Money market funds like VMFXX and SWVXX are great for money you don’t want to risk losing.
They aim to keep the price per share at $1.00, making them a stable place to park your cash.
These are not “get rich” vehicles, but they do allow your money to make money without much risk.
However, keep in mind that when interest rates are cut, the yields on these funds will eventually drop as well.
I mentioned in a recent newsletter that I’m using SWVXX as a temporary cash pit stop while I decide what to do with the proceeds from my sale of 157 shares of TD. These funds are perfect for that kind of short-term holding.
Your Turn
What do you think about using money market funds as a safe place for your cash? Have you had any similar experiences or suggestions? Hit reply and let me know your thoughts!
😁THANK YOU to everyone who responded to the last newsletter!!
Check out the portfolios and podcasts, or see what’s cooking on YouTube.
And now, here is this week’s portfolio activity…
Dividends Received This Week ~$76.50
- Lockheed Martin (LMT) | $31.50
- Main Street Capital Special Dividend (MAIN) | $45.00
Dividends Received Year to Date~
$5,320.34
Stocks Sold (AVERAGE)
- 32 Prudential (PRU) | $121.10 (we needed money to get ahead of bills, so this was the first to go!
- 1K Schwab Value Advantage Money Fund (SWVXX) | $1.00
Stocks Bought (AVERAGE)
- 9 Visa (V) | $273.98
- 5 VICI Properties (VICI) | $33.05
- 1 Harrow Inc. (HROW) | $44.25
- 3 Global X MLP & Energy ETF (MLPX) | $53.95
Notable Ex-Dividends This Week + SSD Score
- 9/30 Agree Realty (ADC), 4.01% | 70S
- 9/30 Humana (HUM), 1.11% | 99VS
- 9/30 Rexford Industrial (REXR), 3.31% | 81VS
- 10/1 Air Products & Chemicals (APD), 2.36% | 95VS
- 10/1 Realty Income (O), 5.04% | 80S
- 10/2 Bank of Nova Scotia (BNS), 5.79% | 70S
- 10/2 Comcast (CMCSA), 2.98% | 89VS
- 10/4 Bristol-Myers Squibb (BMY), 4.71% | 70S
🎙️Podcast of the week🎙️
The guys from across the pond (if you’re in North America) shared 4 dividend stocks to capitalize on China’s economic revival. Check it out!!
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🎦If you missed it, 5 Undervalued Dividend Stocks using the new SimplySafeDividends.Com valuation tool !!
Investing Newsletters You Might Like
⭐Ryne Williams writes a free weekly dividend newsletter and creates multiple top-notch YouTube videos every week.
🤑Rick Stambaugh from Orange Mountain Financial brings you ‘Grow Retirement Income.’ He’s a seasoned pro with over 30 years in trading and a passion for guiding folks to a prosperous retirement.
🚨Seeking Alpha Special Offer!!🚨
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Ozzy Osbourne – Mr. Crowley (live)
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That said, have a WONDERFUL week, and I’ll see you in the next one.
