Vanguard Money Market Account

Although often referred to as a money market account, Vanguard actually doesn’t have money market accounts but rather money market funds. There are some vital differences between money market funds and money market accounts which will be described below. In any case, Vanguard is a trusted name in the investment industry and a Vanguard money market account (fund) is perhaps one of the safest on the market simply because of their track record of successful investments.

Money Market Funds
Money market funds are basically mutual funds that are open ended funds that heavily invest in debt securities that are short term investments. They are regulated by the federal government by the Investment Company Act of 1940 and the average maturity date in money market funds is approximately two to four weeks. They are considered to be stable investments and can easily be converted to cash. While money market funds are usually thought of as being safe investments, this is not written in stone. One of the reasons for this is that money market funds are not guaranteed under FDIC insurance and mutual funds management companies also manage money market funds.

Money Market Accounts
Money market accounts, on the other hand, are generally offered through banks and credit unions. They work in similar fashion to certain types of savings accounts except that they usually offer higher yields. Some money market accounts afford the investor the advantage of writing a certain number of checks each month against the account and money market accounts with banks and credit unions are FDIC insured up to $250,000. The main difference between a money market fund and a money market account is perhaps the fact that your money is safe (up to the limit) when invested in a money market account while a money market fund is susceptible to losses if the underlying securities don’t do well. In other words, with an account your principal is safe but in a fund it may experience loss.

Vanguard Money Market Funds
Having said all that, it’s time to take a look at Vanguard Money Market Funds. There are actually several types of funds available through Vanguard. For the past decade, every one of their money market accounts outperformed other funds by competitors with the same types of funds. Vanguard designs their funds for conservative investors who want to count on their savings but are looking for a moderate income as well. Similar to money market accounts in banks and in credit unions, the investor can write checks and also electronically make deposits to or from his/her bank account. In other words, while money market funds are often seen as more volatile than money market accounts, Vanguard has a solid reputation for protecting their investors’ money.

Today’s investor has more opportunities than ever before simply because of the explosion of new investment products that have hit the market. While there are a greater number of ways to invest money, many people feel more secure in conservative investment products that aren’t as susceptible to market instability. Vanguard money market funds have proven to be among the safest available to investors with a good annual yield, better than many of their peers. Some of their funds are subject to federal and state taxes while others are tax exempt. In fact, some of the Vanguard money market funds are also specifically set up for investors in specific states such as New York, California, Pennsylvania, New Jersey and Ohio so that the fund is not taxed either on the state of the federal level. Further information on a Vanguard Money Market Account can be found on their website.

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