If you opt in for the vanguard bank sweep, is that similar to just putting money in a savings account earning about 4.6% interest? With the bank sweep, there is no way you can lose money (have a negative yeild) right? worst case scenario the interest rate goes down, right? Also, in the event the banks fail, you are insured for up to 1.25 miliion. So with all that, the only way you can lose money in the bank sweep program is if you have over 1.25 million in there, AND the banks fail.
Compare this to a MMF and you are SIPC insured. You can lose money in a MMF if the fund breaks the buck (extremely unlikely) OR if the brokerage fails, in which case you are SIPC insured up to 500k
If my understanding is correct:
Bank sweep:
Risk = Banks failing, in which case you are covered up to 1.25M (FDIC)
Reward = ~4.6% APY (subject to change)
MMF:
RIsk = The fund breaks the buck (very very unlikely) OR the brokerage fails in which case you are insured up to 500k (SIPC)
Reward = >5% interest (usually?)
Is my understanding of the sweep option vs investing in a MMF correct? Also if you have money in your vanguard settlement fund, thats just in a MMF, right?
Any info/help is greatly appreciated, thank you!
Submitted July 08, 2024 at 08:56PM by Conscious-Algae2022 https://ift.tt/QfCgJPY
