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What is a Vanguard Cash Management Account?
Vanguard Cash Management Account is a hub that aids in benefiting:
- Withdrawal of funds
- Settling transactions
- Receiving investment income
- Investing (you need funds available in Vanguard CMA to make investments).
Vanguard Cash Plus Account
The Cash Plus Account is an alternative to a traditional savings account.
- The Vanguard Cash Plus Account features a bank sweep insured by the FDIC for up to $1.25 million for single accounts plus $2.5 million for joint accounts and provides a competitive yield (on short-term savings).
- You can leverage the bank sweep as a lesser-risk platform to stash cash and only use it for emergencies, immediate living expenses, and other goals.
- You’ll also have the option to buy five Vanguard money market funds (each worth a minimum of $3000) in the cash plus account.
- Leveraged to set up direct deposit with your employer, pay bills, or connect to international payment options such as Venmo and PayPal.
Vanguard Money Market Funds
Vanguard money market funds invest in short-term, high-quality debt securities, cash, and cash equivalents. They also:
- Permit you to access the money without penalty (in most cases).
- Idle for the money you’ll require within a few months or one year, uncertain expenses, or goals without duration.
- Offers tax-exempt or taxable interest based on your selection of money market funds.
- Focus on maintaining a fixed share price.
- Requires $3,000 as a minimum investment amount.
Brokered CDs
Credit unions and banks issue CDs to investment companies at a high interest rate in return for expecting a lump-sum deposit. Moreover, if you’re seeking to invest in a brokered CD, learn that they:
- FDIC-insured for up to $250,000/account holder for each ownership category at each institution
- Idle for the money you’ll require for three months to three years or short-term goals with pre-defined goal dates.
- Requires $1,000 as a minimum investment
- Provide maturities that differ from a few weeks to numerous years.
Fee: $1 transaction fee/$1,000 CD ($250 maximum)
As Vanguard offers a wide range of FDIC-insured brokered CDs, it also comes up with distinct maturity rates and terms. Pick yours from the table below:
| Maturity Term | Yield (%) |
| One to three months | 5.45% |
| Four to six months | 5.45% |
| Seven to nine months | 5.40% |
| Ten to twelve months | 5.45% |
| One year | 5.40% |
| Two years | 5.40% |
| Three years | 5.30% |
| Four years | 5.35% |
| Five years | 5.35% |
| Seven years | 5.25% |
| Ten+ years | 5.10% |
Vanguard Cash Deposit
Vanguard Cash Deposit is an option for a settlement fund for a Vanguard brokerage account that:
- Provides FDIC insurance for up to $1.25 million for single accounts & $2.5 million for joint accounts.
- It might be liquid as a money depository between investments instead of keeping cash on hold for the long term.
- It might be idle for accessible trading money.
- Offers you a different option for your settlement fund than Vanguard Federal Money Market Fund.
Benefits of Money Market funds
1. Less Volatility
Vanguard money market funds maintain a fixed net asset value (NAV) of $1 and are less risky than other types of investments, such as bonds and stocks.
2. Easy Access
It allows you to transfer money quickly between your Vanguard and bank accounts.
3. Get Earnings on Your Savings
No matter what your goals are, you must be able to earn interest on your savings and reduce market risk.
Who Should Consider Money Market Funds?
If you’re saving for short-term financial goals or creating emergency funds, you must consider market funds for such investing.
Comparison Table of Different Vanguard’s Money Market Funds
| Fund Name | Strategy | Initial Investment | Average 7-day SEC yield | Expense Ratio |
| Vanguard Cash Reserves Federal Money Market Fund Admiral Shares (VMRXX) | Short-term U.S. government securities | $3,000 | 5.28% | 0.10% |
| Vanguard Federal Money Market Fund (VMFXX) | Short-term U.S. government securities | $3,000 | 5.27% | 0.11% |
| Vanguard Treasury Money Market Fund (VUSXX) | Short-term U.S. treasuries | $3,000 | 5.28% | 0.09% |
| Vanguard Municipal Money Market Fund (VMSXX) | Short-term tax-exempt securities | $3,000 | 3.08% | 0.15% |
| Vanguard California Municipal Money Market Fund (VCTXX) | Short-term California municipal securities | $3,000 | 2.18% | 0.16% |
| Vanguard New York Municipal Money Market Fund (VYFXX) | Short-term New York municipal securities | $3,000 | 3.01% | 0.16% |
Pros and Cons of Vanguard Cash Management Account
Pros
- No minimum balance required: You didn’t need to maintain a balance to activate and keep the account open.
- An easy way to avoid a fee: Customers pay an annual fee of $25, which can be easily waived if they sign up for e-statements.
- High interest rate: With an APY of 4.60%, the Vanguard Cash Management Account has a comparatively high rate compared to other high-yield savings accounts.
- Third-party FDIC Insurance: Vanguard Cash Management Account works with partner banks to sweep customer funds into savings accounts that the FDIC highly insures. Customers can enjoy up to $1.25 million insurance on a single account or up to $2.5 million for a joint account.
- High withdrawal limit: Customers can get the privilege to withdraw up to $100,000 in one business day.
- Unlimited transactions: No transaction limit can be made with the account.
Cons
- There is no check writing and no other way to deposit or withdraw cash: With the Vanguard Cash Management Account, customers can only move their money via online transfers (be it domestic or international) using the ABA routing number and account number.
- No ATM access: There is no facility for using a debit card or ATM to withdraw or transfer money from one savings account to another.
- Overdraft protection: Vanguard does not provide overdraft protection to its customers. You need to have sufficient money in your account to pay your monthly bills.
Not Sure Which Vanguard Account is Suitable for You?
The Vanguard Cash Plus Account is a suitable option for you if:
- You are comfortable operating without the privilege of check-writing
- You want to have your cash management and investment in one place.
- You’re good to go with transferring money to another account in case you need cash, but you’re waiting one business day for the transfer.
Here are some other Vanguard accounts that best suit your needs.
1. IRAs: Roth and Traditional IRAs provide a distinct tax break for each.
2. Individual and joint brokerage accounts: These accounts are flexible enough to permit withdrawals as required without concern about withdrawal penalties.
3. 529 savings: The educational plan allows you to invest in a brighter future for you and your child, grandchild, or someone else.
4. Trust accounts A legal arrangement in which the grantor permits a trustee and third party to look at or manage assets on behalf of the trust’s beneficiaries.
5. UTMA/UGMA: A Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) account is owned by a minor but controlled by an individual adult until the child grows up. Later on, they can leverage the money by their means.
6. Organization accounts: These accounts are legally held by established companies that offer investment and trading features designed to help companies work towards fulfilling financial goals.
7. Small business retirement plans: Vanguard Cash Management Account offers SEP IRAs, Individual 401(k), and SIMPLE IRAs.
Vanguard Cash Management Account Interest Rate
If you want to learn about the Vanguard Cash Management Account Interest Rate, let’s use a table to help you understand it better.
| Account | APY (%) | Minimum Deposit | Monthly Fees |
| Vanguard Cash Plus Account | 4.60% | $0 | None |
Final Take
This blog on the Vanguard Cash Management Account encapsulates several benefits, such as FDIC insurance, low risk, high returns, competitive yield, and more, along with Vanguard’s five money market funds.
Choosing a Vanguard Cash Management Account is the best decision because of its benefits and features. So, if you’re looking for the best cash management account, you can try the Vanguard Cash Plus Account.
Don’t wait! Open your savings account with Vanguard today to enjoy the services.
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Happy Investing!
