Would it make sense for me to hold my emergency fund in a Federal Money Market Settlement Fund (Vanguard)? I have been holding this fund in a high-yield savings account, but with interest rates so low, it’s not doing much. Is it safe to hold an emergency fund in a federal money market settlement fund? Can I lose my principal, or are there any risks or drawback I should be aware of?
Thank you for any insight you can provide!
Yes, I think that makes perfect sense. No savings/cash/money market accounts are paying any meaningful interest these days. I personally hold cash in a money market fund exactly like that. No one is gonna get rich by optimizing the tiny interest on their emergency fund. Just keep it somewhere safe and convenient. Those money market funds aren’t technically FDIC insured, but I don’t know of a time in history where they’ve actually lost money. They’re about as safe as safe gets.
Thank you! This is very helpful!