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gerad

VUSXX - 5.29%

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And, crucially, last year 80% of VUSXX's interest was state tax exempt.

Unless you specifically need the features of a savings account (eg ACH), money market funds are the way to go.

TTTXX is 100% exempt from state and local income taxes, as far as I know.

I only recently discovered this.

Are there any practical advantages to high yield savings account, then? Or do they only exist for people who don't understand how to buy money market funds?

Technically not FDIC insured.

I personally like CDs since the rate is locked and everyday someone is calling for a rate cut.

Agreed. I've been building CD ladders for the past year or so with shorter term CDs which are all paying higher interest than the money market accounts. CDs also have FDIC insurance. Many CD brokers allow you to buy and sell CDs on a market, so they have some liquidity now.

The simplicity of CDs draws me to them. Sure I can eke out another 0.5%, but if it takes me three hours a year to figure out what the hell is happening, and it would be hard or risky to unwind if I'm incapacitated and my survivors need to pick it up, it's not worth my time.

If the spread was 5%, the calculation would be different, of course.

Money market funds are not protected by FDIC. Savings accounts or CDs from banks are protected by FDIC. Your choice is likely to be made around risk. Granted, I don't think money market funds actually losing value or going to 0 is very common, but with FDIC insurance you have true 0 risk for <$250k per bank.

Well, some people pay <4% investment income tax at the state/local level too.

ETF?

Money market fund.

Treasury Money Market Fund seeks to provide current income while maintaining liquidity and a stable share price of $1 per share.

Tagging into the sibling that said it's a money market, Vanguard ends money market funds in "XX" as a nice rule of thumb

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