Vanguard is now several months into beta plan to offer head-turning, high FDIC-insured yields and capacity after 2019 scrapping left it flat-footed against Schwab and Fidelity | RIABiz (2024)

FAQs

Does Vanguard offer a high yield savings account? ›

Vanguard's Cash Plus Account offers a 4.7% annual yield on deposited cash. And it comes with $1.25 million in FDIC coverage for individual accounts. That's a compelling FDIC-insured yield compared with traditional high-yield banks. And it's miles ahead of what major banks pay.

The securities that underlie the funds are held by a custodian, not by Vanguard. Vanguard is paid by the funds to provide administration and other services. If Vanguard ever did go bankrupt, the funds would not be affected and would simply hire another firm to provide these services.

Money market funds held in the account are not guaranteed or insured by the FDIC, but are securities eligible for SIPC coverage. To learn more, visit the SIPC's website. Money market funds and other securities held in the Vanguard Brokerage Account are eligible for SIPC coverage.

Rest easy knowing the cash in your Vanguard Cash Plus bank sweep is eligible for FDIC coverage up to $1.25 million for individual accounts and $2.5 million for joint accounts. You can keep all your money in the bank sweep or diversify into 5 available Vanguard money market funds (each with a $3,000 minimum investment).

What are the cons of a high-yield savings account? Variable rates. Interest rates on these accounts can and do fluctuate, which means the APY you started with could potentially drop. Keep your eye on such changes and remember that the money is yours; at any time, you can move it to a bank that offers a higher rate.

Although each financial situation is unique, it doesn't typically make sense for you to keep all of your money in a high-yield savings account. After all, most high-yield savings accounts limit withdrawals to only six per month, so a checking account is typically a better place to store your spending cash.

In our 2024 Best Online Brokers reviews, Charles Schwab earned higher scores than Vanguard in almost every category we ranked and was chosen as Best for Beginners. Still, that doesn't mean Charles Schwab is a better option for every investor.

At Vanguard, we expect cash to deliver annualised returns³ of 3.4% over the next 30 years, compared with 6.9% for shares and 4.3% for bonds, based on average market conditions⁴. When we factor inflation into our projections, those figures decline to 1.4% for cash, 2.3% for bonds and 4.9% for shares.

Because the fund's income is based on short-term interest rates—which can fluctuate significantly over short periods—income risk is expected to be high. Manager risk: The chance that poor security selection will cause the fund to underperform relevant benchmarks or other funds with a similar investment objective.

When the market cratered, investors withdrew $16.4 billion from Vanguard's index mutual funds. What accounts for remaining index mutual fund outflows? Johnson says it could be clients pulling out money because they're retiring, or because they're negatively affected by the pandemic.

Is Vanguard safe from collapse? ›

First, the chances of Vanguard failing are miniscule. That said, let's talk about brokerage accounts for a minute. Brokerage accounts are not backed by the FDIC but by the Securities Investor Protection Corp (SIPC), which protects accounts up to $500,000.

Top performing investment funds owned by Vanguard worldwide 2024, by one-year return. As of June 2024, the Vanguard Mega Cap Growth Index provided the highest one-year return rate. The Vanguard Russell 1000 Growth Index Fund ranked second having a one-year return rate of 36.3 percent.

Earn up to 2.6% on USD at Vanguard

Earning interest on uninvested cash in a brokerage account is a useful, low-risk way to preserve the value of your money. However, there can be significant differences among brokers when it comes to interest: some don't pay anything, while some brokers pay higher rates than banks.

We'll keep any extra interest we receive on your cash above the 2.60% we pay you. This is to cover our costs for managing your cash (for example, our banking costs). It also allows us to continue to develop our products and services.