My savings account has 0.15% APY. I use it as an emergency fund. I was thinking about moving much of it to a money market fund. This fund's expense ratio is 0.64%, and its 5-year total return is 0.24%. If I understand this correctly, I pay more in expenses than I get in returns, and I'm losing in the long term (if the numbers stay steady). Am I missing something?

  • @depperm - added the united-states tag Jun 19, 2018 at 13:35
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    The total return takes into account the expense ratio. So it's "real" return rate is .88%.
    – Norm
    Jun 19, 2018 at 13:51
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    Just an FYI there are several online banks that offer higher APY (1+%), see discover, synchrony, sallie mae, goldman sachs,....the list goes on
    – depperm
    Jun 19, 2018 at 13:51
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    Another FYI, there are several online banks that offer 6 month CDs at around 2% APY.
    – Glen Yates
    Jun 19, 2018 at 15:20
  • The highest MM rate that I know of with a low minimum deposit is CIT Bank at 1.85%. For me, it makes no sense to lock it up in a 6 month CD for 15 basis points Jun 19, 2018 at 16:10

2 Answers 2


The return being quoted should be net of expenses, so 0.24% would be what you would be getting once the expenses are taken out. See this answer for more information about the different kinds of returns that might be reported.

Also, similar to what I noted in that other answer, 0.64% is very high for an expense ratio for a money market fund. Money market funds with expense ratios below 0.20% are easy to come by.

Finally, when comparing a money market fund to a savings account, do note that unlike with the savings account, the returns in a money market fund are not guaranteed. It is possible for the fund to return less than expected, or even to lose money. The latter is very rare, but it has happened.


I would say , shop around. Vanguard VMFXX money market paid 1.18 % over the last year; 1.79% rate this week. ( After what ever tiny fee they have.). With some low risk you can get 10% in REITs.

  • Would someone explain why this is downvoted? Jun 20, 2018 at 8:22
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    @horsehair it doesn't answer the question. Jun 20, 2018 at 10:18
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    @horsehair First sentence good; second sentence sort of OK but possibly misleading in the context the question was asked; last sentence totally undermines the answer as a whole.
    – David
    Jun 20, 2018 at 13:40
  • I use REITs in my Vanguard account as a money market when I want to park money for a few weeks or more , fees are very close to zero. I hate to see banks rip people off. Jun 21, 2018 at 13:56

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