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Money market funds and cash alternatives

Best Money Market Funds for Monthly Income

Compare popular cash parking options like SGOV, SWVXX, VMFXX, and VUSXX alongside BND and VBTLX so you can see yield, taxes, risk, and estimated monthly income in one place.

By MerryDiv Team|Last updated: July 2026
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BND and VBTLX are included because investors compare them with cash alternatives, but they are not money market funds. They can pay monthly income and still lose principal when bond prices move.

Quick Comparison

FundTypeYieldExpenseMinimumTax noteBest for
Vanguard Treasury Money Market Fund
Treasury money market fund3.69%
7-day SEC yield
0.07%$3,000Mostly Treasury income; often largely state-tax exempt, but check Vanguard's annual tax supplement.Vanguard investors who want Treasury-heavy cash with state-tax advantages.
Vanguard Federal Money Market Fund
Government money market fund3.63%
7-day SEC yield
0.11%$3,000 ($0 as settlement fund)Federal taxable; state-tax exemption depends on the fund's Treasury holdings for the year.Vanguard brokerage cash and settlement-fund simplicity.
Schwab Value Advantage Money Fund
Prime money market fund3.53%
7-day yield
0.340% net$0Federal taxable and generally state taxable; can hold commercial paper and CDs.Schwab investors who want an easy sweep-like cash alternative.
iShares 0-3 Month Treasury Bond ETF
T-bill ETF3.61%
30-day SEC yield
0.09%1 shareTreasury interest is federally taxable and generally exempt from state and local income tax.ETF investors who want ultra-short Treasury exposure in a brokerage account.
Vanguard Total Bond Market ETF
Core bond ETF4.65%
30-day SEC yield
0.03%1 shareFederal taxable; only a portion may be state-tax exempt depending on Treasury holdings.Longer-term bond allocation, not emergency cash.
Vanguard Total Bond Market Index Fund Admiral Shares
Core bond mutual fund4.65%
30-day SEC yield
0.04%$3,000Federal taxable; only a portion may be state-tax exempt depending on Treasury holdings.Vanguard mutual-fund investors building a bond allocation.

Yield snapshot checked against provider pages in late August 2026. Yields change frequently; verify the current SEC yield, distribution yield, and tax supplement before investing.

$10K Monthly Income Calculator

Estimate monthly income from each fund before tax and after a simple federal/state tax assumption. Treasury-heavy funds are modeled as state-tax exempt for the estimate.

Before tax
$30.75
per month from VUSXX
After estimated tax
$23.37
simple estimate
VUSXX3.69% 7-day SEC yield$30.75
VMFXX3.63% 7-day SEC yield$30.25
SWVXX3.53% 7-day yield$29.42
SGOV3.61% 30-day SEC yield$30.08
BND4.65% 30-day SEC yield$38.75
VBTLX4.65% 30-day SEC yield$38.75
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Best For Each Use Case

Best for state-tax sensitivity

VUSXX and SGOV lean into Treasury exposure, which can matter in high-tax states.

Best for brokerage convenience

VMFXX fits Vanguard settlement cash; SWVXX is the natural Schwab comparison.

Best for bond allocation

BND and VBTLX are better framed as core bond holdings, not cash parking spots.

How to Choose

Use a true money market fund when you care most about stable value and simple cash management.
Use a Treasury ETF like SGOV when you want ETF trading and short T-bill exposure.
Use BND or VBTLX only when you are comfortable with bond-fund price movement.
Compare after-tax yield, not just headline yield, especially if you live in a high-tax state.
Recheck yields before investing because money market and T-bill yields move with short-term rates.

Frequently Asked Questions

There is no single best fund for everyone. VUSXX is attractive for Treasury-heavy state-tax treatment, VMFXX is convenient as a Vanguard settlement fund, and SWVXX is easy for Schwab investors. The right choice depends on your brokerage, tax bracket, state income tax, and whether you need a stable money market fund or an ETF.
No. SGOV is an ETF that holds 0-3 month Treasury bills. It can behave like a cash alternative, but it trades intraday like an ETF and its market price can move. That is different from a money market fund that seeks to maintain a stable $1 NAV.
No. BND and VBTLX are total bond market funds. They can pay monthly income, but they have interest-rate duration and can fall in price. They belong in a bond allocation, not in a cash bucket you expect to spend soon.
Treasury interest is generally exempt from state and local income tax, but fund-level tax treatment depends on the fund's annual holdings and your state's rules. Check the fund provider's year-end tax supplement and talk with a tax professional for your own return.
No. Money market mutual funds and Treasury ETFs are investments, not bank deposits. They can be very conservative, but they are not FDIC insured. High-yield savings accounts and bank money market accounts are different products and can be FDIC insured when held at an eligible bank.
Treasury tax note source: the IRS says Treasury bill, note, and bond interest is subject to federal income tax but exempt from state and local income tax. Fund tax reporting can still vary by holdings and state rules.

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