VOHXX or Online Savings account

[Roupey03]

I just recently starting moving my money over to vanguard. While going through available funds I stumbled upon VOHXX Vanguard Ohio Tax-Exempt Money Market Fund.

I currently have an online savings account through ING that has about 10k in it. This is used as my emergency fund. My question is would it be better to migrate my emergency fund over to VOHXX seeing that it is tax exempt. Soon my emergency fund will be nearing 20k with the first time homebuyer credit on its way.

Thoghts?

[disneysteve]

You need to compare the interest rates as well as the ease of accessing the money. Since it is your EF, you want to be able to get to it without too much difficulty or delay. I have a tax-exempt money market fund that has check writing with it, so I can just write a check when I need to access that money. I'm not sure how Vanguard's funds work in that regard.

As for interest rate, you need to figure out the after-tax return of your ING account and compare that to the return of the Vanguard account.