I was with Vanguard for many years. Fidelity has too many things I like to split between two brokerages. Using 4-week treasuries on auto-roll is close enough to VUSXX for me. You really can't go wrong with Fidelity, Vanguard, or Schwab if all you need is a brokerage. But Fidelity has a much broader set of products that it offers compared to Vanguard.
That's if you're only judging by APY. Vanguard has an atrocious app, and is missing many 'bank-like' features that Fidelity provides - I've enumerated some in a sibling comment. I don't think Vanguard even has a debit card, unless that's changed recently.
If you want to pay $330/year on $100k or $1650/year on $500k to Fidelity so they can pay themselves 0.42% expense on MM fund (atrocious if you ask me) but have a pretty app, that's of course your choice as a customer. I'd spend it on something else.
There is also something to say about diversification across finance orgs. I am not sure having all the funds for banking and investing using the same org is healthy. Diversification helps with SIPC/FDIC/FCUA coverage too.
I think most people know that Vanguard has lower expense ratios than Fidelity. What you give up are products and excellent customer service that some of us find worth paying a bit more for.
I don't use an MMF as an investment vehicle. It holds my daily cash. I can't use Vanguard for that sort of thing, so it's not an apples-to-apples comparison. Excess cash (e.g. emergency fund) is in an auto-roll 4-week treasury ladder.
I was previously a Vanguard customer. It's not like I don't have experience with both Vanguard and Fidelity. I understand the trade-offs.
High APY ( ~5% ). Keep in mind this is a MM account that works exactly like checking. I don't have to worry about the money in it - don't have to reinvest money earned myself or sell to spend money - it's all transparent. When you spend money, it works, and you'll just see it removed from your MM balance. I mention this because Schwab has a similar account, but makes you manually buy and sell holdings instead as needed.
In above account, you can also make selections here to not need to pay state tax on earnings, but that doesn't apply to me anyways. Nice for people in high tax states, though.
Paper checks in a checkbook. This is something you'd assume is standard but actually hard to find at online banks today.
Debit card with ATM fee rebates worldwide. I don't travel worldwide much anymore, but there's only 3 or 4 banks total that do this and it's a nicety.
Instant P2P between accounts. I often send my wife money for various reasons. This is another one that's surprisingly not standard at a lot of banks.
Free same day wires. Very straightforward, no hassles here, though I've only used it three times.
Customer Service. When you call them, someone in the US answers within a few seconds. They'll talk investing with you, goals, or general troubleshooting things. They also call to check in about twice a year which I find annoying, but some people might like it.
Money guarantee. Luckily I haven't had to use this yet, but any money stolen from hackers/fraud is supposedly 100% covered by Fidelity.
Currently trying to figure out where to start with an IRA (probably Roth) after learning about it recently and seeing it's something I probably should have started like over 15 years ago...
Which would you suggest between Schwab and Fidelity? Is it something I can/should easily do by myself as a financial layman? I have no experience with either of them, though I am slightly leaning towards Schwab since they have some tie-ins with American Express whom I like.
Trying to read up on this is almost worthless because past a certain point it's all just snake oil peddlers wanting me to part with my money (eg: all the Vanguard fanbois).
There's a lot to consider here that may be worth talking to an advisor at both. Traditional, Roth, or Backdoor Roth? Look at investible options, fees associated, etc.
As for Schwab vs Fidelity, your money is in safe hands with either. Might want to call and talk shop with both, and choose whoever you feel gave you better answers, all other things equal.
Vanguard has low fees, but it shows in every facet of their existence. I don't hate it, but I'll make marginally less money perhaps for better experience. YMMV.
I RTFM'd courtesy of the IRS and banks I trust since personal finances is a pretty important subject and worth spending some time and effort to learn it myself, even if I ultimately toss all the paperwork at my CPA to deal with come April.
I'm more than likely going for a Roth IRA given my income (well below threshold) and a strong desire to just keep things simple. Traditional IRA with tax deductions sounds nice, but it's also overhead and effort I just don't want to deal with regardless of potential tax savings (and I need to pay the taxes eventually anyway); the old saying that time is money.
It's great and much appreciated to hear from someone who's not marketing at me that Schwab and Fidelity are more or less objectively the same. That means the deciding factor is simply which one I'm more biased to, which means Schwab (aforementioned AMEX tie-ins).
Fidelity has the better website (but Schwab's site is not nearly as bad as Vanguard) and has had fewer weird financial problems in recent years than Schwab. That said, either one will work. I've got everything moved over to Fidelity right now because I like having my free cash in a decent money market fund, and I somehow found that more difficult with Schwab.
If you hit the limit of what you can put in a Roth IRA (good choice) and still have money to save, I Bonds through treasury direct are something to consider.
Doing more research, everyone seems to agree Fidelity is the most handy when it comes to using a brokerage like I would a bank. Their 2% all-around cashback Visa credit card is also admittedly nice. They outsource the banking aspects, though.
On the other hand, Schwab has an actual bank as a subsidary if I do want to use them also for banking, which is great for feeling reassured as a client/depositor if I want to diversify my current banking with US Bank.
Schwab also has those AMEX tie-ins, which is again reassuring because I really like and respect AMEX. Yeah it's just marketing, but damnit if it isn't effective. :V
Though either way I'm not concerned with the finer points of brokerage-banking or investing right now because I'm not sure if I will get into the whole investment money games beyond a Roth IRA. Maybe I will, but I can worry about that when I get to that point.
I understand the concern regarding banking. I keep "cash" in my Fidelity account in one or the other of two Fidelity money market funds that invest in US Treasuries. That's as safe as a bank, after a fashion (if the treasury starts defaulting on t-bills, everything including banks' FDIC insurance is going to go down the tubes). There was an extra step with Schwab that I found a little irksome - your free cash in one of their accounts goes into a sweep account that may or may not be FDIC insured (I don't remember), but it doesn't earn much interest. Moving that money into a money market fund that invests in treasuries was an extra step.
But they're both good choices. I remember when paying $15 for a stock trade was considered innovative. But the most recent Schwab website changes I experienced, maybe a year ago before I switched everything over, were a step backward.
I have the Fidelity 2% card and it's great.
I would have stayed with Vanguard forever if their website didn't suck and their brokerage services didn't also suck. They really were a leader for a while.
One feature I found rather unique at Fidelity (I too have recently migrated there as my "one stop shop") was free outgoing domestic wires ($100 minimum). Being able to "teleport" money within an hour to another pre-registered account (before 3PM ET on biz days, in my experience) facilitated switching to Fidelity while still keeping old bank/CU accounts minimally active without having to engage in a lot of thinking ahead about balances (and worrying about EFT/ACH hold times) at those now peripheral accounts.
The only reason I currently have a Fidelity account alongside my Vanguard account is Fidelity also offers a 2% across-the-board cashback credit card that auto-redeems points straight into my money-market account (albeit at $50 intervals).
FDLXX 7-day yield is 4.93%. 99.5% exempt from state income tax.
The most recent 4-week treasury is 5.24%. Exempt from state income tax.
There is very very slightly more risk in the FDLXX MMF than a savings account.
I started using Fidelity as my primary "bank" years ago and haven't looked back.