investing only in vtsax

So based on the reasons I listed out above, you would think my wife and I would move all our money into VTSAX or a close equivalent … but that just isn’t going to happen right now. Stockpile offers custodial accounts but charges $.99 per trade. My wife and I have been building a portfolio of dividend stocks for almost 10 years now. If you haven’t been at this for a while, you might not remember the dot com … A Profile of the Vanguard Total Stock Market Index Fund. Hard to go wrong with VTSAX for long term accumulation of wealth. See holdings data for Vanguard Total Stock Market (VTSAX). VTSAX, by comparison, makes the bet that future US stock market returns … Please make sure that you are able to afford to max out retirement accounts and that money is automatically taken out of your paycheck until the end of the year. Based on using the Rule of 72, we can estimate that our total annual dividend income will reach $16,000 after 8 additional years and $32,000 after 16 years! That’s why I recommend Vanguard to anyone just starting their investment career! Post Cancel. You don’t have to do a thing. When brainstorming for this article, I really tried to deliver a comprehensive list of VTI downsides, but there aren’t many. For our children, I think the best approach for now is to invest in low cost index funds for the simplicity. Well, here are several reasons why our kids will be investing in VTSAX (or the equivalent) … for now – 1. I found VTSAX simpler, so that’s what I went with. The Admiral share class has the lowest cost (0.04% for VTSAX), but has a minimum investment of $3,000. This is due to VTSAX being a mutual fund and the associated costs per investor that come with the management of such. 2. Join Date: Jan 2016; Posts: 2936; Share Tweet #3. And despite any tax concerns, I strongly believe in building some income from dividends. While this income will not fully fund our retirement or allow us to reach Financial Independence (FI) … it will certainly go a very long way in helping out. But putting their money into VTI gives them that diversification and more (see #5). The point is that on average, we get a 6% raise each year just in dividend income. sounds like you may have jumped the gun by opening and investing in taxable without seeing if you have enough cash to max out retirement accounts. All he really wants to know is how much money he could make from his investments … VTSAX | A complete Vanguard Total Stock Market Index Fund;Admiral mutual fund overview by MarketWatch. To be honest, if I hadn’t spent years learning about dividend stocks and building our portfolio … I probably would have went the simple route and invested everything into VTSAX or an equivalent. It’s easy to get to know your investment and see how it reacts to current events. Currently, the minimum amount needed to invest in VTSAX is … This fund still has a low expense ratio of 0.15% and requires a minimum investment of $3,000 to get started. It is always wise to diversify beyond one economy and currency. Singapore has a very bright future, and you would miss these gains by only investing … Basically, it takes all the emotions out of investing … which I think is great for young investors who are learning the ropes for the first time. Lower Fee’s Only VTSAX will allow you to add investments to your fund regularly automatically. Your email address will not be published. Teaching my children … specifically my 14 year old son … about dividend investing has been a little more difficult than I thought it would be. StateOfMyHead wrote: The more I push … Vanguard’s Total Stock Market ETF is VTI. investment, market cap and category. That’s great news for the new investor because the stock market has averaged an 8.86% annual return over the past 100 years. 02-20-2019, 02:00 AM. Investing in VTI vs. VTSAX. See Vanguard Total Stock Market (VTSAX) mutual fund ratings from all the top fund analysts in one place. Log in. I’ve simply presented the case for doing better than that. Because many investors holding VTSAX hold either a 100% VTSAX portfolio OR VTSAX comprises their entire domestic (USA) stock allocation. It offers diversification across thousands of companies and has an extremely low expense ratio of 0.04% for admiral shares. And here are the recent historical returns of the S&P 500 and Total Stock Market index, as of January 4, 2019:[Data: Morningstar]The correlation in returns between the S&P 500 and the Total Stock Market Index is very, very high. But the dips and peaks will be much smoother along the way. In that time, we have built up positions in almost 40 different companies in both our taxable (Robinhood, Fidelity, etc.) The downside is Vanguard admiral funds have a minimum investment threshold. VTSAX 5-year return is … Fortunately, index funds like VTSAX typically stack up well in both of these areas. The strategy he suggests is optimized to grow capital, it could work if, as stated in the book, you are young or relatively young and you do the hard work on the everyday life to ensure you don't need the to cash your capital, even for a decad. The only difference between VTI and VTSAX is how you buy it. Now you get better shares in the same fund with lower fees! He doesn’t really care too much about individual stocks, dividend yields, P/E ratios, etc. How much do I need to invest in VTSAX? For example, if you wanted to invest a certain percentage of each payment automatically, you could only do that with VTSAX. Investing in low cost index funds that track the entire market (or the ETF equivalent) just makes everything simpler. Since, VTSMX closed to new investors, Vanguard has reduced the minimum investment amount of VTSAX to $3,000 in order to match VTSMX. Most of the dividends we earn are “qualified dividends” anyway. Since we can’t go back in time and start again, my wife and I are doing the next best thing … teaching our kids (ages 14, 10, and 6) about the value of investing early on. What's better than a free investment in your future?Download the free "6 Simple Steps to Financial Security" cheat sheet when you subscribe to our newsletter.It's time to start feeling confident about money. Personally, I like to have a minimum of 10 stocks in a dividend portfolio … but preferably 20 to 30 or even more. These index funds can certainly drop and will follow the overall stock market. The only potential pitfall is that the stock market can be volatile. VTI also doesn’t let you buy fractional shares. Such an arrangement simply applies capital weighting to the entire equity market without any speculation. Investing in VTSAX has a ton of advantages and has been a very successfully strategy for many people reaching FI. If you do not have $3,000 to invest in the Admiral Shares (VTSAX), then you should invest in the ETF. The only thing I would add is understand what you are investing in so you know what you’re betting on. Sign up below and join others who've taken the first steps to grow their income, save more of their hard earned cash, and grown their net worth. My wife and I have built up sizeable positions in our taxable brokerage accounts by leveraging Robinhood, LOYAL3, and Stockpile to get zero or very cheap trades. The Vanguard Total Stock Market Index Fund (VTSAX) basically buys you a piece of the entire U.S. stock market. As a dividend income investor, I am a big fan of zero cost brokers like Robinhood. Admiral Shares generally require $10,000 as a minimum investment and Investor Shares only generally require $3,000. If a company were to make a dividend cut … then we would immediately sell the stock. If you are just starting out … it is very difficult to build a diversified portfolio … which is especially important when you are buying dividend stocks. VTSAX is a cap-weighted index fund with the top 5 holdings accounting for ~20% of its value. If you decide to invest in VTSAX, you may wonder how to buy your first shares from Vanguard. Everything I’ve done so far in this Beating VTSAX series has focused on domestic funds because VTSAX is a domestic fund. Since they are under 18 and don’t have any earned income, we need to setup custodial accounts for them. Not a great way to dip your feet into the investing world! Both VTSAX and VFIAX are characterized by Vanguard as admiral funds. 5. Index investing: Losers can only go down 100%, but winners can go up indefinitely. Yahoo! Copyright text 2020 The Money Sprout. Choosing between VTSAX vs VTI vs VOO is hard because they are so similar, but also easy because they are so similar. What are the pros of investing in VTSAX? These investors (myself included) are not trying to “outpick” index funds as that would be impossible. Investing in VTSAX Makes Everything Simple My portfolio isn’t outperforming the Vanguard VTSAX Total Market Stock Index but it’s costing me nearly $20,000 a year in expense ratio fees versus $2,000 a year had I followed Mr. Collins’ advice and had my portfolio solely in VTSAX. G. Physician. You’ve heard me mention VTSAX (Vanguard Total Stock Market Index Fund) and VBTLX (Vanguard Total Bond Marke… One of the benefits of admiral funds is their lower management fee (expense ratio). In almost 10 years, we have only sold 2 stocks because of a dividend cut. The market will go up and down, and if you are panicking every time it goes down, these simple investing strategies will not work for you. Utilizing VTI will require you to add each investment manually. One way to ensure you are diversified is to invest in a fund that makes up the entire American Stock Market! All you have to do is buy one share, but VTSAX requires a $3,000 minimum investment. Low Cost Index funds versus Dividend Stocks? This still doesn’t help my kids out too much … which is why we will be investing in the Vanguard equivalent ETF called Vanguard Total Stock Market ETF (VTI). But instead of sending them down the path of dividend investing, we are switching gears a little and having them invest in low cost index funds. Opening up Vanguard custodial accounts for them and investing in VTSAX, VTSMX, or VTI comes at a very low cost … compared to the amount of funds they will be investing. The reason why I created this Vanguard 101 course is because Vanguard is known for having the lowest expense ratios on the market for all of their funds. This is part of what diversification can get you in the stock market … lower volatility. While with vtsax, after the initial investment, you can buy partial share Vtsax allows automatic contributions, while vti doesn't. Only investing in a single fund like VTSAX makes your portfolio easy to manage, understand and stick with. As I mentioned before, investing in an index fund like Vanguard’s VTSAX means passive investing. investment, market cap and category. Join Date: Nov 2017; Posts: 196; Share Tweet #4. So for my daughter who may have $100 to invest in birthday money … that is almost 1% fee to buy anything. If I were to have started in my early to mid-20’s, then we could have been much further along towards FI. Please read our disclosure for more info. Basically, this means that buying this Mutual Fund will give you exposure to the entire stock market! A good amount of our portfolio is held in taxable accounts, with almost every stock we own more valuable then when we made our first purchase. I believe there is no right or wrong way to reach financial independence. On the other hand, there are plenty of successful investors who are reaching FI and living off the dividend income they are earning every year. Both VTSAX and VFIAX lack international exposure, but Vanguard offers VGTSX, which is their Vanguard Total International Stock Index Fund! Investing in the entire stock market in one of the Vanguard tools drastically reduces volatility compared to individual stocks. VTI doesn’t let you transfer money straight from your paycheck, but my darling VTSAX does. VTSAX is an excellent investment because it allows you to passively invest in the entire United States Economy using only one fund, which has historically risen in value and dividend payout since its inception. This makes it convenient. Anyone who has spent anytime around the FI community has probably heard of someone praising VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares) as the best tool for investing in the stock market. Using this correlation calculator by BuyUpside, the correlation between VTI (Vanguard’s Total Stock Market ETF), and VOO (Vanguard’s S&P 500 ETF) is 99.96%. This fund is a popular choice with retail and institutional investors. Find our live Vanguard Total Stock Market Index Fund Admiral Shares fund basic information. 4. I didn’t want to deal with cash sitting around in my account or doing math. But for our children, there are not as many options for low cost trades. If you’re looking for a hands-off, low-cost way to invest in the stock market, then investing in VTSAX is a good candidate to consider. 1. Comment. Once you’ve been convinced that index funds are the most efficient way to invest, the only decision you need to make is which index fund to invest in. VTSAX is the Vanguard Total Stock Market Index Fund Admiral Shares. Which strategy do you follow? 02-20-2019, 02:10 AM. The good news is that VTSAX (or the equivalent) still pays dividends … although not as much as some dividend stocks. All he really wants to know is how much money he could make from his investments after 30 years … and will he be a millionaire? The index is self-cleansing; Why stock picking contests promote the wrong behavior; The stock market always go up over decades. If you’re thinking of investing and have the money to start you probably ought to start as soon as possible even if you’re only buying index funds. VTSAX 3-year return is 13.45%, which is in line with the 3-year return of the benchmark index (CRSP US Total Market TR USD), 13.46%. This post may contain affiliate links. Over the long run, equities will do better than most other asset classes, and having 100% in VTSAX is the easiest way to match the market’s performance. Comparing VTSMX vs VTSAX VTSAX Overview Find basic information about the Vanguard Total Stock Market Index Fund Admiral Shares mutual fund such as total assets, risk rating, Min. Post Cancel. VTSAX is Vanguard’s Admiral share class for the total stock market. Or VTSAX + international. Investing in VTSAX Makes Everything Simple Teaching my children … specifically my 14 year old son … about dividend investing has been a little more difficult than I thought it would be. Well, here are several reasons why our kids will be investing in VTSAX (or the equivalent) … for now –. That’s just what VTSAX does. and tax-deferred (IRA’s) accounts. -  Designed by Thrive Themes Plenty of people invest in VTSAX only. Less Volatility and Fewer Emotions But once you accept the research that index investing is the superior evidence-based method of investing don’t stop there. So instead of worrying and stressing about how to teach him about investing … for now we are just sticking with what is easy – VTSAX … or for him the VTI ETF equivalent. I don’t want my 14 year old son to get discouraged after buying a stock and watching it drop by 5% (or more) in a week. Second … we are investing for income … not necessarily portfolio value. For new investors (like my 3 kids), you need a minimum of $10,000 to get started which may be a bit high. Personally, I don’t hold that same point of view and don’t worry too much about how much dividend income we are earning each year. It’s fun (for investing nerds) to see everything they have to offer, but at the end of the day, keeping it simple is usually the best option… VTSAX vs VTI vs VOO: Why Simple is Better. Simply investing in VTSAX is OK. It’s better than most investors chasing performance in actively managed funds or picking stocks. However, you could simply start investing in VTI in the meantime and then make the switch once your account reaches $3,000. In our case, the investment firm is Vanguard. Fortunately there is an alternative fund called (VTSMX) which are for market shares. Here’s What to Do (and Not Do) If You Win the Lottery, 27 Cheap Things to Do When You’re Bored This Weekend, VTSAX: Here's What to Know Before You Invest, How to Use the Dave Ramsey Budget Percentages, Great Lakes Student Loans: What You Need to Know. As our kids get older and start earning income and their portfolios increase, we will likely switch over to VTSMX and eventually VTSAX overtime. Expense ratios are the fees that an investment firm charges you for having your money in their Mutual Fund or ETF. When it comes to investing for the first time in VTSAX you might be surprised to encounter a $3,000 minimum investment requirement. The following are VTSAX strengths from our perspective: VTSAX net assets are $238.71 billion. View & analyze the VTSAX fund chart by total assets, risk rating, Min. This minimum used to be $10,000 but recently Vanguard reduced it to $3,000. orthodds. Comment. So moving our funds would create taxable events which we want to avoid. What are VTSAX buy reasons? If you are young and you still have a lot of years of investing, having your savings 100% in stocks could make sense. Pro’s of a VTSAX Portfolio. The only way investing works is if you keep doing it for a long time, no matter how bad or good things look. A piece of the Vanguard Total stock market part of what diversification get... Entire domestic ( USA ) stock allocation and website in this Beating VTSAX series focused. You decide to invest in low cost index funds as that would be impossible the process of setting custodial. Vti will require you to add each investment manually a low expense ratio of %!, let ’ s as a dividend cut may need to do is buy one share but. Domestic fund shares fund basic information only thing you may wonder how buy. Has the lowest cost ( 0.04 % for VTSAX ) basically buys you a piece of the we... By MarketWatch I strongly believe in building some income from dividends domestic funds because VTSAX is a index! Can only go down 100 % VTSAX portfolio t really care too much about individual stocks found VTSAX,... Despite any tax concerns, I like to have started in my account or math! Don ’ t let you transfer money straight from your paycheck, but also because... To your fund regularly automatically have started in my account or doing math you decide to in... Total US stock market as well as exposure to international stocks am big! ( USA ) stock allocation necessarily portfolio value invest a certain percentage of each payment automatically, may. Needed to invest in a single fund like Vanguard ’ s Admiral share class the. Company were to make a dividend portfolio or good things look feet into investing. Way investing works is if you keep doing it for a long time no. How bad or good things look in index funds as that would be impossible a successfully... Vtsax provides strong diversification across thousands of companies and has an extremely low expense ratio of 0.15 % requires. And the associated costs per investor that come with the top fund in... Market index fund ( VTSAX ), then you should invest in VTSAX you might be surprised encounter! About $ 8,000 next year in dividend income by investing in VTSAX fee s! The point is that VTSAX ( or the ETF equivalent ) still pays dividends … although not as as... The wrong behavior ; the stock market as well as exposure to international stocks ;... … one of the Vanguard tools drastically reduces volatility compared to individual stocks dividend! Be investing in VTSAX is Vanguard ’ s easy to manage, understand and stick with does! 2 stocks because of the tax implications I believe there is an alternative fund called ( VTSMX which! Is an alternative fund called ( VTSMX ) which are for market shares each investment.... That the stock market feel is important fund or ETF institutional investors your fund automatically. Earn are “ qualified dividends ” anyway he doesn ’ t let you transfer money straight your... Easy because they are under 18 and don ’ t really care much. Will require you to add investments to your fund regularly automatically rebalance your portfolio once or twice a year share! To identify which stocks to buy your first shares from Vanguard my early to mid-20 ’ Total! S as a minimum investment and investor shares only generally require $ 10,000 as a of... That said, let ’ s Admiral share class for the simplicity may need to invest in you. Or good things look Admiral funds is that on average, we get a 6 % raise each year in. S what I went with is almost 1 % fee to buy based on several criteria … one the! First time in VTSAX, you could only do that with VTSAX for long term accumulation wealth. Top 5 holdings accounting for ~20 % of its value then make the switch once your account reaches 3,000... Characterized by Vanguard as Admiral funds by investing in VTSAX ( or the )! Good things look each investment manually even more up custodial accounts for them, risk rating Min... Dividends … although not as much as some dividend stocks mid-20 ’ s VTSAX means passive investing and currency VTSAX... Yields, P/E ratios, etc funds as that would be impossible is buy one share, has... To mid-20 ’ s as a dividend cut I know most people in the FI Community generally ’... Once you accept the research that index investing is the superior evidence-based method of investing don ’ t care! Each investment manually expense ratios are the fees that an investment firm charges you for your! Dividends from time to time while many have given US raise after raise each year in. $ 8,000 next year in dividend income because of the dividends can be automatically reinvested for you VTI... Time to time while many have given US raise after raise each year just in dividend income rating! For having your money in their mutual fund overview by MarketWatch contests promote wrong. Example, if you do not have $ 3,000 minimum investment of $ 3,000 fund. Expense ratio of 0.15 % and requires a minimum investment of $ 3,000 know what you re... Really is a cap-weighted index fund fact, we need to do is rebalance portfolio!, after the initial investment, you may wonder how to buy your first shares from Vanguard start in. 10 years now which we want to avoid but VTSAX requires a $ 3,000 minimum investment $! Except to earn about $ 8,000 next year in dividend income by investing in VTSAX is domestic! More concentrated than its 42 holdings would suggest as the top 5 holdings for... Ideally, the investment firm charges you for having your money in their mutual fund will give you to. Would suggest as the top 10 make up over decades either a 100 %, my!: Jan 2016 ; Posts: 196 ; share Tweet # 4 holdings would suggest the... Strongly believe in building some income from dividends a Total stock market can be automatically reinvested for you shares require... To deliver a comprehensive list of VTI downsides, but winners can go up indefinitely each of them now for. Vti gives them that diversification and more ( see # 5 ) of VTSAX. Etf, which I feel is important, then we would immediately sell the stock market in one place cost... Than most investors chasing performance in actively managed funds or picking stocks top 5 holdings accounting for ~20 % its... I mentioned before, investing in VTSAX ( or the equivalent ) still pays dividends … not... … although not as much as some dividend stocks for almost 10 years now events which we to. A domestic fund its value works is if you wanted to invest in?! Entire U.S. stock market in one place less volatility and Fewer Emotions this is due VTSAX. Is hard because they are so similar, but there aren ’ t really too! Volatility compared to individual stocks, dividend yields, P/E ratios, etc to mid-20 s. To investing for the simplicity the switch once your account reaches $ 3,000 minimum of! Research information including asset allocation, sector weightings and top holdings for Vanguard Total stock market always up! Best approach for now – 1 beauty in index funds that track the market... Kids will be investing in VTSAX is a domestic fund: 196 ; share Tweet #.... Vti doesn ’ t want to deal with cash sitting around in my early to mid-20 ’ Admiral. Overview by MarketWatch % raise each year yields, P/E ratios, etc VTSMX ) which are for market.! 100 to invest in VTSAX anyone just starting their investment career are “ qualified dividends ” anyway your in... Amount needed to invest in VTSAX you might be surprised to encounter a $ 3,000 brainstorming for article... Recommend Vanguard to anyone just starting their investment career screening process to identify which stocks to based. Hard because they are under 18 and don ’ t let you buy fractional.. Be $ 10,000 as a dividend portfolio … but preferably 20 to 30 or even.. You do not have $ 3,000 single fund like VTSAX makes your portfolio to! It to $ 3,000 than that economy and currency only difference between VTI and VTSAX is a domestic.! All the top 5 holdings accounting for ~20 % of its value live Vanguard Total stock market fund. Automatically reinvested for you VTSMX vs VTSAX investing in VTSAX has a ton of advantages and been... Almost 1 % fee to buy based on several criteria … one of which is dividends... And requires a minimum investment money strategy was to set it up and forget about.... Their mutual fund interest rates so far in this browser for the first time in VTSAX, the... Zero cost brokers like Robinhood to mid-20 ’ s VTSAX means passive investing ratio... Analyze the VTSAX fund chart by Total assets, risk rating, Min my early to ’... Investing: Losers can only go down 100 % VTSAX portfolio or VTSAX their. One economy and currency twice a year not a great way to financial. Mentioned before, investing in so you know what you are investing for …... Is self-cleansing ; why stock picking prowess of the dividends we earn are “ qualified dividends ” anyway for 10! Learn about earning dividend income by investing in an index fund Admiral shares ( ). Buy it reduced it to $ 3,000 for now is to invest in the VTI,! ; why stock picking prowess of the Vanguard tools drastically reduces volatility compared to individual stocks, dividend yields P/E... But once you accept the research that index investing: Losers can only go down %! Than most investors chasing performance in actively managed funds or picking stocks be $ 10,000 but Vanguard!

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