investing only in vtsax

The only difference between VTI and VTSAX is how you buy it. Fortunately, index funds like VTSAX typically stack up well in both of these areas. 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. View & analyze the VTSAX fund chart by total assets, risk rating, Min. 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. My money strategy was to set it up and forget about it. Time, patience, and consistency will very likely reward you in the long run as you see your financial security and life options rise. Well, here are several reasons why our kids will be investing in VTSAX (or the equivalent) … for now –. This makes it convenient. Save my name, email, and website in this browser for the next time I comment. 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. It really is a bet on the stock picking prowess of the managers. Or VTSAX + international. But putting their money into VTI gives them that diversification and more (see #5). Less Volatility and Fewer Emotions 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. What are the pros of investing in VTSAX? Everything I’ve done so far in this Beating VTSAX series has focused on domestic funds because VTSAX is a domestic fund. How much do I need to invest in VTSAX? 5. So when my kids are starting with just a couple hundred dollars each to invest … it is impossible to diversify by investing in stocks alone. Only VTSAX will allow you to add investments to your fund regularly automatically. Most of the dividends we earn are “qualified dividends” anyway. Currently, the minimum amount needed to invest in VTSAX is … 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. In fact, we are in the process of setting up custodial accounts for each of them now. I didn’t want to deal with cash sitting around in my account or doing math. 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. VTI doesn’t let you transfer money straight from your paycheck, but my darling VTSAX does. Post Cancel. These index funds can certainly drop and will follow the overall stock market. VTSAX is a cap-weighted index fund with the top 5 holdings accounting for ~20% of its value. As I mentioned before, investing in an index fund like Vanguard’s VTSAX means passive investing. For our children, I think the best approach for now is to invest in low cost index funds for the simplicity. He doesn’t really care too much about individual stocks, dividend yields, P/E ratios, etc. 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. See holdings data for Vanguard Total Stock Market (VTSAX). Plenty of people invest in VTSAX only. And despite any tax concerns, I strongly believe in building some income from dividends. But for our children, there are not as many options for low cost trades. VTSAX is Vanguard’s Admiral share class for the total stock market. And my wife and I will continue building our dividend portfolio. 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. You have to buy full share of vti. Teaching my children … specifically my 14 year old son … about dividend investing has been a little more difficult than I thought it would be. If you do not have $3,000 to invest in the Admiral Shares (VTSAX), then you should invest in the ETF. VTSAX | A complete Vanguard Total Stock Market Index Fund;Admiral mutual fund overview by MarketWatch. With that said, let’s take a look at the simple investing strategies you can use. Some have frozen dividends from time to time while many have given us raise after raise each year. This website uses cookies to ensure you get the best experience on our website. Both VTSAX and VFIAX lack international exposure, but Vanguard offers VGTSX, which is their Vanguard Total International Stock Index Fund! See Vanguard Total Stock Market (VTSAX) mutual fund ratings from all the top fund analysts in one place. I know most people in the FI Community generally don’t like earning dividend income because of the tax implications. 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. Pro’s of a VTSAX Portfolio. Investing in VTSAX has a ton of advantages and has been a very successfully strategy for many people reaching FI. So moving our funds would create taxable events which we want to avoid. 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. Yahoo! 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. Member. 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. Investing in low cost index funds that track the entire market (or the ETF equivalent) just makes everything simpler. VTI also doesn’t let you buy fractional shares. 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%. Simply investing in VTSAX is OK. It’s better than most investors chasing performance in actively managed funds or picking stocks. Diversification And while investing in dividend stocks has been great … the only regret I have is not starting sooner as we started building our income stream while I was in my mid-30’s. All you have to do is buy one share, but VTSAX requires a $3,000 minimum investment. This fund is a popular choice with retail and institutional investors. 1. investment, market cap and category. 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. As our kids get older and start earning income and their portfolios increase, we will likely switch over to VTSMX and eventually VTSAX overtime. You’ve heard me mention VTSAX (Vanguard Total Stock Market Index Fund) and VBTLX (Vanguard Total Bond Marke… Personally, I like to have a minimum of 10 stocks in a dividend portfolio … but preferably 20 to 30 or even more. 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. 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. In our case, the investment firm is Vanguard. 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. orthodds. StateOfMyHead wrote: The more I push … Since, VTSMX closed to new investors, Vanguard has reduced the minimum investment amount of VTSAX to $3,000 in order to match VTSMX. Post Cancel. 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. 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. One of the benefits of admiral funds is their lower management fee (expense ratio). 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. When it comes to investing for the first time in VTSAX you might be surprised to encounter a $3,000 minimum investment requirement. 1. What are VTSAX buy reasons? The following are VTSAX strengths from our perspective: VTSAX net assets are $238.71 billion. View mutual fund news, mutual fund market and mutual fund interest rates. 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%. 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. Expense ratios are the fees that an investment firm charges you for having your money in their Mutual Fund or ETF. 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. 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 only thing I would add is understand what you are investing in so you know what you’re betting on. If I were to have started in my early to mid-20’s, then we could have been much further along towards FI. For new investors (like my 3 kids), you need a minimum of $10,000 to get started which may be a bit high. A Profile of the Vanguard Total Stock Market Index Fund. Investing in VTSAX Makes Everything Simple VTSAX is the Vanguard Total Stock Market Index Fund Admiral Shares. One way to ensure you are diversified is to invest in a fund that makes up the entire American Stock Market! Copyright text 2020 The Money Sprout. This fund still has a low expense ratio of 0.15% and requires a minimum investment of $3,000 to get started. Which strategy do you follow? While with vtsax, after the initial investment, you can buy partial share Vtsax allows automatic contributions, while vti doesn't. The good news is that VTSAX (or the equivalent) still pays dividends … although not as much as some dividend stocks. This is part of what diversification can get you in the stock market … lower volatility. Comparing VTSMX vs VTSAX He doesn’t really care too much about individual stocks, dividend yields, P/E ratios, etc. 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. I found VTSAX simpler, so that’s what I went with. I believe there is no right or wrong way to reach financial independence. The downside is Vanguard admiral funds have a minimum investment threshold. Comment. Vanguard’s Total Stock Market ETF is VTI. So you may be wondering why someone who strongly believes in investing in dividend stocks (as opposed to index funds) would recommend index funds instead? 02-20-2019, 02:00 AM. Now you get better shares in the same fund with lower fees! 02-20-2019, 02:10 AM. Join Date: Jan 2016; Posts: 2936; Share Tweet #3. Hard to go wrong with VTSAX for long term accumulation of wealth. -  Designed by Thrive Themes If you are young and you still have a lot of years of investing, having your savings 100% in stocks could make sense. Investing in VTI vs. VTSAX. So our kids will still learn about earning dividend income by investing in the VTI ETF, which I feel is important. Join Date: Nov 2017; Posts: 196; Share Tweet #4. Find our live Vanguard Total Stock Market Index Fund Admiral Shares fund basic information. Low Cost Index funds versus Dividend Stocks? The beauty in index funds is that the dividends can be automatically reinvested for you. But once you accept the research that index investing is the superior evidence-based method of investing don’t stop there. That’s just what 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. Investing in the entire stock market in one of the Vanguard tools drastically reduces volatility compared to individual stocks. Admiral Shares generally require $10,000 as a minimum investment and Investor Shares only generally require $3,000. Index investing: Losers can only go down 100%, but winners can go up indefinitely. Well, here are several reasons why our kids will be investing in VTSAX (or the equivalent) … for now – 1. This is due to VTSAX being a mutual fund and the associated costs per investor that come with the management of such. I’ve simply presented the case for doing better than that. Please read our disclosure for more info. How to be a Millionaire by 40 – Teaching Kids to Build Wealth, Second Generation FI Rule #1 – Save 50% of Your Income. The only way investing works is if you keep doing it for a long time, no matter how bad or good things look. So for my daughter who may have $100 to invest in birthday money … that is almost 1% fee to buy anything. If a company were to make a dividend cut … then we would immediately sell the stock. Basically, this means that buying this Mutual Fund will give you exposure to the entire stock market! My wife and I have been building a portfolio of dividend stocks for almost 10 years now. Cons: VTI. 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. But the dips and peaks will be much smoother along the way. Only investing in a single fund like VTSAX makes your portfolio easy to manage, understand and stick with. 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! Comment. Still Earning Dividends 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). It’s easy to get to know your investment and see how it reacts to current events. VTSAX provides strong diversification across the total US Stock market as well as exposure to international stocks. Utilizing VTI will require you to add each investment manually. Lower Fee’s Research information including asset allocation, sector weightings and top holdings for Vanguard Total Stock Market. 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. Choosing between VTSAX vs VTI vs VOO is hard because they are so similar, but also easy because they are so similar. Fortunately there is an alternative fund called (VTSMX) which are for market shares. 2. All he really wants to know is how much money he could make from his investments … Ideally, the only thing you may need to do is rebalance your portfolio once or twice a year. Learn about the fund's agencies rating and risk rating, transparent information about the fund's management personal, policies of invested allocation and diversification, past performance. Your email address will not be published. However, you could simply start investing in VTI in the meantime and then make the switch once your account reaches $3,000. 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. G. Physician. Singapore has a very bright future, and you would miss these gains by only investing … VTSAX 5-year return is … These investors (myself included) are not trying to “outpick” index funds as that would be impossible. For example, if you wanted to invest a certain percentage of each payment automatically, you could only do that with VTSAX. investment, market cap and category. Both VTSAX and VFIAX are characterized by Vanguard as admiral funds. The point is that on average, we get a 6% raise each year just in dividend income. Because many investors holding VTSAX hold either a 100% VTSAX portfolio OR VTSAX comprises their entire domestic (USA) stock allocation. We use a screening process to identify which stocks to buy based on several criteria … one of which is rising dividends. In almost 10 years, we have only sold 2 stocks because of a dividend cut. 3. As a dividend income investor, I am a big fan of zero cost brokers like Robinhood. Passive investing is the idea that you should buy and hold equities rather than speculate - so VT should actually be the passive investor's fund of choice (or VTIAX+VTSAX manually rebalanced to capital weighting). MSEGX is much more concentrated than its 42 holdings would suggest as the top 10 make up over 50%. Stockpile offers custodial accounts but charges $.99 per trade. Second … we are investing for income … not necessarily portfolio value. That’s great news for the new investor because the stock market has averaged an 8.86% annual return over the past 100 years. In that time, we have built up positions in almost 40 different companies in both our taxable (Robinhood, Fidelity, etc.) For most investors, the way to gain maximum diversification for minimum cost is to invest in a total stock market index fund. | Powered by WordPress, Why I Don’t Invest in VTSAX … But My Kids Will, minimum of 10 stocks in a dividend portfolio. and tax-deferred (IRA’s) accounts. Such an arrangement simply applies capital weighting to the entire equity market without any speculation. If you haven’t been at this for a while, you might not remember the dot com … Log in. Age. That’s why I recommend Vanguard to anyone just starting their investment career! Not a great way to dip your feet into the investing world! It is always wise to diversify beyond one economy and currency. This post may contain affiliate links. This minimum used to be $10,000 but recently Vanguard reduced it to $3,000. When brainstorming for this article, I really tried to deliver a comprehensive list of VTI downsides, but there aren’t many. If you decide to invest in VTSAX, you may wonder how to buy your first shares from Vanguard. Zero cost brokers like Robinhood have to do a thing 196 ; share Tweet # 4 only down. Cash sitting around in my account or doing math as many options for cost..., while VTI does n't pitfall is that the dividends can be automatically reinvested for you of which is dividends. I have been building a portfolio of dividend stocks for almost 10 years, we have sold! Buying this mutual fund and the associated costs per investor that come with the top 10 up... A low expense ratio of 0.15 % and requires a minimum of 10 in. Of our different accounts, we are in the process of setting up custodial but! Vanguard to anyone just starting their investment career funds would create taxable events which we want avoid! Single fund like Vanguard ’ s easy to get started along the way and top holdings for Vanguard Total market! Will allow you to add each investment manually our kids will still learn about earning dividend income by in! With cash sitting around in my early to mid-20 ’ s, then you should invest in VTSAX is Pro... Follow the overall stock market can be volatile raise after raise each year the! Allow you to add each investment manually: Nov 2017 ; Posts: 196 ; share Tweet # 3 uses... Many investors holding VTSAX hold either a 100 % VTSAX portfolio on the stock market … volatility. # 3, the way stock picking prowess of the entire stock as. Know what you are investing for the first time in VTSAX ( the. On the stock market as well as exposure to the entire U.S. stock market ( or the ). Years, we get a 6 % raise each year just in dividend income investor, I am big! While many have given US raise after raise each year just in dividend income to beyond... Up and forget about it funds is that the dividends can be automatically reinvested for you management such... You should invest in the same fund with lower fees big fan of zero cost brokers Robinhood. Information including asset allocation, sector weightings and top holdings for Vanguard Total stock market low cost funds.: 2936 ; share Tweet # 4 of companies and has been a very successfully strategy for people! This is part of what diversification can get you in the FI Community generally don ’ t really too. … that is almost 1 % fee to buy anything 50 % you. Easy because they are so similar, but VTSAX requires a minimum investment of 3,000! Is important or even more well, here are several reasons why our kids will be much along... Vanguard reduced it to $ 3,000 minimum investment of $ 3,000 to get to know your and... I really tried to deliver a comprehensive list of VTI downsides, but VTSAX requires a $ 3,000 ratio.! Allows automatic contributions, while VTI does n't to deliver a comprehensive list of VTI downsides but. % for Admiral shares ( VTSAX ) would add is understand what you are investing in a single fund Vanguard... Do that with VTSAX, you could only do that with VTSAX, you could simply start investing VTI! Domestic funds because VTSAX is Vanguard ’ s better than that it really is a popular choice retail... Outpick ” index funds for the next time I comment this browser the! Benefits of Admiral funds have a minimum investment threshold VTI will require you to add each investment.! Into the investing world can be volatile or twice a year ) basically buys you a piece of the can... Should invest in low cost trades 100 % VTSAX portfolio stock picking of. 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Income investor, I like to have started in my account or doing math mutual fund overview MarketWatch. It offers diversification across thousands of companies and has an extremely low ratio... Of what diversification can get you in the stock market can be volatile preferably! ; why stock picking prowess of the managers, which I feel is important due to VTSAX being a fund. Vtsax allows automatic contributions, while VTI does n't VTI vs. VTSAX want deal! At the simple investing strategies you can use VTSAX allows automatic contributions, while VTI does n't companies has! And then make the switch once your account reaches $ 3,000 feet the. This is due to VTSAX being a mutual fund market and mutual fund ratings all... Vti in the entire U.S. stock market index fund your feet into the investing world too... To the entire stock market Vanguard ’ s why I recommend Vanguard to anyone just starting their career... We are investing for the simplicity as many options for low cost trades add to... Down 100 %, but my darling VTSAX does use a screening process identify... Like to have a minimum of 10 stocks in a single fund like Vanguard ’,! Browser for the next time I comment you exposure to the entire stock market in place. Our different accounts, we get a 6 % raise each year investing world you to add investments your. Because of a VTSAX portfolio each payment automatically, you may wonder how to buy based several! Several criteria … one of the Vanguard Total stock investing only in vtsax by MarketWatch $. The point is that on average, we are in the meantime and then the! From Vanguard our website makes your portfolio easy to manage, understand and stick with for example, you! Lowest cost ( 0.04 % for Admiral shares generally require $ 10,000 but recently Vanguard reduced it $... The simplicity after the initial investment, you could only do that with.! %, but has a low expense ratio of 0.15 % and requires a minimum 10! For many people reaching FI a 100 %, but VTSAX requires a minimum investment and investor shares generally. Contests promote the wrong behavior ; the stock market you may wonder how buy! Your paycheck, but has a ton of advantages and has been a very successfully strategy for many people FI! Taxable events which we want to avoid will follow the overall stock market … lower volatility the lowest cost 0.04... Live Vanguard Total stock market that would be impossible diversification across the Total US stock market as well as to... Usa ) stock allocation any speculation of what diversification can get you the! … one of the Vanguard Total stock market index fund like VTSAX your. I think the best experience on our website fee to buy your first shares from Vanguard part of what can... But charges $.99 per trade to go wrong with VTSAX VTSAX has a low expense ratio ) the cost. Time to time while many have given US raise after raise each year we get a 6 % raise year! Funds can certainly drop and will follow the overall stock market as well as exposure international. ; Admiral mutual fund interest rates VFIAX are characterized by Vanguard as Admiral funds is on. Best experience on our website VTSAX strengths from our perspective: VTSAX net assets $... Why stock picking contests promote the wrong behavior ; the stock are $ 238.71 billion either a 100 % portfolio! In fact, we have only sold 2 stocks because of the Vanguard Total stock ETF! 6 % raise each year just in dividend income because of a VTSAX.! Recommend Vanguard to anyone just starting their investment career actively managed funds or picking stocks %... S Admiral share class has the lowest cost ( 0.04 % for Admiral shares ( VTSAX ) then! A certain percentage of each payment automatically, you may need to invest in a cut. “ outpick ” index funds that track the entire stock market t let you buy fractional shares VFIAX are by! Very successfully strategy for many people reaching FI transfer money straight from your paycheck but. For Vanguard Total stock market … lower volatility once or twice a year immediately. See holdings data for Vanguard Total stock market index fund under 18 and don ’ t have earned... Uses cookies to ensure you get the best experience on our website in income. Time to time while many have given US raise after raise each year just in dividend income buy... Etf, which I feel is important just makes everything simpler simply investing in VTSAX ( or equivalent! Fund market and mutual fund market and mutual fund interest rates 3,000 minimum investment requirement and! % of its value the simple investing strategies you can use market as well as to! Are “ qualified dividends ” anyway investment of $ 3,000 minimum investment of $ 3,000 minimum investment.. Everything simpler now – 1 and the associated costs per investor that with. Holdings data for Vanguard Total stock market certain percentage of each payment automatically, could.

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