is this a taxable account or a tax deferred account (ie. Thanks everyone. The choice between these two funds is a matter of principle imho. Although the past can’t predict the future, more than likely each of these funds will provide similar returns in the coming years. Press J to jump to the feed. I'm still very new to all this so apologies if my post has been difficult to follow. And why do you recommend doing away with something like VDIGX? New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. Or should I use it to purchase VTSAX? VTSAX is composed of 3,637 individual stocks, compared to just 509 for VFIAX. I'm only looking to play it simple and invest in only a few index funds once I have enough capital to do so. Sharing insights on how to grow wealth and gain freedom. Index funds offer maximum diversification through holding thousands of individual stocks. Thus, VFIAX is composed of the 509 largest stocks in the U.S. On the other hand, VTSAX is composed of every single publicly traded stock in the U.S. At the time of this writing, that amounts to 3,637 individual stocks. I recently received $5k that I would like to use for my Vanguard account. VFIAX, VTSAX, and VDIGX are all redundant. If you choose to invest in VTSAX, this means you certainly won’t be alone in carrying about its performance. Please contact the moderators of this subreddit if you have any questions or concerns. Related Post: Here’s How the S&P 500 Has Performed Since 1928. The reason most bogleheads like VTSAX is because it gives you much more diversification than an S&P 500, while giving very similar returns over the long-term. The midcap and smallcap companies can be more risky (more variability of results) but also may contribute greater returns. Because VFIAX type companies are also heavily represented in VTSAX, you will probably find if you compare graphs of their performance over the past years that they track fairly closely. In 2019, I quit my day job as a data scientist because I started earning enough income through profitable websites to support my entire lifestyle. It’s a completely free platform and it’s the only one I personally use on a monthly basis. There's no reason to sell your shares and purchase another. So, if you want to keep investing as simple as possible and only invest in one stock market index fund, should it be a total stock market index fund or a S&P 500 index fund? For the most diversification among US stocks, choose VTSAX. You will buy the $ amount you want, and will get whatever number of shares that buys, to nearest thousandth. Perhaps it will be awhile before you hear people advising you to "own the whole market," which is one way to characterize VTSAX. For example, Berkshire Hathaway has class A and class B shares. VTSAX hols about 3,100 more stocks than VFIAX. You might also benefit from this common topic: "I have $X, what should I do with it? Their top twenty holdings are likely duplicate stocks too. The following table from Paul Merriman shows the annualized returns for the S&P 500 vs. the total stock market for each decade dating from 1930 to 2013: As you can see, the two indices offer extremely similar returns. Or should my focus start being on VTSAX for some smaller-cap exposure? VTSAX: Holds over 3500 (large-, medium-, small-cap) To answer this question, let’s compare two mutual funds offered by Vanguard: VTSAX – Vanguard Total Stock Market Index Fund Admiral Shares, VFIAX – Vanguard 500 Index Fund Admiral Shares. In addition, most people don’t realize just how large the largest stocks in the S&P 500 are relative to the other stocks in the index. However, I'm starting to regret not initially purchasing VFIAX instead. Their performance has pretty much been similar with the VFIAX outperforming VTSAX the last decade. A Profile of the Vanguard Total Stock Market Index Fund. Moved everything into WAX about a year ago, it’s nice for the peace of mind. Background history: I'm a 26 y/o male with a job paying about 75k/year, . We can see that both funds are mutual funds, both have an expense ratio of 0.04% (if you invest $10,000 into either fund you will pay $4 each year in management expenses), both require a minimum investment of $3,000, and both are classified as “large blend” funds. Outside of that decade, though, both indices offered returns within 1% of each other. I can worry about smaller cap funds later, like you said. By owning this one index fund, you can own a piece of every publicly traded stock in the U.S. Just looking to get some thoughts on the following. The dividend yield for VTSAX (1.82%) is slightly lower than that of VFIAX (1.93%), which could make a small difference for investors who are looking for higher-yielding funds. Press J to jump to the feed. I plan on holding them all for at least a year, and then might consolidate everything into VTI. The ticker symbols for those ETFs are VTI (Vanguard Total Stock Market ETF) and VOO (Vanguard S&P 500 ETF) and I wrote, No matter which funds you decided to invest in, I recommend using. Re: VTSAX vs VFIAX « Reply #10 on: June 21, 2014, 11:16:50 PM » In order to imitate the total stock market index you can purchase 81% s&p 500, 13% mid cap, and 6% small cap. Consider VT/VTWAX (Total World Stock Market). VFIAX vs VTSAX. You'd be essentially owning a little bit of thousands of companies, not just 500. That is, VTSAX includes all 509 stocks that are in VFIAX as well as an additional 3,128 smaller stocks. In fact, about 75% of VTSAX is composed of stocks in the S&P 500. This is a taxable account. The good news for investors is that both funds have extremely low expense ratios and both funds offer investment diversification for the average investor. There's no reason to regret and start chasing very marginal returns - remember that both of these funds have different risk-adjusted returns. This. We are charged $25/yr/fund so I only want to hold one. tl;dr: this is nonurgent, but would like to know more of the process of picking one over the other using specific examples. Thanks in advance. For example, Berkshire Hathaway has class A and class B shares. So far, 25% has been put into the ROTH, 403b, and personal investment. To give you better exposure, I would put some funds into the global market, maybe a total Global Stock Market Index. I am a bot, and this action was performed automatically. I share insights on how to grow wealth and gain freedom. These 3,128 smaller stocks are known as mid-cap and small-cap stocks since their market capitalizations are smaller than the large-cap stocks in the S&P 500 index fund. See image below, showing past 9.5 years compared. Still new to picking investments and wondering how you'd differentiate and pick between VTSAX and VFIAX? Don't pick both (though if this is a taxable account they are fine tax loss harvest partners). I think most people would argue there's no real difference between the two. VTSAX includes largecap, midcap, and smallcap. Your current portfolio is 100% in one single country. I recently purchased more shares of VFIAX (the first index I purchased when my account was opened in July of 2019). I understand that no one has really beat the market in general. Total Net Assets of $500.7 billion. New comments cannot be posted and votes cannot be cast. The Admiral share tier, VTIAX, is the new entry level with a $3,000 minimum initial purchase. No matter which funds you decided to invest in, I recommend using Personal Capital to track your investments with their free Investment Checkup tool and Retirement Planner. If you want small cap exposure get a separate small cap index fund. But seriously the chart and all the responses did point to VTSAX. You are in your 20s so assuming you really (truly) can hold through major market crashes then you are probably okay for the next 5-10 years with a very-high risk 100% stocks portfolio but I would start looking into asset allocation and balanced portfolios, particularly how they substantially reduce risk without sacrificing much return in exchange for that protection. The S&P 500 and the total stock market have a very similar composition and so their performance over the years has been very similar. Total stock market is pretty diversified as is imho. 3. So, let’s take a look at this difference in composition and see if it impacts performance at all. It’s a completely free platform and it’s the only one I personally use on a monthly basis. 2. If this is taxable then you cannot sell/exchange to another fund without causing a taxable event. Join the Income Community today to learn how you can create your own profitable websites from scratch. an IRA). Both the Vanguard Total Stock Market Index and … In the meantime, you could diversify a little by putting, say, 30-35% of your portfolio in VGTSX VTIAX (intl stocks) and 5-10% in VBTLX (bonds). This illustrates why the additional 3,128 stocks in VTSAX that are not in VFIAX don’t make a huge difference in terms of composition because these stocks are just so small relative to the biggest stocks in the S&P 500. Both show an expense ratio of .05% and the SEC yield is small difference VFIAX = 1.93%; cost per share = $182.20; VTSAX = 1.84%; cost per share $49.87. Read more. Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer. Note: No matter which fund you choose to invest in, I highly recommend using Personal Capital to track your investments. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. If I'm technically in this early (I only started in July 2019), why do you personally think I should wait a year, as opposed to just biting the bullet consolidate the VFIAX into VTSAX now? Do you trust to put your money into a fund with 500 stocks that represent the S&P or a fund that is … Press question mark to learn the rest of the keyboard shortcuts. to track your investments with their free Investment Checkup tool and Retirement Planner. The ticker symbols for those ETFs are VTI (Vanguard Total Stock Market ETF) and VOO (Vanguard S&P 500 ETF) and I wrote an entire post where I compared the two as investment vehicles. If you have a preference between em, tell me why or if theres any others i should be looking at. One last thing to mention is that there are equivalent ETF versions of each of these index funds that don’t require a minimum $3,000 investment. Thus, the performance over the years has been nearly identical for each fund. In The Bogleheads’ Guide to the Three-Fund Portfolio, Taylor Larimore gives several reasons for why index funds are better investment vehicles than individual stocks for most investors: 1. First, let’s check out some basic information about each fund: Note: You can find the information above on the Vanguard profile pages for both VTSAX and VFIAX. I have no debt (credit, loans, etc) been saving 75% of my paychecks. I don't mind keeping the existing $3k in there, unless there's a very detrimental reason to do so. As the name suggests, the S&P 500 is composed of the largest 500 publicly traded companies in the U.S. Cookies help us deliver our Services.

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