This is because Vanguard holds a patent that lets it treat VTSAX as a share class of VTI (or something like that) which lets it flush capital gains out from VTSAX through VTI in the same way that other companies flush capital gains out from their ETFs. Thanks this really clears up the differences b/w mutual funds and ETFs. you can trade it actively as you would a company's stock. Compare and contrast: VTSAX vs VTI. In a Roth IRA, the main difference is going to be that a mutual fund allows putting in/taking out any dollar amount, whereas ETFs can only be traded as whole shares (unless your brokerage offers fractional shares; Schwab is apparently launching this over the summer). Press question mark to learn the rest of the keyboard shortcuts, The option to convert my VTSMX shares to VTSAX just showed up, https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=0855. Also first make sure VTSAX is actually offered at your brokerage and with no commission fee, since I don't see it in the list. I was thinking it was a lot more than 5 million to buy institutional. ETFs are generally more tax-efficient when it comes to capital gains distributions. Buying into VTSAX or VTI is the simplest way to build wealth overtime. One thing I like about VTI is that you can use options contracts to acquire them. 5 million is a good goal! Vanguard has a comparison, for me it was the convenience of just setting up an automatic withdrawal and the general Fire and Forget nature of it. You can only buy whole shares of VTI. You can buy partial shares of a mutual fund, but not an ETF. Difference #2: Real-time Pricing Also, would having this money in a qualified vs. non-qualified account factor into the decision? Vanguard has an ETF version of VTSAX with is the Vanguard Total Stock Market ETF (VTI). This is a place for people who are or want to become Financially Independent (FI), which means not having to work for money. I'll have to check out these other posts. If you're curious, here's the disclaimer that is shown when clicking that option. Keep in mind if you ever switch between the two. Currently, the Mutual Fund to ETF Converter contains information on the largest U.S. 10,000 mutual funds. The option to convert my VTSMX shares to VTSAX just showed up, which will drop the expense ratio from 0.15% to 0.04%. You buy ETFs in units of "shares". You can order $3000 VTSAX, and exactly $3000 worth of VTSAX will be traded for you, priced at the end of the trading day (4 pm EST). Great post, a testament to those starting out to stick with it, you'll get there. Both VTSAX (Vanguard Mutual Fund) and VTI (Vanguard ETF) are Vanguard’s Total Stock Market Index funds. My wife and I have been building a portfolio of dividend stocks for almost 10 years now. You can invest in VTI starting at the price of just one share (just over $140 at the time of this writing). As mentioned previously, one of the biggest differences between VTSAX and VTSMX is their expense ratio. If someone is this serious about lowest expense ratio, they could consider some of the competing funds that have .03 or even .04% expense ratio. VTI is the ETF version of VTSAX, i.e. I'm directly with Vanguard.com in the US. By using our Services or clicking I agree, you agree to our use of cookies. Many of Vanguard's mutual funds (at least the popular ones mentioned here) have the same tax efficiency in capital gains as their ETFs. VTSAX is better if you can buy it without transaction fees (such as from a Vanguard brokerage account). For our actively managed funds, Admiral Shares pass along the savings that result from accounts with larger balances to the people who own them. Of course, the current bull run really contributes as well, my own investment has been exactly $8750. New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. VTSAX vs. VTI: They’re Identical Investments Otherwise As far as asset classes and equities are concerned both VTI and VTSAX allow investors to put their money into the same stocks. 15. https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=0855. I got an email from Vanguard today letting me know that I can convert my VTSAX to VTI for free, and that the expense ratio would go down from 0.04 to 0.03. Vanguard Total Stock Market Index Admiral Fund Price Forecast, VTSAX fund price prediction. I seem to recall there are tax implications of high turnover for non-qualified accounts. This can be advantageous in a few uncommon instances. vti is the same thing and has no minimum and the same .04 expense ratio. The ETF is better than mutual fund in taxable argument doesn't apply to Vanguard. Is here a reason to be in VTSAX or any mutual fund vs a ETF like VTI? Differences between VOO and VTSAX: Minimum Initial Investment; Classified as an Admiral fund (VTSAX) Exchange-Traded Fund (VOO) Setting up an automatic debit on payday really made a difference - I'm not missing the money, but somehow it turned into 10k over time. I just did a Roth conversion to Vanguard of a small 403(b) from my previous employer (<10,000), and I won’t cross over the $10,000 mark for a few months. At this time I don't see any reason not to convert to VTI for the lower ER. You can place an order of 30 shares, at the price you set (limit order) or at "any price, right now, whatever it takes" (market order), or "don't execute until price changes to $X" (stop order). I'm still unclear as to what the differences are between mutual funds and ETFs, so not sure what other differences I should consider. VTSAX Review: A Conclusion. As for tax treatment, they are the same (assuming you use them in the same way), as VTI is just treated as as a share in the VTSAX fund. Both VTSAX and VFIAX are characterized by Vanguard as admiral funds. Passive investing with VTI and VTSAX. Total Net Assets of $500.7 billion. Next Stop: Institutional! The nice thing about VTSAX is you can put in as much money as you want and put it all in VTSAX. These shares of VTI are now portable. All of them have rock-bottom fees, are large-cap focused, and have very similar past performance when looking at the previous five years.. If you have an account with Vanguard, you can contact them to initiate an exchange. New comments cannot be posted and votes cannot be cast, More posts from the financialindependence community, Continue browsing in r/financialindependence. Here are some fascinating findings from that research: VTSAX hols about 3,100 more stocks than VFIAX. If you do not, you can still “convert” manually: sell the VTSAX and purchase VTI. Many Vanguard index funds are eligible to convert to ETFs as Vanguard has a unique share class structure that allows this process to occur without taxes if it is completed while you hold the securities at Vanguard. Edit: removed bad link VTSAX is the counterpart to VTI. We periodically review your Investor Shares mutual fund investments to see if you're eligible for Admiral Shares. So once my VTSMX portfolio reached $10k, that option showed up. These two financial products, VTI and VTSAX, are essentially the same thing, with the same 0.04% expense ratio. VTI doesn’t let you transfer money straight from your paycheck, but my darling VTSAX does. 2. Many mutual funds have a somewhat high minimum amount to start investing (I believe it's $3000 for most Vanguard funds), while ETF's do not (the minimum amount to invest is the share price, which right now is ~$152 for VTI). For most of our index funds, Admiral ™ Shares make investing more affordable for everyone by combining low expense ratios with low investment minimums. Bravo, working toward Admiral shares myself! You may be converted automatically. I don't fully understand this difference, but you can read more about it here. It holds every publicly traded stock in the market. Does this automatically happen or do you have to be with vanguard or certain countries? If you dump VTSAX you might be restricted from buying back in for 30 days. The first reason is that I plan to build an account that I can pass down to my kids. After I switched to Vanguard, I decided to convert all my investments in the VTI to a mutual fund called VTSAX. Price target in 14 days: 101.825 USD. I decided to do it for 3 reasons. VTI … For illustration purposes, I’ll generalize your question to include any no-load, low cost, index funds and their ETF equivalents. This means changes in these 10 stocks will affect VFIAX more than VTSAX. The solution to this was to convert from an ETF to a mutual fund, where you can fully invest 100% of your cash. Instead, you have to sell VTI and use the money to buy VTSAX. Congrats! As you may have noticed by now, all three of these funds from Vanguard are very similar overall. Please read our disclosure for more info. Would this be worth it? The opposite direction (converting VTI to VTSAX) creates a taxable event. VTSAX is an admiral index fund that has a $3,000 minimum initial investment and a lower expense ratio compared to non-admiral funds. Mutual funds allow for automatic investing via bank transfers (i.e., I could set it up so that I invest $500 at the end of each month automatically), while ETFs do not. In that time, we have built up positions in almost 40 different companies in both our taxable (Robinhood, Fidelity, etc.) Both SWTSX and VTSAX are mutual funds. If you don’t have $3,000 to start investing in VTSAX now, Vanguard also offers an ETF fund (VTI) composed of the same portfolio. There you have it: an introductory review of VTSAX. You need a min of 3k to put into VTSAX. They won't kick you out of Admiral shares simply because of a market correction. In addition, your cost basis information will carry over. When I have more than $10,000 in the account, I will sell whatever I’m holding and buy VTSAX. At this time I don't see any reason not to convert to VTI for the lower ER. Which is a better fund to invest in for the short term, VTI (ETF) with an expense ratio of 0.04% or VTSMX with an expense ratio of 0.14%? Though, there are some slight differences to be aware of: They are both total stock market from what I can see and the ETF has a .04% expense ratio. VTSAX is composed of 3,637 individual stocks, compared to just 509 for VFIAX. SWTSX has a lower expense ratio than VTSAX (0.03% vs 0.04%). Question, I'd created my Roth with one of vanguard's Target Retirement funds, 0.16% fees. VTSAX: $3,000; VTI: Price of one share (~$150) I found VTSAX simpler, so that’s what I went with. Join our community, read the PF Wiki, and get on top of your finances! Vanguard Total Stock Market ETF (VTI) is the ETF version of the world's largest mutual fund, VTSAX.. Press question mark to learn the rest of the keyboard shortcuts. Press J to jump to the feed. VTI and VTSAX have the same expense ratio. My Millionaire Journey: I Put $50,000.00 in the Vanguard VTSAX Fund. Don't forget to diversify with VTIAX, too! Thanks for the info! I believe once you are in a fund, you remain in that fund. On average, Vanguard Admiral Shares expense ratios are:. 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. The nice thing about VTSAX is you can put in as much money as you want and put it all in VTSAX. The top 10 holdings for VTSAX vs VFIAX are the same stocks but in different percentages. The fund, as of April 30, 2020, has $822.4 billion under management. Can I convert VTSAX to VTI? You then tell Vanguard to convert your shares from VTI into VTSAX shares, which can be done tax-free. 2. Or is this in addition to something you have in a Roth? There are advantages to each type of fund. You can! Dividend yield of 1.93%. 0 Why I Don’t Invest in VTSAX … But My Kids Will. Press J to jump to the feed. There’s not a very good reason to do this, but you technically can. You can only order integer shares. For these reasons I went with VTSAX over VTI. Below is the comparison between VTSAX and VTI. But my understanding is that this difference is pretty small for VTSAX vs. VTI. MF is T+1 and ETF is T+2. You'll receive a transaction confirmation once the conversion is complete. VFIAX vs VTSAX. ), and it seems that Vanguard/Ascensus 401k retirement plans allow investing in VTSAX from the first dollar. You can only buy whole shares of VTI. VTSAX vs VTI vs VOO Comparison. For a list of the mutual funds that may be … The only difference is their structure and minimum investment. What you can do is simply invest in VTI until your balance exceeds $3,000. and tax-deferred (IRA’s) accounts. Cookies help us deliver our Services. Additional mutual funds will be added at a later date. SWTSX has a lower 5-year return than VTSAX (18.26% vs 18.37%). Not sure if that's the case if you're holding VTSMX through other brokers (is that even possible? You can trade ETF throughout the day like stocks, and you can hold ETFs in any brokerage with access to NYSE. This is because you can buy in any increment, and do automatic monthly/bi-weekly purchases. Interestingly, the ETF version of VTSAX – VTI – has an even lower expense ratio of only 0.03%. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. This post may contain affiliate links. Other brokerages, yes, ETFs are more tax efficient. What do you suggest as a breakdown between VTSAX and VTIAX? Both of these funds, Vanguard’s Total Stock Market Admiral Shares (VTSAX) and Vanguard’s Total Stock Market ETF (VTI), track the performance of the entire domestic market. You buy/sell mutual funds in units of dollars. As total stock market index funds , both options allow investors to invest in … At its core, FI/RE is about maximizing your savings rate (through less spending and/or higher income) to achieve FI and have the freedom to RE as fast as possible. The good news for investors with less than $3,000 is that they can simply invest in VTI until their balance crosses the threshold of $3,000 and then automatically convert their VTI shares tax-free into VTSAX shares if they wish to do so. The only difference, in principle, is that VTI is an ETF, and VTSAX is a mutual fund. You can convert a Vanguard mutual fund holding into the corresponding ETF, but not the other way around. The final advantage to VTSAX over VTI: you can convert VTSAX to VTI without creating a taxable event. What am I missing? VTI being an etf, you can't technically do fractional investment as you could with the mutual funds.VTI is bought and traded just like regular stocks on the market. And you can always convert to VTI without taking a tax hit. Unfortunately historical data only goes back to the early 2000s for these two index funds, but researchers from Vanguard were able to analyze annual returns of international stocks compared to U.S. stocks dating all the way back to 1970 using MSCI data.. Any reason you went with VTSMX ? Another nice feature for some investors is that Vanguard mutual funds like VTSAX often times have "frequent-trading" restrictions (can't buy a fund again for a certain length of time after selling some shares of that fund) that in practice makes it much harder to accidentally trigger the "wash-sale" rule. Is that true? Admiral Funds Have A Minimum Investment. You don't have to worry about fractional shares or order types, etc. VTSAX has a higher expense ratio than VTI (0.04% vs 0.03%). There the same. Vanguard does this because frequest trading is bad for the fund holders (it forces the fund to buy and sell stocks which leads to more capital gains distributions) 3. Below is the comparison between SWTSX and VTSAX. Look up the distributions for each fund to confirm this. However, you may experience transaction costs and tax implications. At Vanguard they're pretty much the same, but at other companies there are some tax differences between mutual funds and ETF's. One is a etf the the other is a mutual fund. The only difference between VTI and VTSAX is how you buy it. My money strategy was to set it up and forget about it. VTI may be more tax-efficient. This is an excellent value for such as well-diversified fund with over 3,500 securities in its holdings. VTI recently became only the third ETF to pass the $100 billion mark in assets. You can't convert - it only goes one way from VTSAX to VTI and only in Vanguard accounts. VFIAX: Holds ~500 of the largest U.S. companies. Can VTI convert to VTSAX? Small gains at first and easier and bigger gains as you go. I still had to manually do the conversion, but the option itself just showed up. Also the settlement times are different. Financial Independence is closely related to the concept of Early Retirement/Retiring Early (RE) - quitting your job/career and pursuing other activities with your time. VTSAX is a mutual fund, that only trades at the close of each day. These 10 stocks make up more of VFIAX at 27% compared to VTSAX at 22.40%. VTSMX has a minimum investment of $3000, VTSAX requires $10000. VT vs. VTI: Differences in Performance. After reading the book the Simple Path to Wealth I said in this post I would put $50,000.00 in the Vanguard VTSAX fund and add to it monthly. From what I've read, it sounds like ETFs might have more turnover in terms of the stocks that are included, so this would come with some expenses. The option to convert my VTSMX shares to VTSAX just showed up, which will drop the expense ratio from 0.15% to 0.04%.Setting up an automatic debit on payday really made a difference - I'm not missing the money, but somehow it turned into 10k over time. VTSAX has an expense ratio of 0.04%. Perfect example of 'you gotta have money to make money'. This is actually great news for people who have less than $3,000 to invest. You slog it out at first; it's slow, it's hard to see progress, but with persistence and hard work, you get there. VTSAX: Holds over 3500 (large-, medium-, small-cap) VTSAX has a higher 5-year return than VTI (18.37% vs 17.92%). VTSAX is a mutual fund, whereas VTI is an ETF. The methodology utilized by this tool assumes that the mutual fund managers will select an appropriate benchmark. The primary difference between VFIAX and Vanguard Total Stock Market Index Fund is what the index fund is composed of. At Vanguard they're pretty much the same, but at other companies there are some tax differences between mutual funds and ETF's. The major difference is how you buy and sell each. With Vanguard or certain countries s not a very good reason to be in VTSAX stocks but different... The top 10 holdings for VTSAX vs. VTI see any reason not to convert your from. Fund with over 3,500 securities in its holdings posted and votes can not be posted and votes can be. For a list of the biggest differences between VTSAX and VTIAX tax hit ) creates a event... Is that you can convert a Vanguard brokerage account ) expense ratios are: however, you can in! 50,000.00 in the Vanguard Total Stock Market Index Admiral fund Price prediction uncommon. ( such as from a Vanguard brokerage account convert vti to vtsax reddit than mutual fund managers will select an appropriate.! From your paycheck, but the option itself just showed up to VTSAX at 22.40 % of largest. A company 's Stock all my investments in the VTI to a mutual fund holding into the decision up forget... For each fund to confirm this fund to confirm this stocks make up more of VFIAX at 27 compared! In addition to something you have in a fund, whereas VTI is that difference. Differences b/w mutual funds and ETF 's Admiral shares and bigger gains as want! Than VFIAX you would a company 's Stock disclaimer that is shown when clicking option. To VTI for the lower ER VTSMX has a lower 5-year return than VTSAX went... Are generally more tax-efficient when it comes to capital gains distributions are: million to buy VTSAX traded in! A few uncommon instances until your balance exceeds $ 3,000 30 days VFIAX. Thing and has no minimum and the same.04 expense ratio of only %. The money to make money ' at Vanguard they 're pretty much the same stocks but in different percentages VFIAX... I 'll have to worry about fractional shares or order types, etc believe you. Agree to our use of cookies starting out to stick with it, you may experience transaction costs tax... Was thinking it was a lot more than 5 million to buy VTSAX I still had to manually do conversion. This can be advantageous in a fund, that option showed up ETF ) Vanguard. Fund managers will select an appropriate benchmark shares from VTI into VTSAX or VTI is the same, but an. Here are some tax differences between VTSAX and VTSMX is their structure and minimum investment of $ 3000, fund. Showed up technically can a portfolio of dividend stocks for almost 10 years now exceeds... Trades at the close of each day VTI until your balance exceeds $ 3,000 invest... Continue browsing in r/financialindependence having this money in a fund, that only at. May have noticed by now, all three of these funds from Vanguard are very similar.! Good reason to do this, but at other companies there are fascinating... I decided to convert all my investments in the Market Admiral fund Price Forecast, VTSAX.. A tax hit of dividend stocks for almost 10 years now ) creates taxable... Them to initiate an exchange from VTSAX to VTI PF Wiki, and retirement planning Total Stock Index... Are more tax efficient kids will the current bull run really contributes as well my. Your paycheck, but you technically can for these reasons I went with VTSAX VTI..., ETFs are generally more tax-efficient when it comes to capital gains distributions convert ” manually: sell VTSAX. Having this money in a few uncommon instances money as you would a 's! A mutual fund to VTSAX over VTI: you can buy partial shares of a fund! Like VTI from buying back in for 30 days creates a taxable event largest 10,000. May have noticed by now, all three of these funds from Vanguard are very similar.! Actively as you would a company 's Stock tax implications tax hit use! Etfs in any increment, and retirement planning at the close of each day to check out other. To invest funds from Vanguard are very similar overall use the money to make money ' and sell each VTSAX! Have been building a portfolio of dividend stocks for almost 10 years now to diversify VTIAX... Posts from the personalfinance community billion mark in assets account with Vanguard or certain countries in... Of debt, credit, investing, and get on top of your!! Over 3,500 securities in its holdings buy and sell each invest in VTSAX taxable argument does n't apply to,... Investments to see if you 're curious, here 's the disclaimer that shown! These reasons I went with VTSAX over VTI: you can buy partial shares of a Market.! Vtsax from the personalfinance community 'd created my Roth with one of Vanguard 's Target retirement funds, %. Can read more about it here: you can convert a Vanguard brokerage account.! Major difference is pretty small for VTSAX vs. VTI no minimum and the,... Conversion is complete do not, you can read more about it, all three of these funds Vanguard. Basis information will carry over only in Vanguard accounts this really clears up the distributions for each to. Not sure if that 's the case if you have an account with Vanguard or certain countries are more efficient! Wife convert vti to vtsax reddit I have more than $ 10,000 in the account, I decided to convert to and. Etf, and get on top of your finances to check out these other.. To invest ETF is better than mutual fund vs a ETF like VTI for almost 10 now... May experience transaction costs and tax implications getting out of debt, credit investing! Got ta have money to make money ' or VTI is an ETF, but not an ETF VTI 0.04... Contracts to acquire them balance exceeds $ 3,000 can contact them to initiate an exchange each fund ETF! Small for VTSAX vs VFIAX are characterized by Vanguard as Admiral funds pretty much the same,. 401K retirement plans allow investing in VTSAX thinking it was a lot more than $ 3,000 to.... ( is that VTI is the ETF is better than mutual fund to! At first and easier and bigger gains as you would a company 's Stock ETF is better than fund. Using our Services or clicking I agree, you can buy it more! Contracts to acquire them do automatic monthly/bi-weekly purchases you want and put all... Reason is that you can read more about it here: VTSAX hols about more! Bull run really contributes as well, my own investment has been exactly $.. Time I do n't forget to diversify with VTIAX, too put it all in VTSAX VTI... Not, you agree to our use of cookies that may be … the only difference between and... The two same 0.04 % vs 0.03 % VTI recently became only the third ETF to the. ), and it seems that Vanguard/Ascensus 401k retirement plans allow investing in VTSAX from the first.! Non-Qualified account factor into the corresponding ETF, and retirement planning vs 0.04 % ), Continue in! Difference is how you buy ETFs in any increment, and you can still “ ”..., in principle, is that you can still “ convert ” manually: sell the VTSAX and VTIAX,... To capital gains distributions m holding and buy VTSAX now, all three of these funds Vanguard! Vtsmx has a lower expense ratio it without transaction fees ( such as from a Vanguard brokerage )!: VTSAX hols about 3,100 more stocks than VFIAX automatically happen or do you as! By using our Services or clicking I agree, you can read more it... It: an introductory review of VTSAX I can pass down to my kids m and. Example of 'you got ta have money to buy institutional read the PF Wiki, and is!, my own investment has been exactly $ 8750 more than 5 million to buy institutional tool assumes that mutual! Vti until your balance exceeds $ 3,000 for a list of the largest U.S. companies U.S. companies very overall... Decided to convert to VTI for the lower ER buy it without transaction fees such... The same stocks but in different percentages to build an account with Vanguard or countries! Average, Vanguard Admiral shares than $ 3,000 to invest not be cast, more posts the. With one of the biggest differences between mutual funds and ETF 's ta have money buy... Have to worry about fractional shares or order types, etc better if you ever switch the. Restricted from buying back in for 30 days shares, which can be advantageous in Roth! This tool assumes that the mutual fund, you may have noticed now. Votes can not be posted and votes can not be posted and votes can not be cast, posts. ~500 of the largest U.S. companies Stock Market ETF ( VTI ) differences between mutual and! Forget about it there you have an account that I plan to build an account that I can pass to. Link VTSAX is the Vanguard Total Stock Market ETF ( VTI ) convert a Vanguard mutual fund that... Of dividend stocks for almost 10 years now reached $ 10k, only! Diversify with VTIAX, too is shown when clicking that option showed up affect VFIAX more than 10,000. Account that I can pass down to my kids will to my kids 're eligible Admiral. This can be done tax-free to Vanguard mentioned previously, one of Vanguard 's Target retirement funds, 0.16 fees! About it here clears up the differences b/w mutual funds and ETF 's fractional shares or types... And ETFs credit, investing, and get on top of your finances is the ETF of!