Vanguard Total Stock Market Index Fund Fact Sheet – VTSAX vs VTI Vanguard Index Funds | The RIGHT WAY to own the Vanguard Total Market Index Fund
Vanguard Total Stock Market Index Fund Fact Sheet – 6 Tips
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VTSAX vs VTI Vanguard Index Funds | The RIGHT WAY to own the Vanguard Total Market Index Fund
Vanguard’s Total Market Fund can be purchased as both an Index Fund, Vanguard VTSAX, or as an Exchange Traded Fund (ETF), Vanguard VTI. I have mentioned on previous videos that I do not personally own the Total Market Index Fund/ETF because I think it is a gross misrepresentation of what the total stock market actually is. That being said, there is over $900 Billion invested in these funds which means people are buying and holding it anyways. As a result, in this video we are going to cover the actual differences between holding the Vanguard Total Market fund as an ETF vs an Index Fund. There are some nuanced differences that people might not know.
ETF VS. MUTUAL FUND
Vanguard VTSAX is an index fund but it is technically also a Mutual Fund whereas Vanguard VTI is an ETF. Technically, you can own and purchase Mutual Funds from Vanguard with a different brokerage account, but often times, that brokerage has competing mutual funds and will charge a hefty fee to buy and hold them. On the contrary, Vanguard VTI is an ETF and you can purchase a Vanguard ETF
MINIMUM REQUIRED INVESTMENTS
Vanguard Index Funds require a minimum initial investment of $3,000 whereas Vanguard ETF’s such as VTI can be purchased for the cost of only 1 share. Additionally, certain brokerages like M1 Finance allow you to own/purchase fractional shares of Vanguard ETF’s if you don’t have enough money to buy a full share of the ETF.
Vanguard VTSAX has an expense ratio of 0.04% per year which results in a $4.00 fee every year for every $10,000 held in the Index Fund. The expense ratio for Vanguard VTI is 0.03% per year which results in a $3.00 expense for every $10,000 invested.
HOW YOU BUY VTSAX VS. VTI
Since Vanguard VTSAX is a mutual fund, no matter when you submit the purchase order, you will not actually purchase shares until AFTER the end of the trading day once the Net Asset Value (NAV) of the fund is re-calculated. Vanguard VTI is an ETF and can be purchased real-time throughout the trading day like a stock.