What’s The Difference? Just a few key differences set them apart
Investing in stocks is a great way to build wealth. Investing in US equities for decades can make you wealthy. It’s really hard to beat the US Stock Market. Really hard. Picking individual stocks a game not worth playing. Most US stocks stink. That’s right, most stocks outright stink. The few huge winners create all the wealth in this country.
More than 50% of the stock market returns come from 0.33% of the companies.
86 of the 26000 stocks analyzed in the paper, generated half of the stock market returns.
More than 100% of the stock market returns come from 3.8% of the companies
983 of the 26000 stocks analyzed created all the wealth. Amazing.
Trying to pick those stocks in advance is damn near impossible. That’s why over 89% of professional stock pickers lose to the index.
Luckily you don’t have to beat it. You can tie it and win big. Vanguard makes it easy with index funds. Buying VTI or VTSAX will give you exposure to the entire US Stock market. Either investment choice can help you build a life of financial freedom.
VTI and VTSAX- The Differences
There are a few subtle differences. Here are the main differences.
- Investment minimums
- Real-time vs end of day pricing
- Automatic investing options
Minimum Investments
VTI – No minimum. You can buy one share of VTI at the market price. Many investing platforms, like Robinhood, allow you to buy fractional shares.
VTSAX – $3000 minimum. Your first investment must be $3000 dollars or more. There is no minimum requirement for additional investments.
Real-time Pricing
VTI – this ETF has real-time pricing. The price will change throughout the day when the market is open.
VTSAX – this Mutual Fund has end-of-day pricing. The price is calculated after the trading day is over. So all investors that put a buy order in during the day will get shares at the same price.
This pricing difference will not have a significant impact on long-term results. Time in the market is measured in years not days.
Automatic Investments & Withdrawals
VTI doesn’t have automatic investing. Many investing platforms have their own tools to execute scheduling buying or selling.
VTSAX – automatic investing is available. Set up one and your buys will automatically execute.
Are VTI and VTSAX the Same?
Yes. Both investments buy and hold all actively trades stocks in the US equity market.
Stocks
How many stocks does each investment choice hold?
- VTI = 3590
- VTSAX = 3590
- VTI = Net assets of 10 largest holdings = 23.7%
- VTSAX = Net assets of 10 largest holdings = 23.7%
Historical Returns
[Jul 2001 – Oct 2020]
- VTI = 8.31%
- VTSAX = 8.28%
Cost
The expense ratio of VTI is slightly lower than VTSAX. Both are very cheap options.
- VTI = .03%
- VTSAX = .04%
Which is Better VTSAX or VTI?
- Both are less risky than individual stocks
- Both are run by professional portfolio managers
- Both are commission-free at Vanguard
- Both are great choices to build long term wealth
There is no clear winner between these two choices. They’re both winners.
The index fund that helps you buy stocks every month for the next decade is the better choice.
We’ll all about building habits. Simple Money Habits are our jam. Buying US Stocks every month is one of the greatest habits to build wealth. Please do it. Every month. Buy stocks. Don’t miss a month and invest as much as possible. Your future self will thank you.