Vtsax Minimum Investment

[Eleanor Heidecker]

Ifyou live outside the USA, Vanguard and its funds may or may not be available. Vanguard is growing rapidly and now is available in many countries outside the USA. You can check the list out here: Vanguard Global

Also, when I talk about VTSAX or a Total Stock Market Index Fund, both these are indexes that mirror the US stock market. As I explain in my post on International Funds, this is all those of us in the USA really need. But you might find it difficult to access such a USA-centric fund.

If you are inclined to go this route, you might consider the lower cost ETF version: VT. Ordinarily, I tend to avoid ETFs (exchange traded funds) because with them you have the possibility of sales commissions and/or spreads to consider. But since the expense ratio on VT is .07%, it is worth exploring. Just be careful what you pay to buy it.

While the funds you list for option #2 are low cost, they are still higher than VINIX. This extra cost very likely erases any performance advantage. Plus there is the added complexity of having to rebalance them to stay on target.

Since I hold the REITs and Bonds in the IRAs, at some point I might have the interest and dividends routed to our cash accounts for spending. Or I might continue the ROTH strategy and draw living expenses from my taxable VTSAX fund.

For instance, we hold our bonds and REITS in IRAs to protect the dividends from taxes. We fill our Roths with VTSAX because I expect stocks to have the strongest growth over time and the ROTH best protects that.

So, the house sale proceeds actually went into the taxable VTSAX fund. Then, in turn, I transferred an equal amount of VTSAX shares in our IRA to the REIT also within the IRA. Net result, my allocation remained exactly the same.

I invested about $50K in Feb this year in the Lifestyle High-Growth Managed Fund and plan to invest at least $19K (or more if I can grow my salary) per year for next 10 years via automated regular payments. I know the management fees are higher using the Vanguard managed funds vs Vanguard ETF but found the idea of investing regular small amounts into multiple ETF and re-balancing required too much micro-management on my part (a nice way of saying I am lazy).

Stocks have the potential for capital gains and, as I explain elsewhere on the blog, they should dramatically outperform savings accounts over time. You are only looking at the 5% savings interest rate v. the stock dividend currently at 2%. This dividend and the value of the stocks both have the potential to grow.

There are different tax rules in most EU countries and it does matter what fund domicile you chose, e.g. most Vanguard funds over here are Dublin-based vehicles that usually come with a tax disadvantage to domestic funds or investors outside of Ireland, if the funds do reinvest the distribution.

When it comes to the bond part of the portfolio one has to realise that you either go for a bond index fund/ETF that invests in domestic (government) bonds such as German Bunds or UK Gilts or you will end up with a European portfolio with high weightings in countries such as Italy, Spain and France which might not be the safest option within the current Euro crisis. So high risk at low yields. Perhaps that even speaks against a bond portion at all for the time being.

VEF might be the best route for international exposure holding around 950 common stocks of companies in approximately 22 countries in Europe, Australia, Asia, and the Far East ( -detail-overview.htm?portId=9555) However, a 0.43% MER.

Thank you so much for the education.

I am from the Philippines and how can i invest in Vanguard?

as of now my bos bought me a life insurance with investment in Sun Life, i request requested my agent to put it in index portfolio.

I recently opened my first Vanguard Roth IRA but I only had $1,000 to put in it to start. I do plan to fully fund it this year (and one for my husband), but ony had the $1,000up front. I put it in to a Target Fund to begin with because that was the only one that seemed to offer $1,000 funds as a minimum. Was this a bad move? Once I get $3,000 built up in there, can I transfer into the VTSMX fund? If so, will there be any penalties (tax or otherwise)? Thank you so much for your help, I love your blog.

I am new to your blog, and have enjoyed reading random posts. Enjoyed your post on the Vanguard. I have been with them myself for more than 15 years. Recently I was stunned (and pleased) to read that Vanguard is managing $2 trillion U.S. mutual fund assets (15% of all US investments)

Jim,

Happily invested in Vanguard, Thanks for the great advice.

You mentioned in a reply above (from Steve) exchanging a traditional IRA into a Roth IRA, Besides paying the taxes when you exchange is there any other drawbacks or pitfalls? Other than paying less taxes when withdrawing, when would this make since to consider or not? Are you planning a series or post about withdrawing assets to avoid the tax man?

There are two main reasons to hold bonds:

1. They tend to be less volatile than stocks and so owning them tends to reduce portfolio risk and makes for a smoother ride.

2. They are a deflation hedge.

My guess as to the reason is that, assuming you are conscientious about rebalancing, over time this mix will give you the advantage of buying low and selling high while still holding a strong enough stock percent for maximum performance.

This post is most welcome! Love your blog and your writing style. As a investing beginner I often get confused about the fund names, so this is really helpful. And I appreciate that you included advice for your international followers ?

I am a fellow kiwi investor and am interested in the VTS ETF on the aussie exchange. I was wondering about what taxes are incurred on the returns on the investment (dividends/capital gain). To my understanding only dividends are taxed currently, do you have any further info? Also, do you just accept the foreign exchange risk (NZ dollar weak against AUS recently) or do you go about it some other way?

Yes, you can hold individual stocks in your IRAs, Roth and otherwise. If you currently hold these at another brokerage, Vanguard can help you transfer them. Once you are set up with Vanguard, you can buy and sell stocks thru them. But while you can do, whether you should is another question. Consider first:

As you know, I have no expertise in Danish or European investing options. All I can offer you is some general guidelines at to what I in your position would be looking for, and that would be something that closely matches this:

Also in the off chance that your daughter swings by Aarhus in Denmark and wants a tour-guide, feel free to contact us. We know the place well, and my wife (from Georgia, US) would certainly appreciate the opportunity to talk to a fellow country(wo)man ?

The problem for us is not to get Vanguard, as we can buy the Vanguard ETF versions of the funds you recommend, and I presume we could also open a new, joint account at Vanguard from Denmark.

The main problem is taxation, and if the taxation laws makes it a bad investments compared to more expensive Danish index funds which are taxed more leniently.

Ah. That tax treatment makes quite a difference. Having then already accounted for any gain or loss, would I be correct in then assuming when you did sell you Vanguard shares it would not be a taxable event?

To matters more complex though, you can only deduct up to 33% of your losses if you invest in foreign funds, where as you will still be taxed up to 42% on your gains.

In Danish funds the loss/gain deduction/tax is the same, so up to 42%.

Still doing a guest post would require a bit more understanding and most importantly experience than I have at the moment, I think. Though if any other dane, more experienced in investment, would like to write a post, I would love to read and contribute if necessary.

Hello,

I have some amateur questions. Do you have to have a Vanguard account to purchase VTSAX? I hold some other Vanguard funds in my Fidelity account. If it is available through Fidelity, is there any disadvantage to purchasing it through there as opposed to opening a Vanguard account? In my Fidelity account I have my personal investment account and a rollover IRA, so I could transfer everything to Vanguard at some point.

Here in Sweden we have access to an index fund following the 30 largest swedish companies (named Avanza Zero), and the funds expense ratio is 0%. It comes with no additional costs what so ever, and is of course always recomended for swedes looking to invest in an index fund.

My question though, is this:

Would you recomend mainly investing in this no-cost index fund over investing in the Vanguard Total Stock Market Index ETF, which have an expense ratio of 0,05% ?

Hello there jlcollinsnh, i have a question for you.

Its about how to invest in Vanguard from sweden. I do know of one way, but thought i could ask if you know a smarter way before i start investing it.

I am a 29yr old swedish gentleman, with a pretty new found interest for saving up for an early retirement.

Im very interested about investing thru the Vanguard Total Stock Market Index Fund

But i am unsure about my options for doing it from sweden.

I know i can buy them over the market as a stock traded fund (ETF). But im not sure if its the best way to get them for a person living in sweden. Or if i can buy the Admiral/Investor shares, and if so, if it is an option for me or not. Having a hard time understanding the info i see over the internet here, i did find a vanguard site for sweden, however, they have nothing like the Vanguard Total Stock Market Index Fund, the closest is a european index fund with about 450 different stocks. And thats not at all what im looking for.

Found it at this link: -funds.shtml#pagetab1

From what i can se, the etf has an expense ratio of 0.05%/year just as the Admiral Share.

However, id have to pay a brokerage fee every time i buy into it. (would probably be around every second month, to keep the brokerage fees at a decent level).

Brokerage-fees for buying american stocks is at 13.95 USD, and buying every second month would be an investment of somewhere around 2000-2200 dollars worth, so a buying fee of 0.6% or so. Or would it possibly be better to buy every month, even though it bumps up the brokerage fee to 1.2%?

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