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Learning, Sharing, and Teaching => Investor Alley => Topic started by: merlin7676 on July 25, 2016, 10:27:37 AM

Title: 401K VITSX and taxable VTSMX
Post by: merlin7676 on July 25, 2016, 10:27:37 AM

I have 24% of my work 401K allocated to VITSX (through Schwab which is the only plan my company uses).

I'd like to start up a taxable account on vanguard with VTSMX ($3000 minimum) and eventually convert it over to admiral share VTSAX when I got 10K in there.

Does it make sense to have what I think is essentially the same thing in 2 different investments? Or are they really 2 different ones even though they both are vanguard total stock market index? 

Title: Re: 401K VITSX and taxable VTSMX
Post by: DrF on July 25, 2016, 11:31:57 AM

http://socialize.morningstar.com/NewSocialize/forums/t/11349.aspx

vitsx is basically s&p500, while vtsmx is total stock market (s&p500 plus mid and small caps). vtsmx is more diversified, but may/or may not have more volatility.

Inherently, there are no issues with what you want to do. You could just buy the ETF version of vtsax (VTI) and then you don't have to save up $10k.
https://www.bogleheads.org/forum/viewtopic.php?t=112949

Title: Re: 401K VITSX and taxable VTSMX
Post by: seattlecyclone on July 25, 2016, 11:36:43 AM

DrFunk, that forum post you linked was inaccurate. Straight from the source, VITSX is just the institutional version of VTSMX/VTSAX (https://institutional.vanguard.com/VGApp/iip/site/institutional/investments/productoverview?fundId=0855).

If your Investment Policy Statement says you should have more US stocks than you can hold in just one of your accounts, it can make perfect sense to buy two different versions of the same fund in different accounts.

Title: Re: 401K VITSX and taxable VTSMX
Post by: DrF on July 26, 2016, 07:23:28 AM

Alas, the internets have failed me...