Author Topic: Thanks everyone. I just jumped in and bought some VTSAX.  (Read 3461 times)

nsmall

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Thanks everyone. I just jumped in and bought some VTSAX.
« on: November 30, 2018, 01:49:58 PM »
Well, it was hard to hit submit, but I just bought 25K of VTSAX.  I have so much tied up in real estate, its time to buy index funds.  I have another 100k to invest, but just spending 25k was tough.  Thanks for all your help everyone.

The 100k I dont quite have the nerve to spend yet will go towards paying down some real estate mortgages, buying more VTSAX, and possibly buying some 529 plans for my 2 and 3 year old foster kids.

I am so thankful I found this site as I had tunnel vision before reading this great forum.

bebegirl

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #1 on: November 30, 2018, 04:58:50 PM »
Congrats!

I was thinking to do the same. How does it work? I open Vanguard account, transfer money and that's it?

Do I need to add more money monthly?

How do I pay for service fee?

Thanks!

nsmall

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #2 on: November 30, 2018, 07:51:33 PM »
@bebegirl
Open a brokerage account.  You may need to link a checking or savings account with micro deposits. 

The fees seem low https://investor.vanguard.com/mutual-funds/profile/fees/vtsax,

you will pay taxes on dividens earned...  https://investor.vanguard.com/mutual-funds/profile/distributions/vtsax

Dont trust me as I am a total rookie, but jump on in, everyone is doing it :)

I dont think you have to add anything monthly, just need $3000 to get the party started.

frugledoc

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #3 on: December 01, 2018, 02:27:01 AM »
Congrats!

I was thinking to do the same. How does it work? I open Vanguard account, transfer money and that's it?

Do I need to add more money monthly?

How do I pay for service fee?

Thanks!

Just do it. It is very easy.

hbrocks

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #4 on: December 03, 2018, 12:27:46 PM »
If I may piggy-back on to your thread with a vanguard question....
I have a TIRA with Oakmark that I wanted to roll over into VTSAX....would I do open an IRA at Vanguard to do this? Is this the same as a brokerage account?
Thx

saveysavesalot

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #5 on: December 03, 2018, 01:30:04 PM »
@hbrocks-
No, open a TIRA at Vanguard.  Then get Vanguard to pull the funds from your old TIRA to your new one.  You can specify your mutual fund then (target date or VTSAX or whatever).  I've consistently found Vanguard to be very helpful over the phone.

hbrocks

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #6 on: December 03, 2018, 02:36:56 PM »
great.....
Thanks @saveysavesalot :)
looks like i'm on track. ....
currently just waiting for Oakmark funds to get released / transferred over.
have been communicating with Vanguard simply thru their online messaging and they typically get back with answer's in one day.

flaky

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #7 on: December 03, 2018, 10:33:21 PM »
Is there any difference between VTS and VTSAX in terms of long term investing? I pay 9.50 for brokerage when I have the cash built up. Is there a better strategy for buying the US total market?

Andy R

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #8 on: December 03, 2018, 11:38:33 PM »
Is there any difference between VTS and VTSAX in terms of long term investing? I pay 9.50 for brokerage when I have the cash built up. Is there a better strategy for buying the US total market?

I noticed your first post was in the Aussie thread, so my response assumes you are an Aussie (also I can not find VTS on the US market).

The Vanguard Australia fund named VTS is a wrapper for the US fund VTSAX, so it is the same fund, but you buy it on the ASX instead of on the NYSE. Besides that it is literally the same actual fund.

Other things to note though:

1. Why are you buying a US total stock market when you are not an American? You should be going for a global fund, which on the ASX would be one of these
- a combo of VTS+VEU (US + Ex-US) or
- a combo of VGS+VISM+VGE (Developed large/mid + developed small + emerging markets) or
- a combo of IWLD+VGE (developed large/mid/small + emerging markets)

2. Even though VTS & VEU are available on the ASX, the underlying funds are domiciled in the US, which means you are subject to the ridiculous US estate tax if you die while still invested in them. This is why most avoid it and go for a VGS/VISM/VGE combo instead. They are a little more expensive, and I have heard Vanguard Australia are looking into re-domiciling VTS & VEU to Australia the way iShares redomiciled all theirs this year and if they do that then VTS/VEU will be the "go-to" combo for cheap all-world diversification for Australians. No idea if or when this will happen though.

nsmall

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #9 on: December 04, 2018, 11:17:12 PM »
I know, I'm playing a fools game.  But the 3% drop today, I found courage to buy another 40k in VTSAX.  Yeah!!!.  I  have 60k left.  Thinking I should buy two 529's for the kiddos and some bonds.  Either way, I am so thankful I found this site as I would have never opened a brokerage account.

Tempname23

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #10 on: December 05, 2018, 12:41:59 AM »
I know, I'm playing a fools game.  But the 3% drop today, I found courage to buy another 40k in VTSAX.  Yeah!!!.  I  have 60k left.  Thinking I should buy two 529's for the kiddos and some bonds.  Either way, I am so thankful I found this site as I would have never opened a brokerage account.

  Congrates to you, buying when everyone is selling is a psychologically hard thing to do.
But, it is buying low, and that is what we all want.
  When I read your first post and noted it was Nov 30th, I thought, oh I hope he doesn't get scared out
by the drop of the market. You didn't and you bought more at a lower price.
  You have it figured out, you're in it for the long term. Good on you!

nsmall

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #11 on: December 05, 2018, 11:06:58 PM »
Thank you.  I am going to make it my focus to buy as much as I can for the next 5.5 years regardless of the price.  I would have never done this, but this site and other sites similar to MMM have shown me buy, buy, buy, buy and buy when you can.

I am in an awkward situation as I am new to this concept and just ran into some money so I had to dig down deep to make the purchases as they were large to me. 

beee

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #12 on: December 06, 2018, 01:47:10 PM »
Congratulations on making the first step!
Here's how much you have in each holding and sectors if you have $65k in VTSAX:
https://stocked.honeymoney.io/?portfolio=VTI_65000
I built this tool because I enjoy browsing what I have and finding familiar companies there.

flaky

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #13 on: December 06, 2018, 05:14:42 PM »

Other things to note though:

1. Why are you buying a US total stock market when you are not an American? You should be going for a global fund, which on the ASX would be one of these
- a combo of VTS+VEU (US + Ex-US) or
- a combo of VGS+VISM+VGE (Developed large/mid + developed small + emerging markets) or
- a combo of IWLD+VGE (developed large/mid/small + emerging markets)

2. Even though VTS & VEU are available on the ASX, the underlying funds are domiciled in the US, which means you are subject to the ridiculous US estate tax if you die while still invested in them. This is why most avoid it and go for a VGS/VISM/VGE combo instead. They are a little more expensive, and I have heard Vanguard Australia are looking into re-domiciling VTS & VEU to Australia the way iShares redomiciled all theirs this year and if they do that then VTS/VEU will be the "go-to" combo for cheap all-world diversification for Australians. No idea if or when this will happen though.

Thanks for your response. The reasoning behind only buying the US total market (at least in the accumulation phase) is explained in jlcollinsnh 'Stock Series' of posts. The rationale is that the US total market is already significantly exposed to the international market that hedging that risk by buying international or ex-US markets is not worth it. Its broadly the same reasoning for only holding a total market rather than particular caps. The US estate taxes are a long ways off concern for me, maybe something I'll consider when I have a bit more invested. If Vanguard re-domiciled VTS to Australia that would be grouse is that likely? Would that be the function of a potential DRIP? Because at the moment paying tax on the dividend only to reinvest it and paying tax on its earnings again seems suboptimal. Apologies for the delay in replying.
« Last Edit: December 07, 2018, 05:24:34 PM by flaky »

Andy R

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #14 on: December 06, 2018, 07:40:27 PM »
Thanks for your response. The reasoning behind only buying the US total market (at least in the accumulation phase) is explained in jlcollinsnh 'Stock Series' of posts. The rationale is that the US total market is already significantly exposed to the international market that hedging that risk by buying international or ex-US markets is not worth it. Its broadly the same reasoning for only holding a total market rather than particular caps. The US estate taxes are a long ways off concern for me, maybe something I'll consider when I have a bit more invested. If Vanguard re-domiciled VTS to Australia that would be grouse is that likely? Would that be the function of a potential DRIP? Because at the moment paying tax on the dividend only to reinvest it and paying tax on it's earnings again seems suboptimal. Apologies for the delay in replying.

I don't understand when you say that you should diversify into the total US market instead of just large caps and that is the "same reasoning" to not diversify further (internationally).
It is true that the US market is pretty well diversified, unlike the Australian market. The Australian market is massively concentrated in 2 sectors and 10 companies. However just because the US market is well diversified doesn't seem like a valid reason to avoid diversifying further.
Have you checked his international investors suggestions on the jlcollinsnh site?

If you were an American then the upside to this is that you have no currency upside risk with an all-US portfolio, which I suspect is what he may be referring to when saying it wasn't worth it to diversify internationally. If you are not an American, then this benefit is not there and I don't understand why you would leave out the other 43 countries that collectively make up the other half of the world by market cap when the long term returns have been much the same and you can get a diversification effect (lower volatility with same returns). Vanguard put out a paper on international diversification, and for the US they found the same return but with lower volatility for about 30% international exposure and anything between about 20 and 40% were still very close, which is why they recommend 20-40% international even for US investors.
Sorry, I don't mean to be banging on about it, and if you particularly want to go with US-only, you will be fine, I just don't see a reason that makes sense to me, but anyway, moving on.

Paying tax on dividends only to re-invest them - not sure there is much you can do about that, there are 2 things certain in life and all that.
One option may be to buy BKR shares because they re-invest it all and pay no dividends. But I don't much like tilting towards one company as it introduces key person risk and removes the entire philosophical argument of indexing.
I wonder what would be the result of signing up to a broker that allows purchases on international exchanges and buying an Irish domiciled "accumulating" fund instead of a "distributing" fund on the LSE? The accumulating funds pay no dividends as they are reinvested but I'm not sure if by Aussie rules you still need to pay tax on it somehow or not, my guess is maybe not. The downside is that you have to pay a small exchange rate cost when buying and selling since it is not in AUD, but I hear Interactive Brokers charges a tiny fee and if you are buying for the long term and not trading it back and forth then should not be an issue.
I have no heard anyone on Aussie forums mention this before so I really have no idea how you would find that out, maybe ask your accountant?
Also don't forget that a non-distributing fund, by nature of not distributing means you will need to sell the capital for cash flow in retirement and you pay CGT on that, but yea if you can swing it, it looks like it would still have a significant benefit, although my gut says it may not be possible or I would have read about it everywhere.

nsmall

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #15 on: December 07, 2018, 11:31:53 PM »
Very cool tool.  Thanks @beee

2Birds1Stone

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #16 on: December 08, 2018, 08:38:05 AM »
Yikes, at this pace you will be down 50% in 2 months ;)

nsmall

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #17 on: December 08, 2018, 08:52:27 AM »
Its okay.  Ill just keep buying.  :)  And I dont know you, but I know you where just playing around.  You folks convinced me to buy and buy, and thats what I am doing. 

2Birds1Stone

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Re: Thanks everyone. I just jumped in and bought some VTSAX.
« Reply #18 on: December 08, 2018, 12:05:07 PM »
That's the mentality you need to have! Avoid the "sky is falling" headlines, and trust that the stock market will be higher when you need the funds than it is today.