Author Topic: VTSAX vs Star  (Read 2741 times)

Harper

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VTSAX vs Star
« on: February 05, 2017, 02:15:26 PM »
Hi,

My husband and I are going to open an account at Vanguard.  The funny thing is that I say let's do VTSAX (because MMM) and he says lets do Star (because Clark Howard).  We're not sure how to compare them or honestly why either one is the better one.

Anyone care to help us distinguish between the two?

Thanks so much!
Arden
« Last Edit: February 05, 2017, 02:19:48 PM by arden »

Full Beard

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Re: VTSAX vs Star
« Reply #1 on: February 05, 2017, 03:55:49 PM »
The two main differences are the types of funds and the expense ratios. 

VTSAX is a Total US Stock Market index fund with a $10,000 minimum investment and a .05% expense ratio.  VTSMX is the same exact fund as VTSAX with a $3,000 initial investment and slightly higher expense ratio of .16%.

VGSTX (Vanguard STAR Fund) is a balanced fund with 60% invested in stocks and 40% invested in bonds.  It's a mixture of 11 different actively managed Vanguard funds.  It has an expense ratio of .34%

Another option instead of the STAR fund would be a Target Retirement fund like VFIFX (Vanguard Target Retirement 2050 fund).  You basically just pick a year that is closest to the year you plan to retire.  If you want more stocks just pick a year further out.  It will automatically adjust over time to increase bonds as you get closer to the fund year.  The expense ratios for these funds are around .16%.  This may be the best way to start out.  You and your husband will have to decide what your risk tolerances are before investing.

Mr Mark

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Re: VTSAX vs Star
« Reply #2 on: February 06, 2017, 04:18:44 AM »
+1

You might also look at Wellington fund (which I prefer to STAR), which is 65% stock and 35% bonds. They do not - especially in the current bond market - do as well as VTSAX in a rising market, but are less bad if there is a dip. STAR has more international component.

Vanguard has a great 'compare fund' function (that includes re-invested dividends and fees). Unfortunately you can only look at 10,5,3 and 1 year historical performance tho'. Have a look at your fund options interactive with your husband.

NoStacheOhio

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Re: VTSAX vs Star
« Reply #3 on: February 06, 2017, 06:12:24 AM »
Alternatively, if you want the 60/40 split, you can still do it in a single index fund: VBIAX/VBINX

Harper

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Re: VTSAX vs Star
« Reply #4 on: February 06, 2017, 06:25:47 AM »
Thank you so much!  I will definitely share this with him.

PhysicianOnFIRE

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Re: VTSAX vs Star
« Reply #5 on: February 06, 2017, 07:09:22 AM »
Those are very different funds in fundamental ways. If you're young and just wanting to take the plunge and start investing, VTSAX is a good way to start. But I would do a lot more reading before making too many decisions. Decide on an asset allocation that's appropriate for your age and risk tolerance, come up with a simple IPS, and go from there.



Harper

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Re: VTSAX vs Star
« Reply #7 on: February 06, 2017, 12:49:12 PM »
Thank you PoF.  The IPS is definitely a good start for us.

@jinganation:  Thanks for putting that comparison together for us.


gggggg

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Re: VTSAX vs Star
« Reply #8 on: February 06, 2017, 04:43:11 PM »
There's also the lifestrategy funds. This is what vanguard recommended for me when I took their little quiz. After getting tired of messing with ETF's, I wanted a fund. So I was trying to decide between STAR, Wellington, lifestrategy, and a plain index. I couldn't decide, so I just went with their recommendation of lifestrategy growth, with the 80/20 split. Note that this is in a taxable account, things may be different if you're doing a retirement shell.

MustacheAndaHalf

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Re: VTSAX vs Star
« Reply #9 on: February 06, 2017, 08:18:25 PM »
Have you considered "getting on the same page" by reading the same investment book?
"A Random Walk Down Wall Street" has survived the test of time.

Mr Mark

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Re: VTSAX vs Star
« Reply #10 on: February 07, 2017, 01:45:17 AM »
VTSAX vs VGSTX vs VWENX (VG Wellington Admiral):

https://www.portfoliovisualizer.com/backtest-portfolio?s=y&s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2017&lastMonth=12&endDate=02%2F05%2F2017&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&showYield=false&reinvestDividends=true&symbol1=VTSAX&allocation1_1=100&symbol2=VGSTX&allocation2_2=100&symbol3=VWENX&allocation3_3=100

Thanks Jinga Nation!! That's a great analysis* tool.

* YMMV The past is not necessarily a predictor of future performance. However, remember cash by definition loses value every year due to the effects of inflation, and market timing is almost always a guaranteed loosing strategy over the long term.