In addition to what badbear said, you could buy Vanguard VTI; it's an ETF version of VTSAX. You buy per share, so the buy in is much lower than the mutual fund.
So I have two options I'm looking at. I can just keep my investments in Betterment until I reach enough to get into VTSAX (or Vanguard Retirement Date Fund) or I could transfer it over to Vanguard VTI? Would anybody recommend utilizing Vanguard VTI over my portfolio at Betterment until I get enough to invest into VTSAX?
Not exactly. The VTSAX is Vanguard's Total Market Index ADmiral shares.... that "admiral" part means you get slightly lower expenses in exchange for having $10,000 invested. However, you can invest in NON admiral funds for much less and still have very, very low fees (and when you hit the $10k mark you can have Vanguard transfer everything to the admiral shares)
For example, you can enroll in any of the Target Retirement Funds for $1,000 (examples: VTTSX, VFIFX, VFORX). These will give you some bond exposure too.
Or you can enroll in the non-admiral SP500 index (VFINX) for $3k and still have an expense ratio of 0.16%
You can also buy shares of any of their funds as an ETF, you get the same basic thing, but instead of it being a fund they trade like individual shares for buying/selling.
Thanks Nereo! That was very helpful. In your opinion (or anyone with knowledge of this that is reading through my forum post), Since my Betterment annual fees are 0.35%, it would definitely be cheaper to invest in one of the Target Retirement Funds (such as VTTSX, VFIFX, VFORX) at this point?
I don't have a problem moving everything to Vanguard right now. I've done plenty of reading and have found many recommend that very thing. I'm just not as well versed (at this moment) and I'm currently researching investing. I chose Betterment because it came highly recommended by some people I respect in the financial arena and it was a suitable option for right now as I learn about investing.
I'm looking at the Vanguard Target Retirement 2050 Fund (VFIFX) which has fund feeds at 0.16%? To me, if your only looking at using Betterment or VFIFX. It's cheaper with the fees and therefore better in my opinion to just dump my money into VFIFX than Betterment?
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It's really up to you. While fees definitely matter, especially over the long term (decades) and with very large balances ($100ks), I wouldn't get too caught up with the difference between a 0.35% fee and a 0.16%. Both are fairly low. Put another way, for every $1,000 invested, the 0.35% fee will cost you $3.50 while Vanguard will cost you $1.60, a difference of $1.90.
I like vanguard, and I have no experience with Betterment. If you invest in one of hte target date funds with Vanguard you will have a mix of bonds and stocks, with the stocks being split between US total market and international. IN other words, you get a very diverse portfolio just by owning one single fund. The fund rebalances itself. As time goes on the fund will shift by owning more bonds and less stocks. For example, the VTTSX has a 90/10 stock-to-bond ratio and is called the "Target Retirment 2060 Fund" meaning it's designed for your average investor who plans on retiring in their 60s at/around the year 2060 (44 years from now). BY the time 2060 rolls around the same fund will be roughly 60/40 stocks to equities. Make sense?
As time goes on you can always shift and buy something more or less conservative. Also, as soon as you have a few thousand$ you could decide to tailor your investments to your own style by just buying teh ratio of funds you want. For example, you might decide you want 25% bonds, 25% large cap US, 25% large-cap internaional and 25% emerging markets. You could do this by holding four index funds in equal amounts and rebalancing them periodically (say, every 6 months). Or you could decide that the Target Date fund has everything you already need and just stick with a one-fund, simple-as-pie formula. It's up to you.
Since you are going down that road, you really ought to fill out your own
Investor Policy Statement. It will guide you into determining what your goals are and help oyu decide what kind of investment(s) you want to be in. Once you set your IPS, follow it!
hope that was helpful you to
~n~