VTI vs VTSMX

[MrsStubble]

Hi, I'm getting started building my investment stash (baby steps) and I don't have alot of money.   I looked at VTSMX but my brokerage requires $3000 down/$1000 an extra investment to get into that.   I don't have a lot of money to get started investing (about $1000) which is too little to buy that fund with but, i saw they carry the ETF version which i could get into now.  I can put about $250-300 in every month meaning i'd be buying about 4x a year at $19.95 a trade for the mutual fund, or 4x a year at $6 a trade for the ETF (to keep the trading costs down).     I'm just not sure if this is a good idea or not. Thoughts?

[grantmeaname]

Why don't you use Vanguard as your brokerage? Then buying VTI or VTSMX is free. There's a lower minimum for VTSMX if you set up a recurring purchase, and there's no minimum to speak of for VTI.

[MrsStubble]

Ooh, thank you, i didn't realize you could buy from them directly!! Love it!  So now, hold out for the Mutual Fund or buy the ETF version? 

[msilenus]

Investing in small amounts like this, commissions can be more important than fees.  At $20/trade, 4x a year, you'd be spending 2.2% of your principal on commissions.  It sounds like you're taking grantmeaname's advice so it won't matter here, but it's good to be in the habit of running the percentages.

[matchewed]

Which one depends on what kind of investor you want to be. https://investor.vanguard.com/what-we-offer/etfs/compare-etfs-and-index-funds that has a breakdown of the differences.

[kyleaaa]

You'd probably be far better off just going with one of the Target Retirement Funds. They are more diversified and the minimum just happens to be $1000 at Vanguard.