Author Topic: Worth a switch from SP 500 index?  (Read 3309 times)

Justin1911

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Worth a switch from SP 500 index?
« on: August 26, 2015, 04:12:59 PM »
I am very new to MMM. Right now in my taxable account with Vanguard I have about $20k in VFIAX and $11k in VTIAX. Since finding this blog I have seen a lot of people recommending VTSAX over VFIAX. Here's my question: Should I exchange my VFIAX shares for VTSAX? The two funds seem to perform similarly enough.

My three options under consideration are:
(1) stick with current holdings and keep contributing to my two funds (working towards a 80/20 balance between VFIAX and VTIAX)
(2) exchange VFIAX for VTSAX and keep contributing towards a 80/20 balance.
(3) stick with VFIAX and VTIAX, and buy a 3rd fund with some small cap domestic exposure (and aim for a 70/20/10 balance)

Am I overthinking things or worse, am I totally off base in my investments?

If it matters to anyone, my Roth IRA with Vanguard has about $16k with the same allocation as my brokerage account. I also have a Roth TSP with about $5k all the large cap fund (C fund I think it is).

GGNoob

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Re: Worth a switch from SP 500 index?
« Reply #1 on: August 26, 2015, 04:41:22 PM »
The reason most would recommend VTSAX is because it holds small and mid-cap stocks as well as large-caps. Over the long term, the addition of small and mid-cap stocks helps VTSAX outperform VFIAX.

With the recent down markets, now could be a good time to switch if you wanted to harvest some losses.

forummm

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Re: Worth a switch from SP 500 index?
« Reply #2 on: August 26, 2015, 05:07:30 PM »
You could also just buy enough VEXAX so that you have 75% VFIAX and 25% VEXAX. That's basically the same as 100% VTSAX.

cheddarpie

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Re: Worth a switch from SP 500 index?
« Reply #3 on: August 26, 2015, 05:10:01 PM »
I have a large amount in an SP500 fund -- in my 401k because that was the only choice and in my brokerage account for no reason other than it seemed simple a couple of years ago when I set it up. Now that I've been learning more, my intent is to switch my brokerage funds to a total stock market index like VTSAX. But, since it's not going to make a huge difference in the short term, I'm going to wait until there is another big adjustment/crash and make the switch then to (hopefully) harvest some losses.


My Own Advisor

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Re: Worth a switch from SP 500 index?
« Reply #4 on: August 26, 2015, 06:31:51 PM »
Why not own VTI - own thousands of stocks instead?


RWD

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Re: Worth a switch from SP 500 index?
« Reply #5 on: August 26, 2015, 08:13:25 PM »
Why not own VTI - own thousands of stocks instead?

VTI is just the ETF version of VTSAX.

Justin1911

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Re: Worth a switch from SP 500 index?
« Reply #6 on: August 27, 2015, 02:28:19 PM »
Thank you all for the feedback. I am going to sit on VFIAX for now. I have only had this brokerage account open for about a year and am currently down about -$3000 between my two current funds, thanks to the correction this week. I think the right thing to do is just let it ride and continue to contribute what I can each month. Is this a logical decision?

Other details that I failed to mention in the OP:
I save about $2000 each month intended for contributions to this taxable account.
I have about $31k in cash sitting in this account, waiting to be invested (I've been scared to dump it all in at once).

CmFtns

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Re: Worth a switch from SP 500 index?
« Reply #7 on: August 27, 2015, 02:45:09 PM »
Thank you all for the feedback. I am going to sit on VFIAX for now. I have only had this brokerage account open for about a year and am currently down about -$3000 between my two current funds, thanks to the correction this week. I think the right thing to do is just let it ride and continue to contribute what I can each month. Is this a logical decision?

Other details that I failed to mention in the OP:
I save about $2000 each month intended for contributions to this taxable account.
I have about $31k in cash sitting in this account, waiting to be invested (I've been scared to dump it all in at once).

Someone said it above maybe you missed it but IF you have a desire to get into a total stock market now (after a correction) would be a great time to do it. This is because you would realise $3000 in losses on sp500 and could report a loss on your taxes. You could then buy a total stock market and ride the market back up on that.

mskyle

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Re: Worth a switch from SP 500 index?
« Reply #8 on: August 27, 2015, 04:05:14 PM »
Thank you all for the feedback. I am going to sit on VFIAX for now. I have only had this brokerage account open for about a year and am currently down about -$3000 between my two current funds, thanks to the correction this week. I think the right thing to do is just let it ride and continue to contribute what I can each month. Is this a logical decision?

Other details that I failed to mention in the OP:
I save about $2000 each month intended for contributions to this taxable account.
I have about $31k in cash sitting in this account, waiting to be invested (I've been scared to dump it all in at once).

Someone said it above maybe you missed it but IF you have a desire to get into a total stock market now (after a correction) would be a great time to do it. This is because you would realise $3000 in losses on sp500 and could report a loss on your taxes. You could then buy a total stock market and ride the market back up on that.

This is actually what I just did. I had a few thousand in a Vanguard Target fund that I had been letting grow since 2008 (chosen then for its low initial investment and non-scariness), plus some money in VFIAX. I had wanted to move them both to VTSAX for a while but the Target fund was up so much I didn't want to take the tax hit just to save a tiny bit on fees, and I had significant short-term gains on the VFIAX. This dip was a great time to sell them both off and buy VTSAX. I ended up realizing around $500 in losses on the old funds, and a day or two later my shiny new VTSAX is already up that much. Which is maybe not the *best* news ("you haven't really lost any money the last 7 years!") but I'm getting into the positions I want and minimizing my tax budget.