More of your questions answered! By me! Mostly about VTSAX.
VTSAX is, of course, my one true love and where I invest the majority of my money. It’s the total stock market index fund from Vanguard. Read the post I’ve linked above if you’re still confused.
Should I wait to buy VTSAX until it’s on sale?
Yes. You should absolutely 100% wait until the price of VTSAX is on sale to invest your money. That’s when it makes the most sense mathematically.
Except you will have no idea when that time will be. Maybe my faith in humanity is misplaced and maybe something absolutely catastrophic will happen in early November and maybe the market will crash and maybe there will be a prolonged sale.
Or, maybe Google will unveil a seriously world-changing new artificial intelligence product tomorrow and maybe *today* is the lowest point of the market for the next 140 years. I don’t expect the price of VTSAX to ever go back down to $20/share, but nobody knew when the last day of that $20 price was.
You can spend hours looking at 52 week highs and lows, studying charts and trying to find patterns, poring over financial disclosures and guessing on timing and prognosticating which companies will be desired and ground-breaking. And people do! They tout their investment knowledge and charge people money to use their guesses.
If you knew when to time the market, you’d be a fast billionaire. And psychic.
My advice? Throw it in as soon as you can and practice the fine art of shrugging. Yes, maybe the market will drop, but you’ll still be getting dividends in the interim. And the point is that you’re still contributing to it as you build your early retirement sanity account. You’ll get the sale if it goes down and, if you don’t need the money in the short-term, you’re not really losing anything.
I know that’s easier said than done because, hey, it’s your money! You spent a lot of time earning that money! You could buy so much ice cream with that money! But that’s the difference between normal people and people like you and me. We think long term and big picture.
I don’t have $10,000 to invest in VTSAX.
VTSMX is the same as VTSAX and you can buy it if you have $3,000. It has a slightly higher expense ratio, but Vanguard automatically transfers you to the cheaper VTSAX when you have $10,000. Because Vanguard is a gentlemen like that.
What’s the difference between VTSAX and VTI?
The only difference between VTI and VTSAX is how you buy it. I found VTSAX simpler, so that’s what I went with. My money strategy was to set it up and forget about it. VTI doesn’t let you transfer money straight from your paycheck, but my darling VTSAX does. VTI also doesn’t let you buy fractional shares. I didn’t want to deal with cash sitting around in my account or doing math. No math with VTSAX!
VTSAX only contains U.S. companies. Don’t you want something international?
Many U.S. companies have international subsidiaries, customers, workers. It’s a global economy. Synergy. Other buzz words. Seriously though, I am happy with the amount of international exposure I have with my sweet VTSAX.
What about retirement accounts and tax implications? Do you recommend buying VTSAX in a Roth IRA?
Sigh. Taxes are boring and I’m too lazy to do research for things that don’t affect me. I’m sorry. Working as a lawyer, I didn’t qualify for a Roth because of my income.
My gut says yeah, use all the tax stuff you can. Roth sounds like a great deal. You pay taxes on it up front and your money then grows tax-free. And VTSAX is my favorite, so if it’s possible for you to use that, I have no objection.
I didn’t have a Roth, but I loaded up my 401(k) every year I worked to lower my taxable income. Not with my gorgeous VTSAX because it wasn’t an option through my employer, but with Vanguard Target 2045 Retirement Fund, which was. Good enough.
Broad, obvious advice: if your employer matches anything, take advantage of that. Free money, right? You are all probably sophisticated enough to know this already.
Are you a shill for Vanguard?
A shill? Ha! I wish! That would be so fun. But, no. No. We’re not even in the same league. If we were in high school, Vanguard wouldn’t even notice me, much less ask me to dance. I looked up the word shill to make sure I understood the question.
How do you track your expenses? What do you think about Mint?
I tried Mint years and years ago, but I found it didn’t categorize my expenses correctly and it couldn’t link to all my accounts. I use Google Docs Excel. Check out this post if you want to see the actual spreadsheet template.
It seems kind of risky to invest your money in just one place.
But my one place is one very special place. With VTSAX, I’m betting on everything. I’m betting that civilization prospers and that people will continue to invent and create and strive. That’s my optimism.
Everyone has different levels of risk assessment. Personally, I find alternative strategies risky. I’ve investigated and dismissed the alternatives. I’m not going to buy gold bars and a safe deposit box. Real Property doesn’t appeal to me even a tiny bit right now. Bonds might sound fun in a couple of decades. Cash will only dwindle.
The riskiest idea of all: paying someone else to guess the future. I may hand over a few dollars to a persuasive reader of palms at a carnival for laughs, but I’m not going to pay someone to guess which investments are going to perform well. Actually, I probably wouldn’t even do the carnival thing.
A rising tide lifts all boats and a tsunami destroys all ships. If VTSAX were to collapse, there is something seriously bad happening in the world and I’m guessing I’ll have bigger things to worry about.
I can’t tell you what to do, only tell you what I do. If it helps, cool beans. John Bogle came up with the idea, but I’ll accept your appreciation. If it doesn’t help and you disagree, the beans are still cool.