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Vanguard VTSAX Alternatives (Don't miss these index funds and ETFs!) - YouTube
Channel: Grow the Piggy Bank
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as one of the most popular total stock
market index funds VTSAX is a great
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choice for anyone aspiring to grow their
wealth as passively and as
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cost-efficient as possible but it may
not be for everyone in this video I'll
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talk about reasons why VTSAX might not
work for you and five great alternatives
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that you should consider coming right up
if we are meeting for the first time my
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name is Sung and I am a husband and
follows two three wonderful kids on my
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channel I love talking about personal
finance tips and strategies that have
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helped my family grow wealth in our
journey towards financial independence
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if you too are wanting to grow your
wealth so that you can focus on what
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truly matters be sure to subscribe so
that you don't miss out on anything
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before we go further I'm the state that
I am not a financial advisor this video
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is strictly for educational purposes
only I recommend you do your own
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research and if necessary speak to a
professional in your area before you
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make any type of investment or financial
decisions this video is a continuation
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in a series of videos I'm doing on
Vanguard's very popular total stock
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market index fund and why it's so great
for families who are looking to get the
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most return on their investment for as
little work as possible if you're not
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familiar with VTSAX or Vanguard or
investing I recommend you watch my
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previous videos to get caught up on the
details because this video assumes that
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you have the basics under your belt I
link to those videos down in description
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below so be sure to check those out
there may be several reasons why VTSAX
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may not work for you one of the big
downsides is that the fund requires a
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minimum investment of three thousand
dollars just to get started before it
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used to be ten thousand dollars until late
2018 but still three thousand dollars is
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definitely a big hurdle for some of you
who are just getting started another
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reason might be that is going to cost
you a lot to buy VTSAX from an account
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that is not with Vanguard I know that
from me
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if I try to buy VTSAX from my Merrill
edge account it's gonna cost me $20 and
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that is just not worth it if I try to
buy through my fidelity account it's going to
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cost me a whopping 75 dollars and that's
definitely not worth it another reason
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might be that it's simply not available
in your brokerage account and you don't
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want to move all your money into
Vanguard just to buy in or it might be
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as simple as you just not like
Vanguard as a company and their silly
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logo a ship from two centuries ago
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that's totally cool
whatever the case is I dug around
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Internet did some homework and found
five alternatives to VTSAX that might
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work for you if any of the reasons I
mentioned above hit the spot
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also bear in mind that these are the
ones that I thought were worth
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highlighting whether it's the fun size
or the expense ratios or whatever
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there are many stock total stock market
funds out there and if I didn't mention
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your favorite be sure to add it down in
the comments below so that I know which
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ones you're owning or are interested in
owning and why because I'm curious to
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know which ones are working for you the
first alternative is VTI VTI is the
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ETF equivalent of the VTSAX index fund
according to the ETF database it is the
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fourth largest ETF by assets under
management as of this recording you may
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be wondering what exactly is an ETF
though so let's back it up a little bit
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and walk this through an ETF basically
combines the diversification of mutual
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funds or index funds with the ease of
trading like stocks for example the
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underlying assets of the VTI ETF is the
same as VTSAX it's the total investable
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US stock market but what Vanguard does
as the VTI provider is that it sets up a
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fund with those assets and sells shares
of that fund to investors those ETF
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shares trade just like stocks we have
ticker symbols and their price
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fluctuates throughout the day depending
on the market supply and demand you can
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buy and sell these during trading hours
so that you can take advantage of any
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big price swings
unlike ETFs index funds and mutual funds
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only trade at the close of the day so
you can't do these type of intraday
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trading ETFs generally have lower
expense ratios than index funds and that
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makes them more attractive for example
VTI has an expense ratio of 0.03 percent
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while VTSAX has an expense ratio of
0.04 percent now I talked about expense
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ratios in a previous Vanguard video but
it is basically the price that you pay
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to have the fund managed by the company
that provides it because ETF trade
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just like stocks you can literally buy
one share of VTI
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and get all the benefits of VTSAX
without having to save up $3,000 to buy
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into the index fund right now VTI
trades at about $150 per share so you
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can see how much easier it is for people
to get started with ETFs as for the cost
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of investing in VTI you have the expense
ratios but you also have the cost of
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making trades in your brokerage account
so make sure you contact your brokerage
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and see what other fees apply when
you're training ETFs if you are enjoying
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this video so far be sure to hit that
like button down below and let me know
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down in the comments if you find that
ETFs are a better option for you the
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second alternative to VTSAX is FZROX which is Fidelity's newer index fund in
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fact compared to the other funds that
I'm covering this one is like a baby
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with an inception date of August 2nd
2018 on the face of it there's nothing
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really special about this fund compared
to Fidelity's other total stock market
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funds but it made a big splash at its
debut when it came out with an expense
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ratio of zero literally zero it has no
expense ratio it doesn't get any lower
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than that one of the big reasons that
fidelity is able to offer this with zero
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expense ratio is because they create
their own index for this fund to track
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called the Fidelity US total
investable market index so that they
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don't have to pay licensing fees to
well-known indices like Standard &
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Poor's compared to VTSAX and VTI
which have a stake in more than thirty
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six hundred companies FZROX fund
there's only a stake in about twenty
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just north of 2500 companies so it's not
as well diversify but it's still pretty
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solid because it is so new there isn't
any long-term historical data to
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evaluate its performance and that's one
of the drawbacks of this new fund now
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expense ratios are one thing but you
also want to have assurances that it's
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going to perform as expected most
industry observers would agree that
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fidelity made this move to compete
better with grain guards funds not only
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are the expense ratios lower compared to
VTSAX but also there's no minimum to
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invest you may be wondering how
successful has this fund has been in
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attracting new investors so far it's
been over a year now since this funds
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debut but if we compare the net assets
FZROX has an net asset
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about 3.7 billion while VTSAX is at
about eight hundred and fourteen billion
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so it still has a long ways to go to
attract low-cost investors if you're
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just trying to invest in index funds
then FZROX might be worth looking into it
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is free to buy if you have a fidelity
account however I do not believe it is
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available anywhere else but you should
check with your brokerage I checked with
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Merrill edge and I cannot buy it through
my brokerage account there the third
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alternative to VTSAX is called ITOT ITOT
ot is an ETF that is part of the iShares
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family of ETFs run by an investment
company called Blackrock the iShare
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family of funds are some of the biggest
players in the ETF market considering
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they were the earliest pioneers of the
product between iShares and Vanguard
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they pretty much dominate the ETF space
based on net assets since ITOT is an
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ETF it's more appropriate to compare two
VTI than it is to VTSAX on many
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characteristics these two ETFs are the
same ITOT has an expense ratio of 0.03
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percent same with VTI they contain a
comparable number of companies and so
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the performance and sin section is
pretty similar here on Yahoo Finance you
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can see that the historical performance
is nearly identical going back to their
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inception date because their ETFs there
is no minimum to invest and you should
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be able to buy them in your brokerage
account just like any stocks assuming
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you pay any trading fees now VTI as I
said before was trading at about a
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hundred fifty per share
ITOT is actually trading at about
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sixty-five dollars per share so it's a
little bit cheaper to get a piece of the
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action
one difference to note is that VTI is
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tracking the CRSP total stock market
index
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well ITOT is tracking the S&P total
market index but based on the historical
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performance the resulting differences
are pretty minor in terms of the sizes
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of these ETFs VTI has assets assets
under management of around 115 billion
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while the iShares is around 21 billion
so it is much smaller now some of that
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might be due to the fact that the
iShares have is a little bit younger
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than vanguards but i think it's just
really a testament to how dominant
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Vanguard is in attracting and keeping
low-cost pass
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of investors the fourth alternative -
VTSAX is Charles Schwab's total stock
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market index fund or SWTSX now if
you're not familiar with Charles Schwab
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it's another large brokerage firm that
is based out of the Bay Area while they
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may not be known for their low cost
investment products I do bring it up to
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diversify the alternatives for you so
that's not just in terms of index funds
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and ETFs but also different companies the
net assets for this index fund is around
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nine point six billion dollars which is
pretty tiny compared to VTSAX but it
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does come with a lower expense ratio of
0.03 percent another benefit is that
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there is no minim to invest so you could
buy into the fund with as little as
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fifty to sixty dollars assuming there's
no transaction fees or any other costs I
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tried buying into the fun with my
Merrill edge account but I was not able
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to I also tried with my fidelity account
but it required a minimum of twenty five
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hundred dollars to buy into it and a
fifty dollar fee was applied so be sure
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to check with your brokerage because the
availability and the cost for you may
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vary now SWTSX tracks the Dow Jones US
total stock market index and it holds
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around thirty one hundred companies
which is still less than VTSAX but I
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think it's still plenty of
diversification that I would feel
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comfortable with it if you're looking
for an ETF version of this that leads me
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to my fifth alternative which is Schwab's
SCHB ETF just like VTI is the ETF
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equivalent of VTSAX SCHB is the
ETF cousin of SWTSX hooo that is a
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tongue-twister they have the same
expense ratios they have no minimum to
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invest and they're tracking the same
index the only difference is that the
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ETF is holding around twenty five
hundred companies while the index fund
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is tracking around north of three
thousand companies just like other ETFs
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I was able to buy SCHB in my Merrill
edge account as well as my Fidelity
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account and it really goes to show that
ETFs are a lot more accessible and
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cheaper to invest in than index funds if
you found this video helpful be sure to
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hit that like button down below and
share with any friends that you think
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might benefit from it if you haven't
subscribed already be sure to do so so
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that you don't miss on
new videos thanks for watching and I'll
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see you guys next time
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