The Wealthy Accountant Forum

General Category => Investing => Topic started by: Michael Tate on January 14, 2018, 02:38:14 AM

Post by: Michael Tate on January 14, 2018, 02:38:14 AM
Hi all, I’m new to this whole FIRE community (Nov 2017), but have been on this journey for a few years with my wife. Since entering the conversation I’m hearing several voices hold to VTSAX and I’m wondering why that over VFIAX? Is it preference or is there something that really makes the argument?

I’ve been a fan of VFIAX personally, but I also recognize that my rational is relatively weak.

My understanding of VTSAX is built around the idea of increased diversification. The difference with VFIAX obviously being that it captures the potential growth of mid and small cap companies. But is there more?

My rational for VFIAX is that with the S&P 500 you are always riding the top large and mega cap companies, and as they fluctuate you share in the growth of rising companies, and you begin to offload lagging companies (and eventually dropping them if they are headed to complete demise**). To me this has appealed as part of my defensive play, which in contrast to VTSAX where you’d ride a company all the way into the ashes.

VFIAX outperforms VTSAX over last 5 years and with its dividends. However VTSAX outperforms at the 10yr and since inception points.

I truly look forward to hearing some input from others. Part of me wonders if the variance is too negligent to discuss; but then again, this is the same crowd that cares deeply about whether their fees are .42% vs .04% so I’m guessing someone might have a thought :)

Michael Tate
Title: Re: VFIAX | VTSAX
Post by: Jim on February 21, 2018, 06:46:09 AM
I'm not 100% sure why everyone loves VTSAX so much.  I think a big part of it has to be with people reading JL Collins' stock series ( and his recommendation of VTSAX.

I personally use the ETF (VTI) in my taxable brokerage, but VFIAX in my Roth IRA's.

For me, JL Collins' stock series solidified my understanding and acceptance of index funds and if others new to the series did the same it could skew the recommendation in the FI community.
Title: Re: VFIAX | VTSAX
Post by: The Aiki Trader on March 06, 2020, 11:42:28 AM
Investing in a total stock market fund is not being diversified.  You are only diversified in one asset class.

Asset Classes:  Stocks, Bonds, Commodities, Real Estate, Currencies,
let alone adding Global Stocks, Global Bonds, Global Real Estate