VTSAX

019R | Index Investing | How to buy VTSAX

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1500 daysIn our Friday roundup Jonathan and Brad discuss the highlights and takeaways from the Monday episode with JL Collins. Then the podcast is opened up and crowd sourced to the community. Find out the specific travel reward perks that are available for active duty military and how to get started with VTSAX if you don’t have $10,000 to invest

The Friday Roundup #8:

Review of podcast with Jim Collins

  • Jonathan’s baby was born! And he’s here recording the Friday Roundup two days later2nd Generation Fire
  • 2nd Generation FIRE and the impact on Jonathan with his new son
  • The value of starting a child on the path to FIRE from the very beginning
  • Index investing as one of the main ‘pillars of Financial Independence’
  • Jim’s Stock Series changed the trajectory of Brad’s investing life and will benefit him to the tune of millions of dollars in his lifetime
  • There are no investing gurus out there who will help you outperform the market over decades when including fees into the calculation
  • Jim is such a fantastic storyteller
  • Fidelity study of the classes of investors who do the best: dead people and those who forgot they had accounts
  • The best thing that can happen to someone who is young is for the market to drop while they are pumping money into the market.
  • Index investing: Losers can only go down 100%, but winners can go up indefinitely. The index is self-cleansing
  • Why stock picking contests promote the wrong behavior
  • The stock market always go up over decades.
  • You only lose money in the market when you try to “dance in and out of the market”
  • Warren Buffett will invest in a Vanguard S&P 500 index fund
  • Vanguard is growing faster than all of its 4,000 competitors combined (to the tune of 8.5x)

Feedback

  • Stitcher reviews – thank you for leaving them and letting us know they exist!
  • Sharing ChooseFI with friends and family
  • Feedback from Steve and Amy on the action they’ve taken since first listening to ChooseFI
  • How police officers and firefighters can access their 401K’s without penalty

Travel Rewards and Investing Questions

  • Travel rewards question about travel in Europe for hotels and Ryanair from Anthony and Abby
  • Question from Alyssa about different retirement account options and different investing options and how to get started for younger listeners who don’t have $10,000 to invest in VTSAX in one lump sum
  • The standard advice doesn’t apply for people on the path to FI, so they should max out traditional IRAs and 401k instead of Roth-IRAs

Links from the show:

Books Mentioned in the Show:

12 thoughts on “019R | Index Investing | How to buy VTSAX

  1. Huge fan of the podcast! I feel so lucky as a 26 year old to have found all of this info as I’m just starting my career (and paying off my student debt, 10k to go!). I’m also so grateful to the legends of the FIRE community like JL Collins who have tried playing the stock market, only to realize it’s a fools game, and have warned the rest of us to stick to index investing. It’s funny that the simplest, most stress free way of investing is actually the most profitable! Thanks again, this is seriously the best podcast on the internet!

    PS: What are your thoughts on robo advisors?

    • Alex you are going to be so wealthy by the age of 60 its going to make your head hurt lol. I don’t currently use a robo advisor, neither does Brad (I don’t think) I need to ask lol. We are not against them. We are currently researching them to do a show on them within the next 6 months. so stay tuned.

  2. I think you guys are increasing the enthusiasm level to such an extend that people cannot go wrong with index investing. This can be good but there is a downside in that, people buy into your idea that they would still sell when times are bad.

    It is one thing to listen to someone say do not sell and another when a large part of their net worth goes down and they have no idea why things will eventually be ok.

    I have a strong hunch a lot of the FIRE folks will be saying stay the course but secretly switching to other means when the time comes. This strongly ties in to the previous narrative that….. if index investing, not market timing is the way to go, then why do we venture into real estate if the returns are poorer than index investing.

    Lastly, I think the main listening audience are the people who wish to reach financial independence in USA and developed countries where Vanguard or low cost index funds is available BUT ALSO that their economy is doing well. The USA have been the economic prom queen for a long while, and a lot of Jim’s premise, as mentioned in the podcast have stated it depends on how well the USA does.

    With that in mind if we look at the other nations, if the person who wish to FI is not based in the USA, their home country do not perform so well. They might not even have the low cost indexing options. They have to get other means because investing in the USA as a non resident is difficult due to 30% dividend withholding tax and estate duty above US$60,000.

    The sequence of return risks would be something that I wish to see more discussion in future parts of the series.

    The way to stick to a plan, is actually to drill into the nuances of a particular method of investing and listen to the naysayers so that you do not suffer from endowment effect, and confirmation bias.

  3. Yeah hopefully this series of episodes will add some resolve to investing spines fire-world-wide in terms of what to do in a down turn but we are planning a sequence of returns episode. thanks for the feedback

  4. I’m obviously late to the party since I’m listening to the episodes in random order, but nonetheless Congratulations Jonathan!!! I became a father myself in late 2016 and it has been absolutely amazing!
    As you have said multiple times, it is really exciting that our kids are going to be exposed to FIRE much earlier than we did 🙂

    • Thanks Juan, – Being a Dad is amazing, and thinking about it, in the construct of 2nd gen FIRE adds a level of depth and clarity. It makes me feel more engaged and intentional about the process.

  5. For me to invest in Vanguard with my pretax contributions, it is much more difficult than choosing Fidelity index funds. I’m comparing VTSAX with FSTVX and note a lower tax cost ratio at 10 years for VTSAX than FSTVX. I don’t completely understand what this means. I understand a lower number is better, but at a 10% tax bracket, will it make much difference? Thanks so much for your time and podcast! Learning sooo much!!!

  6. It looks like the expense ratios, turnover, and performance are very similar – the tax liablility is just lower on Vanguard. It looks like this Vanguard fund has been open longer, so it may have different gains associated with its holdings. I would not be too concerned with it. Personally I keep my entire portfolio in Vanguard, rather than splitting it up, because it makes re-balancing easier and is more simple. The after tax returns on these funds (according to Morningstar) is 7.07% and 7.44% for a 10 year period (includes 2008) – meaning if you invested 10k 10 years ago it would be worth 20278.98 or 21043.36 after taxes respectively. Not much difference – and in 10 years it might swap to where Fidelity has lower taxes for the timespan.

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