019R | Index Investing | How to buy VTSAX

In 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

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)


  • 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:

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22 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.

  7. Hi! I am new to FI and love the idea of investing in VTSAX(new concept to me). My question is I have a good chunk of money in my rollover that is not in VTSAX (mostly funds and a few stocks). With the current dip in the market I am trying to figure out if I should still sell those and move the funds to VTSAX? I will have some losses especially on the stocks so trying to determine if it makes sense since I also know that VTSAX has dipped as well. Any thoughts how to handle this situation. Thanks and love the podcast!

  8. Hey, here’s a great compliment to the Award Wallet, I found a free upgrade code to get the Plus membership, a $15 value. use coupon code ViewFromTheWing. It worked for me today and have to thank the site View From the Wing blog for providing that.

  9. Hi. I max my current 401k and have a TD brokerage account. Is the TD account where I should be investing in VTSAX or is there a more cost effective way? How often makes sense since you pay commission every-time you buy?


  10. Sorry I’m posting about a year and a half after the show….but I was doing some research of the supposed “study” by Fidelity. I’m a passive investor, and want the study to be true, but I can’t find any source that actually links to the actual study. Business Insider wrote a story about the rumor of a study in 2014, and that is the closest that I have come. I don’t think this will pass the Snopes test! I’m still a fan of passively managed funds, I’m just not going to cite this “study” as my reason.

  11. Hey guys, love the show! Wanted to point out one quick thing that might need clarification. In addressing Alyssa’s email question, Brad explains that the Traditional IRA is the favored bucket here, into which shares of VTI would be ideal given her low-dollar entry point. Brad also mentions that selling VTI to attain VTSAX at the $10k mark would be a taxable event (capital gain) and could be tax-free if she fell within the 15% income tax bracket. That would be true if Alyssa were in a taxable brokerage account, but realized capital gains are not taxed in a qualified account such as a Traditional IRA, until the funds are withdrawn after 59 1/2 under the standard income tax rates.

    • Mike is right. Buying or selling funds in your IRA/401k does not generate a taxable event.
      Long Term Capital Gain harvesting occurs on assets that are NOT in taxable accounts, so it wasn’t really germane to Alyssa (yet).

    • Unquestionably you are correct with everything you wrote here Mike! If I said or implied this was the case within a traditional IRA then I misspoke completely.

      Put a few hundred hours of audio out there and it is bound to happen unfortunately. I can’t envision myself saying that since it isn’t a thought that would cross my mind, but since you all corroborated it I’m sure you’re correct 🙂

  12. Hey guys! Like Mike above, I wondered about selling one fund for another within a Vanguard account—as I had just done a few weeks prior to hearing this episode! I called Vanguard to confirm, and all buying and selling WITHIN an account is not considered taxable. It’s only when you take the money out. So your caller could sell VTI for VTSAX using her sweep account within her IRA and not create any taxable events. Thank for all of your awesome work!

  13. Hello! I found the podcast a couple of weeks ago through “How to Money” and I’m hooked! I’m trying to move my 401K investments to VTSAX but I’m not really sure on how to do that, I already have a 2060 Investment Strategy offered by my employer which is managed by Vanguard (I’m 25). The expense ratio on that is 0.12%, so I would definitely want switch to something lower. If I were to move my 401K to VTSAX do I lose the company match? I obviously would like to keep the company match but I know having that higher expense ratio is going to cost me thousands in the long run. Love the show! Please keep the content coming, rest assured that you are changing lifes!!

    • That’s a pretty decent expense ratio for a target fund 🙂 So definitely no rush to switch (compared to 1% + etc) , but you should check with employer HR about your ability to move your funds around inside your employer plan. Many plans will have options for index funds and allow you to move outside the target date funds and still keep your match. Thanks for the feedback and for listening!

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