Index Fund vs. ETF | VTSAX vs. VTI

In this video we are going to compare the Vanguard Total Stock Market Index Fund (VTSAX) to the Vanguard Total Stock Market ETF (VTI). Both of these investment vehicles track the Total Stock Market, but there are some key differences. We will go over what those differences are and which one might be a better fit for your portfolio.

Timecodes

0:00 - Intro
1:13 - ETF vs. Index
2:04 - 5 Key Difference:
2:10 - 1) Timing of Share Price
3:21 - 2) Fractional Shares
4:47 - 3) Automatic Investing
5:17 - 4) Minimum
5:39 - 5) Cost
6:02 - So What To Consider When Deciding Between VTSAX & VTI
6:12 - Worried About Price
6:59 - Prefer Automation
7:58 - Worried About Minimum
8:30 - What I Invest In

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DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.

[jkm]

Now what makes the choice even harder is the fact Vanguard allows fractional shares with ETF purchases.

[centsofhumor]

You just explained everything I have been trying to figure out the difference between Index funds and ETF’s so many search results call ETF’s index funds adding to the confusion. Thank you for clarifying everything for the average investor.

[Indy_at_the_beach]

I know it is a bit wonky but ETFs can have less taxable exposure for the investor. Good vid.
I really appreciate the work you do for the average investor.

[johnl]

Finally decided to open a brokerage account with Vanguard. I have saved up 57k in HYSA earning 5.07% APR, but I think and I can get more by invest in VTSAX in a long term. This video is very helpful.

[candicewalker]

I started with VTI and have finally hit the $3, 000 minimum. I’m getting ready to move over to VTSAX and stumbled upon this video while looking for videos explaining how to make the change. Thanks for the helpful info!

[codycoblentz]

Fidelity allows you to set up automatic investment in ETFs. And since it also allows fractional shares, I decided to buy ETFs for my taxable account for their added tax efficiency.

[conggao]

i was directed to this by your email, I prefer VTI, since majority of my fund is with Fidelity. VTI's fractional shares was resolved across the brokers, and the automation was addressed by M1 finance platform as well, but the explanation at the time of the video made sense.

[akin]

Some platforms with IRAs only have ETFs. M1 Finance, SoFi, and Webull. If a person has discipline, VTI on a platform with fractional shares and automated investing is better.

Otherwise, VTSAX. Especially for wealthy clients.

[sarahjoy]

Great job, keep the videos coming. You have a talent for this!

[ljli]

I love your channel, Tae. You do such a great job explaining financial information in a way that is easy to digest

[Wee_Catalyst]

Thanks for this video! I had been hoping that you might cover the difference in tax implications between the two, that’s really the deciding factor for me if there’s any significant difference

Thanks from a fellow general Tortoise 😊

[vixyparis]

Thank u so much for this video. I just stumbled on your page after watching multiple videos very confused at the difference between Index and ETF. I subscribed and liked and looking forward to more financial videos. Index for me. I just want to buy and hold for retirement.

[leroyrose]

The information you provided is truly helpful
Thank you!!!

[wendiangel]

Tae, I was told by a CPA that there were some tax benefits to ETFs. What are your thoughts?

[smittyb]

I think vti & vxus should be core holdings in a portfolio... vxus covers foreign markets & vti covers u.s markets, so having both covers the best of both worlds 👍

[vulpixelful]

M1 Finance allows you to buy fractional shares of ETFs and allows you to automate your investments. Right now, Fidelity only allows fractional shares on their mobile app and doesn't allow automated investing for non-retirement accounts at all...which is why I left them for M1 Finance

[WisdomJunkie]

My employer only allows me to use Schwab for tax advantaged accounts. I can access VTSAX, but they charge me money to do so. So, VTI is what I use to avoid those fees. I also enjoy knowing what I pay for a share in real-time.

[karenawong]

Great video! May I know what’s the difference between Indexed Fund and Index ETF?

[jaydetty]

I'm confused. You say that VTI can not be purchased in fractional shares but I buy VTI, VYM and VOO in fractional shares on Robinhood. Am I missing something?

[higiniomorales]

Wow VTI took quite a dip in price appreciation, it's currently $202 a share. (8:23)