Is VTSAX a Good Investment? – A Deep Look

Everyone knows that the smartest way to invest is to have a diversified portfolio. After all, never leave all your eggs in one basket, right? That’s what my grandmother used to say, although she never invested in the stock market. One way to ensure you are diversified is to invest in a fund that makes up the entire American Stock Market! That’s just what VTSAX does.

VTSAX is an excellent investment because it allows you to passively invest in the entire United States Economy using only one fund, which has historically risen in value and dividend payout since its inception.

Lots of investors praise Vanguard for its Total Stock Market Index Fund, and once you see the information below, I believe you’ll see what makes this Index Fund so appealing!

What is VTSAX?

The Vanguard Total Stock Market Index Fund, Admiral Shares (VTSAX), is the largest fund Vanguard owns. It is made up of almost 3,500 small, mid, and large-cap stocks making it a blend fund. It is also made up of growth and value stocks appealing to growth investors as well as income investors.

It tracks the performance of the CRSP US Total Market Index which is made up of almost 100% of every tradeable stock in the US Stock Market.

What Stocks Make Up VTSAX

As I mentioned above, it is made up of almost every tradeable US stock. By investing in VTSAX, you are investing in the overall success of the entire US economy as a whole.

VTSAX Top 10 Holdings

Here is a list of the top 10 holdings as of 6/26/20 ordered by holdings:

  1. Microsoft Corp.
  2. Apple Inc.
  3. Amazon.com Inc
  4. Alphabet Inc.
  5. Facebook Inc.
  6. Johnson & Johnson
  7. Berkshire Hathaway Inc.
  8. Visa Inc.
  9. Proctor and Gamble Co.
  10. UnitedHealth Group Inc.

The top ten holdings make up for approximately 22.6% of total net assets.

VTSAX Holdings List

Although I could publish this list of almost 3,500 stocks, I think it’s a better experience for you to just go and see the published up to date list right on Vanguard’s Website.

Has VTSAX Performed Well?

Finally, my favorite part of the article. How well did VTSAX perform?

Over the last 10 years which has had its shares of bull and bear markets, VTSAX has increased 233.8% with only one year that had a negative return which was 2018. In 2018, VTSAX lost 5.17%.

One year later it surged 30.80%. Averaged geometrically, in order to take into account the one negative year, we get 13.42% average return each year over the years 2010-2019.

In order to illustrate this better, I’ve drawn up this chart in Google Sheets to show what it could have looked like if you invested $10,000 into VTSAX on January 1st 2010 and checked it on January 1st 2020.

I also added a column to show how it would be affected if you just made a single time $1,000 contribution each year on December 31st for illustrative purposes!

For those of you that don’t trust my math (which by the way is spot on…), I’ve included this picture with a source from Vanguard’s website:

Source: Vanguard VTSAX Performance

VTSAX Annual Performance (Growth)

This is the actual numbers pulled off Vanguard’s site if you want to see how I calculated the chart above using the hypothetical $10,000 investment.

Year Total Returns (Growth + Income)
201017.26%
20111.08%
201216.38%
201333.52%
201412.56%
20150.39%
201612.66%
201721.17%
2018-5.17%
201930.80%

VTSAX Dividend Performance

If you are an Income Investor, dividends are rather significant. Below I’ve displayed the Income Performance from the last ten years as well.

Year Income Performance
20102.25%
20111.94%
20122.49%
20132.56%
20142.04%
20151.96%
20162.25%
20172.20%
20181.77%
20192.46%

Although 2018 had the lowest income percentage over the last ten years, that 1.77% helped cushion the only year out of the last ten that had a negative capital return.

As your holdings of VTSAX grow, your income payout will grow consistently as well as the companies in the fund continue to profit and rise in value.

Does VTSAX Have Fees?

VTSAX, like all Vanguard Funds has very low fees. In fact the expense ratio of VTSAX is only 0.04% a year. That means on a $10,000 investment, the fees that you pay will add up to only $4.00. That’s not bad for the ability to invest in the entire US Economy!

How Much Can You Invest in VTSAX?

You can invest as much as you want, but you need to invest a minimum of $3,000 to buy into VTSAX since it’s one of Vanguard’s Admiral Share Funds. Once you’ve invested the original $3,000, you can make any additional contributions to grow your position.

What If I Don’t Have $3,000 to Invest in VTSAX?

I know, I know. I’ve been talking up VTSAX and now I’ve given those with less than $3,000 no hope. Well, there is an alternative and it is much easier to get into.

You can buy shares of Vanguard’s Total Stock Market ETF (VTI), and you don’t need a Vanguard account to buy it.

If you decide to go the ETF (Exchange Traded Fund) route, you will need to buy shares of VTI at the current share price, which at the writing of this is about $151 per share. That means with as little as $151, you can invest in the same selection of stocks that make up VTSAX. Best of all, you can buy it from any brokerage such as Fidelity, TDAmeritrade, or Webull.

It requires a little more management since you need to buy shares yourself and buy additional shares when you make contributions, but overall, it’s not a bad route. Strangely enough, it performs slightly better and has a sliver of a smaller expense ratio.

Let’s Compare VTSAX vs VTI

SymbolVTSAXVTI
NameVanguard Total Stock Market Index Fund, Admiral SharesVanguard Total Stock Market ETF
Minimum Investment$3,000None – Per Share Basis
Investment TypeMutual FundETF
1 Year Performance11.34%11.46%
3 Year Performance31.44%31.57%
5 Year Performance54.90%55.08%
10 Year Performance233.82%234.39%
Expense Ratio0.04%0.03%

Is It Safe to Keep All Your Money in VTSAX?

Like all investments, there is an associated risk. As far as the stock market goes, this is following the entire US Economy and is about as diversified as it gets.

If you live in the United States and are investing in VTSAX, the only way you could lose all of your money is if all companies that make up VTSAX go bankrupt and lose all of their money. In this scenario, your money will not be beneficial anyways because we’ll be experiencing the end of capitalism as we know it!

Most of the time, financial advisors will recommend never investing all in one company or industry. The beauty of VTSAX is that it is highly diversified since it represents the entire market. If you are young and have a long time horizon, you can consider putting all of your money in VTSAX, and over time (20-50 years) you will surely make money.

However, a more conservative investor will probably want a mix of bonds. In this case, consider putting a percentage of your money in VTSAX and the rest in bonds. You can even invest in VTBLX (Vanguard Total Bond Market Index Fund, Admiral Shares). You may have heard of the Rule of 100. This rule states to subtract your age from 100 and invest that amount in stocks and the rest in bonds.

For example, I’m 37. Using the Rule of 100, I should invest 63% in Stocks and 37% in bonds. I think this is far too conservative and think the Rule of 110 or 120 makes more sense. Using the Rule of 120, I would get 83% (120 – 37) Stocks and 17% Bonds, which is closer to my current allocation. This helps keep your account more protected from volatility and the possibility of big downward swings.

Another way to diversify is to invest in something completely different such as a REIT (Real Estate Investment Trust). REITs allow you to invest in real estate which can often outperform the stock market. What’s a good REIT? Glad you asked! VGSLX (Vanguard Real Estate Index Fund, Admiral Shares) has an average annual return of more than 8% in the last 10 years.

How to Buy VTSAX

All of these funds can be found on the Vanguard’s website found here. You simply need to sign in or sign up for an account and choose your funds. Once you’ve chosen your funds, deposit money into them, sit back, and relax.

What if you don’t have $3,000 but want to invest in the funds I mentioned above. Buy shares of the ETF version of the funds on any brokerage. Here’s the ETF versions of the mutual funds I mentioned:

  • VTI – Vanguard Total Stock Market ETF
  • BND – Vanguard Total Bond Market ETF
  • VNQ – Vanguard Real Estate ETF

Final Takeaways

VTSAX is an outstanding mutual fund with low fees, consistent performance, and a ton of diversification. Being made up of small, medium, and large-cap growth and income stocks, there is no wonder why it’s a top pick of most passive investors.

Add VTSAX to your portfolio today by getting started with Vanguard or buy shares of the ETFs mentioned on brokerages such as Webull or TDAmeritrade.

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