Stop! Read! VTSAX or its equivalents

As I’m in the process of moving my content over to a single website, I had to stop and share this. I get questions all of the time on what stocks are hot, how should someone invest their money, or how to setup their portfolio for retirement success. My usual response is that over the long haul, you cannot pick winners and losers and if you try, you may go broke. So, what is the recommendation? The recommendation is a low cost (fees) index fund.

The reigning leader in the FI (Financial Independence) Community is VTSAX. VTSAX is an index fund created and managed by Vanguard and has had a compound annual growth rate of 7.82%. As noted in the book Quit Like a Millionaire, “Index investing beats 85 percent of actively managed mutual funds.” That’s right! It’s the invest in it and forget it fund that will beat your hotshot Financial Advisor in the long-term… and it won’t cost you an arm and a leg in management fees that these Professional Advisors charge. You could literally lose 10s or 100s of thousands of dollars in fees over the course of 25-40 years by using a Professional Advisor.

In the title, I mention “or its equivalents.” Vanguard was the first that created the low-cost index funds. The others (Fidelity, Schwab, etc.) had to play catch-up as they were getting embarrassed and losing business as they didn’t offer these low-cost index funds. Thanks to the competition, they now have the equivalent index funds. If you are using Fidelity or Schwab, you will definitely want to use their equivalent to VTSAX. As an example, to trade VTSAX from Fidelity, Fidelity charges $75. It’s not worth it when you can pay $0 for Fidelity’s equivalent.

What are the equivalents?

  • If you have Vanguard, you should invest in VTSAX.
  • If you have Fidelity, you should invest in FSKAX.
  • If you have Schwab, you should invest in SWTSX.

In full disclosure, I have a Fidelity account (since I was 19; some 26 years ago). I decided to quickly log into the account and do a quick research comparison on VTSAX, FSKAX, and SWTSX. Notice that if you have a Fidelity account, it has the little red dollar symbol by the name. That is to let you know there is a transaction fee. And that fee is $75. The other beautiful thing about leveraging the equivalent, is that since I have a Fidelity account, I don’t even need a minimum to start investing. That! Is! Right! I don’t have to wait until I save $2,500 or $3,000 to open the account and start trading FSKAX. I can do that on DAY ONE. So, take your $100 and throw it into one of these Index Funds.

VTSAX, FSKAX, and SWTSX comparison

The article that made me jump to post this now was from Physician on FIRE – Why VTSAX? and Tweeted by JL Collins.

Happy Investing! Retiring with dignity is just around the corner. If you are just starting, I urge you to start now. Time is your greatest asset!

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