Beginner’s Guide to Investing in VTSAX

Is your money just sitting in a savings account, barely earning any interest? You know it could be doing more, but the stock market seems risky and complicated. This guide breaks down one of the most straightforward ways for beginners to start growing their money for the long term: investing in the Vanguard Total Stock Market Index Fund, known by its ticker symbol, VTSAX.

Think of an index fund as a giant shopping basket. Instead of trying to pick one perfect item (a single stock), this fund buys you a tiny piece of nearly every company in the entire U.S. stock market. This is the core benefit of diversification—the investing version of not putting all your eggs in one basket, which legendary investors like Warren Buffett have long recommended for most people.

So, what companies are in VTSAX? You aren’t buying an abstract symbol; you’re owning a slice of businesses you use daily. The fund includes thousands of companies, such as:

• Apple
• Microsoft
• Amazon
• Google

By owning a piece of the whole “store,” your success isn’t tied to the fate of just one company.

Why VTSAX’s Tiny Fee (The ‘Expense Ratio’) Is a Secret Superpower

Every investment fund has an annual cost called the expense ratio to cover its operating costs. The expense ratio for VTSAX is where it truly shines, sitting at a famously low 0.04%. For every $1,000 you invest, you only pay about 40 cents per year.

While that may not sound like much, many other funds charge 1% or more—costing you $10 for that same $1,000. Over decades of investing, that difference can add up to thousands of dollars that stay in your pocket to grow, instead of going to a fund manager. This low cost is VTSAX’s secret superpower, working silently to boost your long-term wealth.

Your 5-Step Guide to Buying Your First Share of VTSAX

To buy VTSAX, you’ll need to open a brokerage account. Think of it as an account designed specifically to hold investments like funds and stocks. Since VTSAX is a Vanguard fund, the most direct place to open an account is with Vanguard itself.

Opening a Vanguard brokerage account is straightforward and feels a lot like setting up a new bank account online. Here are the exact steps:

1. Go to Vanguard’s website and choose the option to “Open an account.”
2. Select an “Individual brokerage account.” This is the standard, flexible choice for general investing outside of retirement.
3. Enter your personal information (like your name, address, and Social Security number) to create the account.
4. Link your bank account and transfer the funds you want to invest.
5. Search for “VTSAX” and place your buy order for the amount you transferred.

As you go to invest, you might notice that VTSAX has a $3,000 minimum initial investment. What if you want to start with less? Don’t worry—there’s a fantastic alternative made for that exact situation.

What if I Don’t Have the $3,000 Minimum? Meet VTI

The $3,000 minimum for VTSAX can feel like a high hurdle when you’re just starting out. Thankfully, Vanguard offers a nearly identical alternative called VTI. It’s designed to give investors a way to start with a much smaller amount of money.

The key difference is that VTI is an ETF, which stands for Exchange-Traded Fund. While you buy a mutual fund like VTSAX with any dollar amount you choose (e.g., $100), you buy an ETF in whole pieces called shares. This means you can get started by buying just one single share of VTI for its current share price.

Ultimately, both VTSAX and VTI hold the exact same basket of thousands of U.S. stocks, giving you the same incredible diversification. The only practical difference for a new investor is the entry fee. VTI lets you get in the game for the cost of a single share, making it a perfect starting point.

Can I Buy VTSAX in a Fidelity or Schwab Account?

While you technically can buy VTSAX in an account at Fidelity or Schwab, it’s usually not a good idea. Brokerages often charge a significant transaction fee—sometimes as high as $75—just for buying a mutual fund that belongs to a competitor. Think of it like paying a steep out-of-network fee at an ATM.

Fortunately, there’s an easy and fee-free workaround. Every major brokerage offers its own version of a total U.S. stock market fund. For example, if you have a Fidelity account, you can buy FZROX (Fidelity ZERO Total Market Index Fund). At Schwab, the equivalent is SWTSX. These funds do the exact same job as VTSAX: they own thousands of U.S. stocks for you.

The specific ticker symbol you buy is less important than the strategy. The goal is to own a low-cost, broadly diversified index fund. Whether it’s VTSAX, FZROX, or another similar fund, you’re achieving the same powerful result without paying unnecessary fees.

How to Put Your Investing on Autopilot

In your brokerage account, you can set up automatic investments for VTSAX. This tells the system to pull a set amount, like $100 a month, from your bank to buy more shares for you automatically. It’s the definition of “set it and forget it” investing.

Your investment also grows in another quiet, powerful way. The companies in the fund often share a small piece of their profits, called a dividend. By checking a box in your account, you can automatically reinvest these dividends to buy even more VTSAX, rather than taking them as cash.

Together, these two automatic features unleash the power of compounding. Your investment grows from your contributions and from its own earnings, creating a snowball effect over the long term. This is the path from simply saving money to truly building wealth.

Your Path from Saver to Investor

For most people starting out, VTSAX is an excellent long-term investment. Its core design—owning a tiny piece of the entire U.S. stock market—is a proven strategy. While the market will certainly have down years, diversification protects you from the failure of any single company.

You no longer need to view investing as a high-stakes guessing game. Instead, you can see it for what it is: a steady, automated process of building wealth over time. You now have the knowledge and the confidence to begin. Your first step is to open that account and put your plan into action.