Is VTSAX a buy or sell
Is VTSAX a Buy or Sell?
Feeling like you should be investing, but the sheer number of options is overwhelming? You hear about individual stocks, cryptocurrencies, and endless acronyms, and it all feels too complicated for anyone who isn’t a Wall Street pro. This is a common hurdle, but there is a simple, powerful, and highly recommended starting point for a general investing journey.
That starting point is a fund like VTSAX. Instead of trying to pick a single winning company, you can buy a tiny slice of the entire U.S. economy—thousands of businesses, from giants like Apple to small companies just getting started, all bundled together. This approach removes the pressure of stock-picking and instead relies on the proven, long-term growth of the market as a whole, answering the common question: is VTSAX a good long term investment?
What Is VTSAX? Your Slice of the Entire U.S. Stock Market
Picking the right stocks can feel like trying to find a needle in a haystack. Instead of searching, what if you could just buy the whole haystack? That’s the simple idea behind funds like VTSAX. To understand it, let’s start with a basic concept: the mutual fund. Think of a mutual fund as a pre-made basket holding stocks from many different companies, all bundled together for you.
A special and very popular type of mutual fund is the index fund. Instead of having a manager who actively tries to pick the “best” stocks (a service you pay for), an index fund follows a simple, automatic rule: it buys all the stocks on a predetermined list. Because it doesn’t need expensive research or constant trading, it’s typically much cheaper to own.
This brings us to VTSAX, whose full name is the Vanguard Total Stock Market Index Fund. Its straightforward rule is to buy and hold a small piece of nearly every single public company in the United States—thousands of them, from the largest, most established brands to the smallest, up-and-coming businesses.
Ultimately, by owning VTSAX, you aren’t betting on any single company to succeed. You are participating in the overall success of the entire U.S. economy. It’s a way to achieve instant diversification, turning a high-stakes search for one winning stock into a broad, confident investment in the market as a whole.
What Companies Are Actually in VTSAX?
When you look inside VTSAX, the names at the very top are exactly who you’d expect: giants like Apple, Microsoft, Amazon, and Google. Because the fund’s job is to own a piece of the entire U.S. market, it naturally holds the most of the biggest and most valuable companies. It does this by automatically tracking an official list called the CRSP US Total Market Index.
But the true power of this fund isn’t just in owning those titans. VTSAX also includes thousands of medium-sized and smaller companies you’ve likely never heard of. Think of it like this: you don’t just own the famous skyscrapers that define the skyline; you also own a piece of the thousands of smaller buildings, shops, and workshops that make up the entire city.
This broad ownership provides powerful diversification. If one or two big companies have a terrible year, their poor performance is cushioned by the thousands of other companies in your portfolio. Your investment isn’t resting on the success of a handful of famous names; it’s supported by the foundation of the whole American economy. This “safety in numbers” is a key benefit, but it’s not the only one. The second advantage is how incredibly cheap the fund is to own, which acts as a secret weapon for growth.
Why a “Boringly” Low Fee Is Your Secret Weapon for Growth
Just like almost any service, owning a mutual fund comes with a small annual cost. In the investing world, this is called the expense ratio—a tiny percentage taken from your investment each year to cover the fund’s operating expenses. While it sounds technical, the idea is simple: it’s the price you pay to own the fund. And for VTSAX, that price is one of its most celebrated features.
The VTSAX expense ratio is famously low—just 0.04%. On a $10,000 investment, that’s a fee of only $4 per year. Now, compare that to a different fund with a more typical 1% expense ratio, which is common for funds that have managers actively picking stocks. That same $10,000 investment would cost you $100 every single year.
At first, a difference of $96 a year might not sound like a revolution. But here’s the secret: that money you don’t pay in fees stays in your account, where it can continue to grow and compound alongside the rest of your investment. Over decades, this small difference can add up to thousands of dollars in extra growth.
This incredibly low cost is a hallmark of a good low-cost index fund and a major reason why VTSAX is so powerful for building long-term wealth. This simple “own everything” approach is what makes VTSAX a “total market” fund.
VTSAX vs. The S&P 500 (VOO): The Whole Buffet or Just the Main Courses?
If VTSAX is the entire buffet, then funds that track the S&P 500 Index are like getting just the most popular main courses. The S&P 500 is simply a list of the 500 largest and most established public companies in the United States—think of giants like Apple, Microsoft, and Amazon. Many famous, low-cost index funds (like one you might see with the ticker symbol VOO) are built to copy this list, giving you a slice of America’s biggest corporate players.
The key difference in a VTSAX vs. an S&P 500 fund comparison is what’s included. VTSAX holds all 500 of those big companies plus thousands of additional small and mid-sized businesses across the country. It’s the main courses plus all the appetizers, side dishes, and even dessert. This gives you even broader diversification by including companies that are still in their growth phase, long before they might become a household name.
Given that difference, you might be surprised that the performance of VTSAX vs. the S&P 500 is often remarkably similar. This is because those 500 giants are so massive they dictate most of the market’s returns. Ultimately, the choice between the two is a minor detail for most long-term investors. The far more important question is understanding the nature of the risk you take on with either approach.
What Are the Real Risks of Investing in VTSAX?
Investing in VTSAX is incredibly simple, but it isn’t risk-free. Since you own a slice of thousands of companies, the danger isn’t that one company will fail. Instead, the fund’s primary danger is market risk—the risk that the entire stock market takes a temporary dive. Because VTSAX is designed to be the market, its value will fall when the market falls. There’s no escaping the economy’s bad years.
Watching your investment value drop is never fun, and downturns are a guaranteed part of investing. However, this is where a long-term perspective is crucial. While market downturns have happened throughout history, the U.S. market has always recovered and eventually climbed to new highs. This track record is why the answer to “is VTSAX a good long term investment?” is a resounding yes for many—the strategy relies on the long-term growth of the American economy as a whole.
Because of this market risk, VTSAX is not a savings account or a place for money you’ll need soon. For example, you wouldn’t invest cash for a house down payment you plan to make next year. The fund is built for goals that are many years or decades away, giving your money plenty of time to recover from downturns and grow.
How Do I Actually Buy VTSAX? A Simple 3-Step Plan
Convinced that VTSAX might be a good fit for your long-term goals? The next logical question is, “Where do I actually buy it?” You can’t purchase funds from your regular bank; instead, you need to open a brokerage account. Think of this as a special account designed specifically for buying and holding investments. You can open one online in just a few minutes with companies like Vanguard (the creator of VTSAX), Fidelity, or Charles Schwab.
Once you’ve chosen a brokerage firm, the process is refreshingly simple. You can get started with your first investment in three straightforward steps:
- Open an Account. You can open a standard brokerage account or a retirement-focused one, like a Roth IRA.
- Fund Your Account. Connect your regular checking or savings account and transfer the money you plan to invest.
- Buy VTSAX. With your account funded, simply search for the ticker symbol “VTSAX” and place an order.
Before you jump in, there’s one key detail to be aware of. VTSAX has a minimum initial investment, which is typically $3,000. This makes it a powerful, single-purchase way to instantly diversify your money across the entire U.S. market.
So, Is VTSAX a Buy for You?
The world of investing doesn’t have to be an exclusive club with a secret language. You don’t have to pick winning stocks when you can simply own a piece of the entire market.
So, is VTSAX a buy for you? If you are an investor focused on long-term growth who values simplicity, it represents a powerful solution. Its blend of massive diversification and rock-bottom cost in one package makes building a portfolio with VTSAX a foundational first step for millions, directly addressing the challenge of where to begin.
Successful investing isn’t about Wall Street secrets or risky bets. You don’t need to be an expert to build wealth—you just need a simple, effective plan. Learning about an investment like VTSAX is the first step in creating one.