Stocks — Part V: Keeping It Simple, Considerations and Tools

Simple is good.  Simple is easier. Simple is more profitable.

What I’m going to share with you in these next couple of articles is the soul of simplicity. With it you’ll learn all you need to know to produce better investment results than 80% of the professionals and active amateurs out there. It will take almost none of your time and you can focus on all the other things that make your life rich and beautiful.

How can this be? Isn’t investing complicated? Don’t I need professionals to guide me?

No and no.

Since the days of Babylon people have been coming up with investments, mostly to sell to other people. There is a strong financial incentive to make these investments complex and mysterious.

But the simple truth is the more complex an investment the less likely it is to be profitable. Index funds outperform actively managed funds in large part simply because actively managed funds require expense active managers. Not only are they prone to making investing mistakes, their fees are a continual performance drag on the portfolio.

But they are very profitable for the companies that run them and as such are heavily promoted. Of course, those profits come from your pocket. So do the promotion costs.

Not only do you not need complex investments for success, they actually work against you. At best they are costly. At worst, they are a cesspool of swindlers. Not worth your time. We can do better.

Here’s all we are going to need: Three considerations and three tools.

The Three Considerations.

You’ll want to consider:

  1. In what stage of your investing life are you: The Wealth Building Stage or the Wealth Preservation Stage? Or, mostly likely, a blend of the two.
  2. What level of risk do you find acceptable?
  3. Is your investment horizon long-term or short-term?

As you’ve surely noticed, these three are closely linked. Your level of risk will vary with your investment horizon. Both will tilt the direction of your investing stage. All three will be linked to your current employment and future plans. Only you can make these decisions, but let me offer a couple of guiding thoughts.

Safety is a bit of an illusion. 

There is no risk free investment. Don’t let anyone tell you differently. If you bury your cash in the backyard and dig it up 20 years from now, you’ll still have the same amount of money. But even modest inflation levels will have drastically reduced its spending power.

If you invest to protect yourself from inflation, deflation might rob you. Or the other way around.

Your stage is not necessarily linked to your age.

You might be planning to retire early. You might be worried about your job. You might be taking a sabbatical. You might be returning to the workforce after several years of retirement. Your life stages may well shift several times over the course of your life. Your investments can easily shift with them.

F-you money is critical.

If you don’t yet have yours, start building it now. Be relentless. Life is uncertain. The job you have and love today can disappear tomorrow. Nothing money can buy is more important than your fiscal freedom. In this modern world of ours no tool is more important.

Don’t be too quick to think short-term.

Most of us are, or should be, long-term investors. The typical investment advisor’s rule of thumb is: subtract your age from 100 (or 120). The result is the percent of your portfolio that should be in stocks. A 60-year-old should, by this calculation, have 60% in conservative, wealth preserving bonds. Nonsense.

Here’s the problem. Even modest inflation destroys the value of bonds over time and bonds can’t offer the compensating growth potential of stocks.

If you are just starting out at age 20 you are looking at perhaps 80 years of investing. Maybe even a century if life expectancies continue to expand. Even at 60 and in good health you could easily be looking at another 30 years. That’s long-term in my book.

Or maybe you have a younger spouse. Or maybe you want to leave some money to your kids, grandkids or even to a charity. All will have their own long-term horizons.

Once you’ve sorted through your three considerations you are ready to build your portfolio, and you’ll need only these three tools to do it. See, I promised this would be simple.

1. Stocks. VTSAX (Vanguard Total Stock Market Index Fund). You’ve already met this fund in earlier posts of this series. It is an index fund that invests in stocks. Stocks, over time, provide the best returns and with VTSAX, the lowest effort and cost. This is our core wealth-building tool and our hedge against inflation. But, as we’ve discussed, stocks are a wild ride along the way and you gotta be tough.

2. Bonds. VBTLX (Vanguard Total Bond Market Index Fund) Bonds provide income, tend to smooth out the rough ride of stocks and are a deflation hedge. Deflation is what the Fed is currently fighting so hard and it is what pulled the US into the Great Depression. Very scary. The downside for bonds is that during times of inflation and/or rising interest rates they get hammered.

3. Cash. Cash is always good to have in hand. You never want to have to sell your investments to meet emergencies.

Cash is also king during times of deflation. The more prices drop, the more your cash can buy. But idle cash doesn’t have much earning potential and when prices rise (inflation) its value steadily erodes.

We tend to keep ours here: VMMXX. This is a money market fund and time was they offered higher yields than banks. These days, with interest rates near zero, not so much. (Update on 8/8/23: the current YTD return of VMMXX is 19.29%—not bad at all). Now we also keep some in our local bank. If you prefer, an online bank like ING works fine too.

So that’s it. Three simple tools. Two index mutual funds and a money market and/or bank account. A wealth builder, an inflation hedge, a deflation hedge and cash for daily needs and emergencies. Low cost, effective, diversified and simple.

You can fine tune the investments in each to meet the needs of your own personal considerations. Want a smoother ride? Willing to accept a lower long term return and slower wealth accumulation? Just increase the percent in VBTLX.

Next time we’ll talk about a couple of specific strategies and portfolios to get you started.

Meanwhile, a brief note on….

You will have noticed Vanguard is the company that operates all of these funds. It is the only investment company I recommend, and the only one you need (or should) deal with. Vanguard’s unique structure means that its interests and yours are the same. Vanguard the company is owned by the Vanguard funds. In other words, by us, the fund shareholders. This is unique among investment companies.

A while back a commentator on Reddit, referring to one of my posts, said: “This really just looks like a commercial for Vanguard.” I can see his point, although I wish he’d made it directly on here.

I am a huge Vanguard fan, but I am not on their payroll and I have no financial interest in the company other than owning the funds I describe.

You might find an index fund in another investment company that is a bit cheaper. They create some as “loss leaders.” But you can’t trust these other companies long-term. Their interests are not your interests. Their interests lie in making money for their owners.

If you play with snakes, to quote Dave Ramsey, you’ll eventually get bitten.

Don’t bother. Stick with Vanguard.

Addendum: What if you can’t buy VTSAX? Or even Vanguard?

Disclaimer: Like everything on this blog, this is only sharing ideas. You are solely responsible for your own choices.

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Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where they featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Empower is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.


  1. Chris says

    Hey great blog! I have been following the investing series and you offer some great advice. Quick question, I usually use ETFs instead. In this case I use VTI, BND, and VNQ which appear to be the ETF equivalents of the mutual funds above. What are you thoughts on this? Thanks.

  2. jlcollinsnh says

    Welcome Chris….

    …and thanks for your kind words. Glad you are finding some value here.

    My only quibbles with ETFs (exchange traded funds) are minor:

    There can be a fee to buy and sell them.
    They are designed for and encourage frequent trading.
    They are unnecessary other than for lining the pockets of investment houses.

    That said, if you understand them and prefer to execute your strategy with them Ok by me. As with all investment vehicles I would look to Vanguard for them, as you have with VNQ (REITs), VTI (stocks) & BND (Bonds)

    Just curious, what are your allocations in them?

    • Chris says

      I am 30 years old but somewhat conservative when it comes to investing. I am currently 60% VTI, 25% BND, and 15% VNQ. I have recently increased my allocation of VNQ and backed off a bit with VTI given the run up. By the way, I completely agree with your call on Vanguard. Nothing else compares.


    • Bri says

      I am so glad this is the first comment on here. I’m struggling with which version of the Vanguard Stock Index to invest in. I wanted to do the admiral shares, but that would exceed the max contributions in my traditional IRA ($10,000 minimum), so I thought about ETFs for the lower expense ratio, but now I’m wondering if there is a hidden fee I’m not aware of??

      Currently, I have $2,000 invested in a Vanguard target retirement fund, but I wanted to put the other $3,500 in the stock market index. If I go with the VSTMX, then the expense ratio is 0.17%, compared to the 0.05% of the VTI or VSTAX. Not cool!

      I also have a brokerage account in which I’ve already purchased $500 in VTI. I suppose I could just keep going that route and stick with the target retirement fund in my IRA. Afterall, I’ll be maxing that IRA out within months each year, so I’ll need additional investments anyway.

      FYI, I’m 31 and just starting my investing journey. (I started a little late.) The only debt I have is a mortgage.

      Any sage advice on what version of the index to purchase with which account? I’m new at this. Thanks in advance.

      • Zack says

        If you have a Vanguard account there is no fee to buy and sell but there is an additional drag on your purchases (I wouldn’t necessarily call it a fee). There is also the spread between the bid and ask when buying and selling for the ETFs that isn’t there for the mutual funds. With the above ETFs this is normally only $0.01 per share so is pretty small. In your situation I would put the money in the ETF version until I had enough for the admiral shares.

      • Karl says

        I am dealing with the same issue. There is not hidden fees with getting the equivalent Vanguard ETF. If you don’t have enough to get Admiral shares, then you can usually get the same expense ratio with the ETF. There is a tax benefit with ETF’s over mutual funds, but I think its a mute point if already in an IRA or 401K. I just today converted Vanguard mutual fund shares to the equivalent ETF shares, just to have one account vs. two. ETF’s can be a bit more trouble to buy and sell, but you can possibly slightly lower prices with the ETF, using a limit order.

    • Valerie says

      What do you mean by “They are unnecessary other than for lining the pockets of investment houses?” Also, what do you mean when you mention possible commissions buying and selling them? I am currently under the impression that if you buy VTI through Vanguard, there are no fees associated with buying or selling as they allow free access to their funds. Am I mistaken? Or when you say “possible,” do you mean only if you’re purchasing VTI through a company other than Vanguard?

      • jlcollinsnh says

        ETFs were created primarily to facilitate trading in mutual funds. Trading mostly benefits the investment houses that broker the trades. It is rarely a winning strategy for the investor.

        I mean exactly that: possible commissions. At times and in certain places it is possible to buy/sell certain ETFs commission free. Most times commissions are charged.

        If you are able to buy/sell VTI or any other fund commission free, this is not a concern.

    • Jen says

      Dear Mr. Collins. I read your book and started following your strategy about 5 years ago. THANK YOU SO MUCH!

      Vanguard emails me every day telling me it would be better for me to transfer my VTSAX fund which is 100K in an IRA to an ETF. Should I do this or not? I have tried to research but I am confused.

      Thank you in advance for your response.


  3. Jan says

    Looking online and doing a comparison between Vanguard and American Funds, American Funds outperformed the top Vanguard Index Funds, even after the loads. I will concede that I did this comparison when I shifted from Vanguard to American Funds some time ago, but what say you?

    • jlcollinsnh says

      unfortunately, Jan….

      I’d say you got swindled.

      Funds that charge a “load” (sales commission) are aggressively sold by investment advisors. That money, about 5%, goes right out of your pocket and into theirs. Not surprisingly they’ll have nifty charts, brochures and sales pitches to show why this is a good idea. It’s not. Recovering from a upfront load hit is a tough road.

      Never buy a load fund.

      But this is now water under the bridge and the question is what to do with them now that you own them.

      Since load funds are such a horrible idea, I’ve not bothered to look at them much of late. That said, I seem to recall that American Funds are actually not too bad once you get past that hideous load deal.

      What you might do is to look at their current expense ratios and performance.

      For instance, popping over to their website, I see the Growth Fund of America. Its expense ratio, at .68% is one of the lowest in the family and not bad for an actively managed fund. But it is ginormous compared to the .06% of VTSAX. That’s a huge drag over time.

      American Funds are a classic example of a fund company run for the benefit of its owners, rather than its investors. They pay, with your money, sales people to push their funds. That gives them more money under management and that generate more fee income for them. All at your expense.

      sorry to be the bearer of bad news….

      • jlcollinsnh says

        by the way, this is nothing of which to be ashamed. Indeed if this is your biggest misstep you’ve done far better than most, including me.

        Why I remember Myraih International, as does an irked pal who I had lunch with last week and who followed me into to it.

        50K up in smoke. for me. Lord knows what he lost. too much to forgive me but not enough not to speak to me….

  4. Michael says

    Hey JL,
    What about Vanguard Admiral vs Investor funds, VTSAX vs VTSMX? With only $20k to start investing with, the $10k opening for the Admiral fund means I only have $10k to put in bonds, REIT, or somewhere else, which is why I’m thinking to start with $5k in VTSMX, and as I save more, eventually putting it over into VTSAX. (Same thinking applies to the other fund types.)

    Also, what about international funds? With the current European situation, the int’l funds don’t seem to be doing so well, but what over 5, 10, 15-year periods? And Asia (well, China), is on the rise, too, no?

    • jlcollinsnh says

      Welcome Michael….

      ..and thanks for two great questions.

      You are right. Each of the funds I’ve mentioned are part of Vanguard’s Admiral Shares series. Basically they have rock bottom costs but it requires 10k to buy in. Not to worry.

      Each of these funds also has what they call Investor’s Shares. The fund holdings are exactly the same as in Admiral, but the expenses are a bit higher. But the buy in is only 3k. Once you go over the 10k threshold you can convert and the conversion is NOT a taxable event. So the Investor Share versions work just fine.

      Regarding international funds you can certainly add them if you’d like. Vanguard offers International Index Funds. I don’t bother for these reasons:

      1. The US is still the dominate world economy and, in my view, will remain so for the next 100 years and counting. That dominance will shrink over time, as it has been doing since the end of WWII, but it is not ending anytime soon.

      2. VTSAX is loaded with US companies that are fully international in their operations. Indeed many generate well over half their revenue and profits overseas. So it provides exposure to expanding world markets.

      3. This trend will continue to expand as the international economies around the world continue to grow and prosper.

      4. Accounting standards and transparencies in the US remain the envy of the world. Less funny business to worry about.

      5. Direct international investing introduces currency valuations into the mix and that is a whole other level of risk that needs to be considered.

      Hope this helps!

      • Michael says

        Hi JL,
        That helps a lot.

        It’s pretty nice that the conversion from the Investor to Admiral series sounds so easy and, best of all, not taxable. That’s a great draw for me to just get started.

        I didn’t really think about the int’l aspect to U.S.-based companies and how that affects a fund like VTSAX. I think you’ve made some really good points there.

        Thanks for your reply!

      • Pablo Sz says

        Hi! Do you think this comment is still valid after more than 10 years and with the current situation? Is it worth diversifying outside US?


  5. Shilpan says

    Vanguard is my favorite too. I can’t imagine handing my money over to so-called experts on the Wall Street. Most can never even match s & P for the 10 year period. That’s why they only advertise few years of performance. Trust no one. You can’r even trust those old ladies from Beardstown. They were miss calculating their return, and in fact losing money compare to S & P.

    • jlcollinsnh says

      Hi Shilpan….

      ….glad but not surprised to hear you’re a Vanguard guy.

      those other fund companies also fold their losers into their winners. who can’t put together what looks like a successful fund family like that. more reason for my playing with snakes comment.

      Ha! the Beardstown Ladies. haven’t thought of them for awhile.

      For those of you who may not have heard of them, a few years back they had a brief moment of fame. They were a group of classic “little old ladies” who had formed an investment club. In short order they were posting gains that put all Wall Street to shame. Media commentators hung of their every sweetly uttered word. Until it came to light that the numbers were fake.

      I think it was never clear whether they were cheats or just confused. anyone know?

  6. MooSe says

    Is the only way to get funds like VTSAX commission free to open a direct account with vanguard?


    • jlcollinsnh says

      No, thank you FF….

      …you done made my day!

      That is exactly what I was aiming to do: demystify this whole investing thing for those who have other interests.

      very glad to hear it’s made a difference for you.

  7. Djoly says

    I’m one of the rabble who landed here via MMM’s blog. Great work! Now I’ve got another place to hang out and feed my dreams. FWIW, I’m 52, so a bit beyond the MMM demographic but find the discussion and attitudes there great.

    I’m curious if you’ve ever taken a look at which Fidelity funds might best mimic those you recommend from Vanguard. I’ve been using fidelity a long while now and very much like using their FullView (account aggregator) and planning tools, but would like to understand better how much I might be paying for those in fees vs. moving over to Vanguard, assuming I’m comparing similar types of index funds.

    Any input or opinions you have are greatly appreciated, and I’ll be tuning in here from now on! Always enjoy your posts over on MMM, too. 🙂

    • jlcollinsnh says

      Hey Djoly…

      Welcome over here. Any friend of Mr. MM….

      It has been a long time since I’ve bothered to look at Fidelity so there’s not much I can offer in the way of fund suggestions there.

      I do know they have, over the past few years, introduced a line of Index Funds in response to the challenge they faced from Vanguard. Last I looked they had kept their fees on these competitive as well.

      If you invest in Index Funds and you are already comfortable with Fidelity, I don’t think you need to move.

      My concern would be that Fidelity uses their Index Funds as “loss leaders” and my guess is that once you’re on board they’ll try to entice you into their more expensive and (for them) more profitable offerings.

      Index Funds at Vanguard, on the other hand, are the soul of what they do.

      hope this helps!

      • Djoly says

        Thanks for your reply. Took a look and you’re right – Fidelity offers a line of Spartan index funds that are pretty reasonable. There was a good discussion at the Bogleheads site comparing Fidelitiy’s index offerings vs. Vanguard. The main negative re: Fidelity was the possibility they would raise index fees after luring investors in, and if you then sell to move to Vanguard you’re hit with capital gains. I’m of a similar mind as you; these are loss leaders for Fidelity and directly in competition with Vanguard for investors. I’d be surprised if they decided to give up on the competition and raise fees appreciably, losing a potentially large captive audience for their more expensive funds.

        • jlcollinsnh says

          This is an important difference between Vanguard and the other investment companies like Fidelity.

          Low cost is a core principle of the Vanguard approach and it’s hard-wired into their DNA. They are always looking for ways to lower costs and fees.

          Low cost for companies like Fidelity is something they do grudgingly and only as required to meet the competition. They are always looking for opportunities to raise fees.

          That said, the competition should kept their fees in check for the foreseeable future.

  8. Dorothy says

    What do you suggest if the majority of my nest egg is in my 401k at work, and I don’t have the choice of the Vanguard funds you mentioned? Should I be investing outside the 401k as much as possible?

    • jlcollinsnh says

      Hi Dorothy…..

      most 401k plans don’t have access to Vanguard. Mine didn’t when I was working. But they are wonderful tools.

      Most will have on offer at least one Index Fund tracking the total stock market and/or the S&P 500. That’s what you want.

      If your company has a match contribution you’ll want to put at least as much as it takes to get the full match. That’s free money.

      If you have more to invest it becomes a question of tax bracket (do you need the deduction) and when you plan to retire. If you’ll be retiring before 59.5 years old you’ll want some investments outside 401Ks and IRAs.

      I always maxed mine out and, because of my high saving rate, invested outside of it as well.

      • Jeremy says

        I have a related question. I worked for a company who used Vanguard for their 401K and I used it while workin for them to invest Roth 401K with company match. The nice part is i work overseas and dont have to pay taxes so doing the Roth is a great little bonus since i didnt pay taxes on that money and wont have to when i withdraw it. However, i have changed companies and the new company uses ING so i have picked a target retirement fund through them. My question is, if i want to retire before 59-1/2, how should i invest my additional savings in the vanguard VTSAX? Just as general savings instead of an IRA so that i am able to withdraw it when i want? So i will start with 10K and then add to it every month. Does it automatically reinvest dividends? then when i am ready to retire, i can live off the dividends and withdraw from the principal at 3-4%?

      • Jeremy says

        Forgot one question: When i have enough in the accounts to retire and live off of the dividends and 4% rule, how do i account for income on taxes? Will the dividends and ammount i withdraw be counted as income for that year? I have lived all of my working life overseas and only have to file taxes to show what i made, but never have to pay taxes so i am not up to speed on how it will work when i move back to the states and when i finally decide to stop working and withdrawing money out of the investments before i am 59.

        • jlcollinsnh says

          Right now, dividends and capital gains distributions in a taxable account are taxed annually and at a favorable rate lower than ordinary income.

          Regular capital gains (or losses) are taxable events when you sell shares in your taxable account.

          Any money you put in and withdraw from a taxable account is NOT taxed as you have already paid taxes on it.

          Any money withdrawn from a tax-advantaged account such as an IRA or 401k is taxed as ordinary income and, if withdrawn before 59.5, subject to penalties.

          The exception is a Roth. Since Roths are funded with after-tax money and because of the way the law was written, they are NOT subject to tax on withdrawal after 59.5. It is what makes them a beautiful thing.

          You can also withdraw money you contribute to a Roth anytime without tax or penalty. BUT, any dividends or capital gains ARE subject to penalty if taken before 59.5.

          Make sense?

          • Jenny says

            If I may, I’d like to ask a question thats been burning my brain since I’ve discovered your blog (just a couple weeks ago). I’ve slowly been working my way through the Stock Series and have since been doing research on Vanguard and the funds mentioned. My situation is: my mother had money invested for my brother and I in individual accounts through Edward Jones that has been loosing miserably for yours. (Putnam Global Natural Resources). I discovered this recently when she converted the accounts from custodial to each of us as the sole owner. After calling Edward Jones, we decided to sell that fund and transferred 70% into the American Balanced Fund and 30% into the Fundamental Investors Fund. The realized loss from the Putnam fund is almost $5000.00. I have roughly $13,000 left between the new accounts and I’m wondering if moving that over to Vanguard would be in my best interest, but I’m concerned about the tax cost! I just sold the Putnam account within the last month. Would it be a double hit if I sell the new accounts and transfer over to Vanguard? I wish I had discovered your blog earlier. But now that I’m in this situation I’m uncertain what I should do. I would love to get your opinion. BTW: the blog is fantastic! I read this with my coffee every morning, before I even glance at the days news.

          • jlcollinsnh says

            Thanks Jenny…

            …glad you like the blog!

            Sounds like you made the switch from Putnam recently. If so, you likely have very little in loss or taxable gains in your new funds. That being the case, there should be little, if any, “hits” when you move to Vanguard.

            I’d go for it and then you can just hold it and forget it. 😉

          • Jenny says

            Wow! Thanks for the quick response! In general, I know what I should be doing with my money. But I’m at a loss when it comes to taxes. All I know is from experience and it’s always been hefty. And of course, the fees! I never gave to much consideration to the long term affect. I have 2 Roths at TRowe that I’m considering switching just for that reason. I’m paying .67 (ish) in my target date and capital appreciation funds. I will transfer the Edward Jones money to vanguard though. I hate that they let thousands of dollars slip away over years and not once contacted us about making a change. Plus, going through a middle man just seems silly to me. Thanks again for all you do!

        • Jeremy says

          so, since i am still living overseas and plan to for at least another year or two, it makes more sense for me to open a general savings (what vanguard calls it) account outside of my 401k and invest the $10,000 in VTSAX. This will be considered i have already paid taxes on this money correct? then open a Roth IRA account and contribute max allowable amount each year in 50% VGSLX and 50% VBTLX. I will also be putting a monthly amount into the VTSAX general mutual fund account to keep it as the bulk of my investment. I am thinking 80% in VTSAX and 10% each in VGSLX and VBTLX since i am 29.

          Also, i know you say the stock market always goes up and not to try and time it, but i sure wish it would go down quite a bit right now so i could put in my 10K into VTSAX.

          • jlcollinsnh says

            sounds like a plan, Jeremy. Your allocation is a fine match to your age.

            of course, whatever dividends and cap gain distributions your “general” VTSAX account generates will be taxable. As will be any capital gains when you sell shares in the future.

            it’s fine to wish, but don’t get hung up on trying to time the market. you are playing long ball here.

  9. ChetBodet says

    Great blog! I have really enjoyed going back through all the posts.

    I was wondering if you had some advice for my current situation. I am 24 and I have about $20K in my Roth IRA all in the Vanguard STAR fund. I am looking to invest in the VTSAX going forward, but with the $10K initial requirement I am not sure how exactly. Can I take $10K of the STAR fund and basically just switch it to the VTSAX Fund? If so do you know what if any tax implications or Vanguard fees I would incurr? Also, would I then be able to buy more VTSAX funds, but in a seperate account from my Roth?

    • jlcollinsnh says

      Thanks Chet!

      First, the STAR fund is a fine choice. Basically it is a “fund of funds” comprised of eleven different Vanguard funds and it has a mix of 60/40 stocks/bonds. The idea is a full and diversified portfolio in one fund, and you never have to worry about rebalancing it. That happens automatically.

      It’s expense ratio, at .34%, is higher than VTSAX at .06%, but that’s still low in comparison with most other funds out there.

      I would have no problem with you just keeping your STAR fund and adding to it over the next few decades. It should serve you well and with a smoother ride.

      VTSAX (100% stocks) will likely give you a greater final return when the dust settles 30-40 years from now, but it will be a bumpier ride.

      a mix of 60/40 stocks/bonds, as in STAR, is very conservative for a guy your age.

      If you do decide to switch, the process could hardly be easier. You just log on to, go to your account, find the section on exchanging funds and follow the prompts. If you haven’t established your online account, you’ll need to do that first, of course.

      If you like you can even call Vanguard and they’ll walk you thru the process.

      There are no fees to buy and sell Vanguard funds.

      If you are opening your new VTSAX as a Roth account and transferring money from your current STAR Roth, there is no tax conscience.

      If, however, you are taking money from the Roth to open a VTSAX (or any other) investment outside the Roth there will likely be tax consequences. Not a good idea.

      Of course, you can always open a new VTSAX account with money NOT in your Roth. No problem.

      Hope this makes sense!

      • ChetBodet says

        Thanks so much for the quick response! I think I will start putting more of my contributions in the VTSAX fund, mainly because as you mentioned the STAR fund seems a little to conservative for me right now, although the last time I checked their returns the STAR fund had actually slightly outperformed the VTSAX over the last decade.

        Thanks again for the help and the great blog!

        • jlcollinsnh says

          No worries Chet….

          ..glad to help.

          Looking over the last decade, it makes perfect sense that STAR (60%stocks/40%bonds) would outperform VTSAX (100% stocks). The last decade has been tough for stocks and great for bonds.

  10. Albert Choy says


    I think you have this flipped:

    ” The typical investment advisor’s rule of thumb is: subtract your age from 100 (or 120). The result is the percent of your portfolio that should be in bonds. “

      • J dawn says

        Albert is right. You subtract your age from 100 to get the percentage that should be investing in stocks. This means a younger person, say 20, should buy more stocks and less bonds. As you get older, you should generally buy more bonds and less stocks. It makes sense as stocks are generally more volatile and risky. A younger person has more time to recover from stock losses. That is the theory at least.

  11. Debbie says

    Would you compare TRoweP to VAnguard? Spouse invested with TRP for years and managed my IRA. Since his passing, looking at my finances and reading your blog and Q&A I don’t know where to begin, how to compare the two companies. You certainly make a strong case for V.

    Thanks for your response.

    • jlcollinsnh says

      Welcome Debbie…

      Very sorry to hear of your loss. My condolences. That’s tough on so many fronts, including sorting out finances. This is just one more reason I am such a strong believer in simple investing.

      I am a huge Vanguard fan and all other things being equal it is my choice hands down. But in your case, all other things are not equal.

      The good news is TRP is a fine company (my favorite actually after V) so you can start by resting easy that your husband chose it. Certainly don’t feel you have to do anything right away. And certainly ignore all the ‘advisors’ who will be knocking on your door with ‘the solution.’

      When you are ready, you might want to look at exactly what funds in TRP you have. As with Vanguard, TRP offers low cost index funds and that’s where you want your money to be. For the funds held in IRAs and 401Ks this is easy. You can move the money tax free if you need to.

      For investments outside tax advantaged accounts, you’ll want to be more careful. You could be in a less than ideal fund but facing a large capital gain if you move it.

      I hope this helps. Please feel free to check in again if you have more questions.

      • Debbie says

        Your information helps to ease my mind as to “what to do” re fund investments. No action seems most appropriate short term.

        Neglected to mention there’s also a small amount invested with Fidelity funds. Am thinking of moving everything under one umbrella, TRP, at this time. Input?

        BTW your site was instrumental in my “getting” involved in my investments. Thanks.


        • jlcollinsnh says

          Glad to hear it, Debbie!

          If you plan to remain with TRP, and there is not a big tax hit with moving from Fidelity, no problem.

      • Julian says

        Just a quick note to complement how classy you were in answering Debbie’s concerns. Character counts!

        Just found your blog and I’m learning a lot. Thanks.

      • jlcollinsnh says

        Thank you, Julian…

        I very much appreciate your compliment. I try to respond to all the questions here in a like manner.

        That said, with Debbie it was easy as she was friendly and appreciative.

        But some posting questions here are not, or at least their comments don’t read that way. Those are more challenging. 🙂

  12. CG says


    First off, you’re running a terrific blog. Thanks and kudos to you for sharing great information. This blog is one of the best that I’ve seen on these topics.

    I just wanted to pick your brain on something. I’m quite interested in investing in Vanguard index funds, but my situation is a bit tricky. I’m currently working in a foreign country (but a US citizen).

    I don’t think I’ll be returning to the States in the foreseeable future–which is sad, but it is what it is. I pay my taxes here locally; that is, I don’t pay taxes in the States. So, that precludes me from enjoying non-taxable/tax-deferred/retirement accounts like IRA or Roth-IRA.

    In other words, I can only go for taxable accounts. As I understand–and correct me if I’m wrong–if I want my investment to be tax efficient, I should avoid putting money in bonds- (e.g., VBTLX) or real estate-based (VGSLX) index funds with taxable accounts, as dividends/returns from them are taxed at a higher level, compared to stock-based index funds.

    Assuming my understanding is basically correct, that leaves me with the VTSAX or similarly comprised index funds as the only option. I would still be willing to invest in such index funds, but putting money in only stock-based index funds seems to be insufficiently diversified (although they are, of course, well diversified across different stocks).

    In a situation like this, do you know of any other way to hedge against other risks, such as inflation or deflation? Or, would you say one should disregard the tax considerations in cases like this? I would be happy to hear your thoughts. Thanks! All the best. –CG

    • jlcollinsnh says

      Wow! Thanks CG! You made my day. and welcome.

      VBTLX and VGSLX are considered tax inefficient because they throw off dividends and interest.

      VTSAX has a modest dividend of around 2% these days and importantly as an index fund does little trading. That last means little or no taxable capital gains distributions at the end of each year.

      Runaway inflation and deflation are the two economic events that can cause real havoc. But these are also rare events. VBTLX and VGSLX are my favorite hedges for such things and if hedging is important to you I’d say it trumps the tax consideration.

      But I didn’t bother with them until I was older, retired and the income was more attractive. Were I younger, VTSAX is all I’d own. Wild ride, but the best performance potential over time. But I have a very high risk tolerance and a willingness and ability to ride out the crashes I know will come and that I know are normal.

      Hope this helps!

      BTW, if you don’t mind saying, where are you located and what took you there?

      • CG says

        Hi JL,

        thanks for the insight! It makes a lot of sense. I can only go with a taxable account with these investments anyways, so I’m just trying to maximize within the given constraints.

        I absolutely do not mind. I’m in Taiwan. I’m a junior faculty at a university here. I joined the faculty last year. As for what took me here, as you may know, academic jobs are extremely scarce and poorly distributed, especially if you’re looking for a tenure track position. When you get an offer, you basically take it, no matter where the location is. 🙁

        The academic salary here is low (I guess that goes for pretty much anywhere), but it’s a stable career compared to many others out there. That means I feel like I can be quite risk tolerant. I’m trying to set aside a chunk of my salary and invest consistently for a long haul. So, when I put my money in Vanguard index fund(s), I don’t plan on moving it for a very very long time.

        Keep up the good work here! I’m enjoying it a lot. And thanks again!


        • jlcollinsnh says

          so you are on the tenure track at this university? That is a long term commitment to Taiwan!

          How do you like it there? What is your field?

          • CG says

            Yes, it is. Well, “long-term” commitment for the time being. Being on the tenure track doesn’t necessarily mean that I can’t change school/location, although I would like to stay here at least until I get that tenure. Similarly, I can also move to somewhere else after getting tenured. Of course, there is also no guarantee that I’ll get tenured. So, a lot of things can happen, and I might move out of Taiwan down the road. The other–and more important–reason why it looks like I’ll be committed to this location for a long time is because my wife is a Taiwanese, and she didn’t really want to move to the US. I don’t think she’ll change her mind anytime soon… But, on the bright side, I love it here. It’s a very livable place, and people are nice and friendly. I teach political science.

  13. Kevin says

    One small thing… I think that the advisors rule of thumb is that your age or your age minus 20 should be in bonds with the rest in stocks. The way it is stated here you would actually have less in bonds each year that you age. Your point is still completely valid, but I think the rule is backwards.

  14. Stephen says

    I love this blog and am making my way through this series avidly.

    I was wondering how much of this applies to international investors? I live in Australia. Does “the market always goes up” still apply to the Australian market? It seems to historically, however since it’s such a small slice of the international market I was doubtful it was as secure.

    I would like to simply invest in VTSAX, but the vanguard situation is different over here.

    Most of those charge a fee of 0.70% or .090%, and they track the Australian share market, not the US.

    However there are also ETFs listed at Vanguard Australia – these appear to have much lower pa fees. There is one which is the “total US market” for 0.05% pa! Is buying such an ETF the same as buying VTSAX in the US, or am I missing something?

    Im sorry if this is confusing, I guess I’m just wondering the best way to attempt to emulate your strategy of buying the total US stock market whilst living in Australia

    • jlcollinsnh says

      Welcome Stephen…

      Sorry for the delay in responding. Hopefully you read the part about my disappearing to Central America for a few weeks.

      “The market always goes up” refers to the US stock market, which has the advantage of being such a large and dominate player on the world stage. The same would apply to the world markets overall. I would be hesitant applying the idea to Australia as the economy there is far smaller. I encourage investors outside the USA to consider investing in World Index Funds that include the US market.

      VTS, in the second link you provided, is indeed the equivalent of VTSAX and the ER of .05% is great. Be careful, however. Since it is an ETF you might well face commission charges when you buy or sell.

      Since you’ve been working your way thru the blog, perhaps you’ve already come across these two posts:

      You’ll especially want to read the comments in both those posts. Several Aussies have weighed in with their ideas and experiences.

      Cheers, mate and good luck!

  15. Rich says

    Hi Jim,
    Great information and thank you for sharing all this.
    I can tell you that with all the career emphasis most folks have, we just don’t seem to wrap our minds around the investing logic until it’s late in the game.
    I’m retiring in May this year when I turn 62. I have a pension that will “just cover” my monthly expenses.
    I plan to ‘not’ take my social security benefit until I reach full 66yr status. I also have an employer 401K with sufficient funds that is managed by Vanguard. I will likely need to tap into earnings to bridge the gap until I reach age 66.
    81% of my holdings are currently invested in company stock (oil) and I’m considering utilizing your “4 tools” advice.
    Any advice on how to arrange dividend/earnings income withdrawals and whether to roll into an IRA?
    Also I notice you state the rule of thumb for Stock/Bond ratios, but then you say…doesn’t matter. Can you explain why?


    • jlcollinsnh says

      Hi Rich…

      Thanks and glad you find it useful.

      Were I in your position I would be VERY concerned about having 81% of my assets in just one stock. Even if I loved that stock.

      If this holding is in a tax advantaged account I’d promptly shift it into the broad-based index funds discussed in the post. If not and assuming you have a large capital gain, I’d begin shifting as rapidly as possible consistent with limiting the tax hit as best you can. This, of course, will take a careful analysis of your full tax picture; something well beyond the scope of this blog.

      Structuring withdrawals can be almost anything you choose. For us, we first spent down the various investment “mistakes” I’d accumulated. Now we pull what we need each month from our joint VTSAX fund in our non-tax-advataged account. In our IRAs we have more VTSAX along with the bond and REIT funds described above. The dividends from these I have reinvested. We also shift some each year to our Roth IRAs to reduce the amount we have once we hit age 70 and the Minimum Required Distributions (MDRs) kick in. The idea is I’d prefer to pay up to 15% now than 25%+ later.

      Once I have to take the MDRs, those will provide our living expenses and our joint VTSAX fund in our non-tax-advataged account will be left alone to grow again.

      As you can see, this is all unique to our situation and needs. It may or may not be useful to others.

      But I would suggest not worrying about just spending your dividends and interest. Better to look at all your investments as a whole, limit yourself to total withdrawals of 4% or less and take those withdrawals from wherever it makes sense at the time.

      I don’t recall saying stock/bond ratios don’t matter. They are a tool for smoothing the ride. Once you stop working and start drawing on your investments, this is important. But while you are still working and adding money to your investments, I suggest toughening up and accepting the wild ride for the greater return stocks provide over time.

  16. Brian Boatman says

    I LOVE YOUR BLOG! I have a question for you. I’m 37 years old and work for a Governmental Agency with a Pension. On the side, I contribute some money into a 457(b) plan. I currently have $67,000 in there in a Vanguard Target Date Fund, 2045. The Expense Ration is .18. Now, I understand that this ER is great, but I had a thought…can’t I invest in each of the three index funds that make up the 2045 Target Date Fund and save some on the ER? Am I missing something here!?

    Thanks for your blog and for your willingness to share your wisdom with us young, dumb people!


    • jlcollinsnh says

      Thanks Brian!

      And no one who asks questions is dumb. I wish I’d been smart enough to ask more back in the day. 😉

      Anyway, your thinking is spot on. You can absolutely replicate any target date fund using a selection of index funds, and with lower ERs (expense ratios) to boot. You’ll just have to remember to do the rebalancing on your own, something the TDF does automatically for you.

      In fact, I just did our annual rebalancing of the three funds described in the post last week. Easy peasy! And fun. At least for me.

  17. Andrew says

    Great Blog! I’ve been reading this and MMM and working on getting my financials on a better track (fortunately they haven’t ever been bad, just not as optimized as they could be).

    I’m right now looking to get rid of higher expense ratio Mutual Funds. Looking at the Vanguard Funds I’m confused by the existence of:
    – VTSAX (appears to be a Mutual Fund)
    – VTI (appears to be the ETF version of the same)
    – VTSMX (appears to be an more expensive version of VTSAX)

    It seems like I could buy VTI and avoid the minimum contribution of the Mutual Fund with no downsides, what am I missing here?

    One other question: I currently have my money with Fidelity, which I like their online tools and they let me buy Vanguard Funds and ETFs. Is there an advantage of being a Vanguard customer directly?

    • jlcollinsnh says

      Thanks Andrew!

      Great move dumping your high ER funds.

      Your understanding of those three funds is pretty much spot on: They each hold exactly the same portfolio but are slight different animals. I cover this in detail here:

      As for VTI the only concern would be avoiding any transaction fees in buying/selling and because it is so easy to trade be careful not to fall into the sucker’s game of trying to time the market.

      If using Fidelity is comfortable for you and they aren’t charging you to buy & sell, you can stay with them. Just don’t get lured into their high-priced funds.

      My guess is, over time, you’ll want to consolidate everything at Vanguard. It’s just a bit easier. That’s what I’d do/have done. But you can take your time and make the move whenever you’re ready.

  18. Richard says

    I’m so glad I learned about Vanguard and index funds from your blog! I feel so much more comfortable having my money with them than anywhere else now. Thank you for sharing all your wisdom and experience!

    I was curious about this:

    “With it you’ll learn all you need to know to produce better investment results than 80% of the professionals and active amateurs out there. ”

    Index funds make sense to me to use as investment tools, and I’m guessing 80% is a bit of ballpark figure….is this roughly a commonly agreed upon percentage?


    • jlcollinsnh says

      Welcome Richard…

      Great question and yes, that 80% is a ball park figure based on the many articles on this I’ve come across on this over the years. In fact you can Google this question and find several falling around this percentage. I’m not sure why they vary. Some look at different time frames. Some at different metrics. Some factor in costs, some don’t.

      The truth is, 20% is optimistic and is based on short time frames. Clearly it is easier to get lucky and outperform the shorter the time you need to do it. Even I called the market almost exactly last year, and I can assure you it was no more than luck: 🙂

      Vanguard has done research on this looking at a 15-year time frame:
      In it they point out that 45% of actively managed funds fail to even survive over that time, let alone outperform. Only 18% both survived and outperformed. And even those frequently had long periods of underperformance.

      Even if you are lucky enough to pick one of the out performers, it will be tough to live with.

      This article references studies done for an even longer period: 1976-2006, 30 years.

      The results are even more shocking. As the article says:
      “Barras, Scaillet and Wermers tracked 2,076 actively managed U.S. domestic equity mutual funds between 1976 and 2006.

      “And — are you sitting down? Only 0.6% — you read that right, 0.6% — showed any true skill at beating the market consistently, ‘statistically indistinguishable from zero,’ the three researchers concluded.”

      On reflection, calling the out-performers at 20% I am too generously off the mark. 🙂

  19. AF says

    Hello, jlcollinsnh,

    After reading very informative (thanks for that!) articles on your blog as well as on MMM’s site, I opened an account at Vanguard. Before that I called them several times and I had a good feeling after talking to their people.

    Then I got my money ready to be transferred to Vanguard and so I attempted to link my banking account to my Vanguard’s account. I just clicked the button “Add bank account” (I don’t remember exact name) and… my account got blocked.

    It was three days ago. Since then I called them multiple times a day, every time they take my phone number, tell me that “associate managing my account is not available, but they will live a message and he/she will call me back”. Nobody ever called me since then, instead I keep calling them.

    Googling for “vanguard technical support sucks” returned this article among many others:

    I always heard and thought, and your articles supported that, that Vanguard is a solid company, but so far I have serious concerns. If I am being treated like that when they don’t have my money, I am afraid to think what would happen after I make a transfer.

    Can you make a comment on that, please?


    • jlcollinsnh says

      Hi AF…

      Vanguard assigns an individual account manager to each investor. I’ve had mine for 20+ years and have never talked to him. As busy as people are these days, the chances of him being available when I call are slim to none. So I don’t bother.

      Instead I call the Vanguard number and whoever answers helps me. Almost without exception, these folks have been knowledgable and friendly. On the rare occasion that they can’t answer the question they whistle in a supervisor who can.

      The Vanguard website also has a section where you can email your manager. They promise a quick turnaround and the few times I’ve used it, the response, from my manager, has been very prompt. But usually I just call.

      So my advice is to abandon the “deal with just my assigned manager” model and go “free-range” 🙂

      The other thought I leave you with, is that the Vanguard model and mission is low cost. That savings goes into our pockets. It could be that sometimes, in their drive to keep costs low, they go too far and service suffers a bit in comparison.

      Frequently, I’ve heard high praise for the customer service from firms like Fidelity and T Rowe Price. Due to the competitive pressures from Vanguard, both now offer low-cost index funds (sort of loss-leaders to get you in the door), along with their high-profit (to them) high-cost actively managed funds. Could be those high fees allow them to offer a more premium service experience.

      If you continue to be unhappy with Vanguard, you might consider them as an option. Just be careful not to get seduced into their high-priced products.

      As for that link you provided, I wouldn’t pay too much attention. Vanguard certainly isn’t perfect and I’m sure like any large organization they drop the ball sometimes. But most of the complaints there have the ring of bullshit to me.

      Remember that in creating the only investment firm that genuinely aligns its interests with its customers, it has created a lot of enemies in the business. Including legions of money managers who have lost business to them.

      • AF says

        Thanks for your quick response! 🙂

        The problem is that their “free-range” does not provide any support. They just take my phone number and promise to call back. Last time on my request to talk to a supervisor then they called a team lead who… well… took my number and said that the “associate managing my account will call me back”. How can I argue with that?

        To be honest, I was not even aware that I have an “assigned manager” – I’ve never had one in brokerage firms, neither I wanted one. And hearing multiple times about mysterious “account manager” added more into my frustration until your explanation.

        I will try to contact them via email, but I am not holding my breath on that too as I emailed them my question about whether I can label my accounts on the website (I have multiple, so I want a better differentiation) last week and still waiting for a response.

        Thanks for mentioning alternatives to Vanguard and warnings about high costs. Besides Fidelity and T Rove Price, I will check Dodge & Cox – this name was mentioned a couple of times in discussions that I found after googling for alternatives to Vanguard.

        I did not give up on Vanguard yet, but if they won’t let me access my account to transfer my money into it – what can I do?

        • jlcollinsnh says

          This is a tough one as in decades of dealing with Vanguard I’ve never had an experience like yours. Nor has anyone I know. Nor can I replicate it.

          In fact, I just called them to discuss it. 1-800-284-7245 The “free range” guy I got this time was helpful as always but is as baffled as I.

          He did suggest that, if you are asking a complex or technical question, that might require them to take a few days and then get back to you. Other than that, assuming you’re not just yanking my chain, phone calls should work.

          • AF says

            I am lucky to have a wife who is better than me and who in 30 minutes can solve a problem that I cannot solve in 3 days. 🙂

            My better half called Vanguard and she was able to clear things out:

            For many years my wife had individual web account with Vanguard where she had IRA and 401(k) investment accounts. When I opened a new web account for both of us, I used her SSN along with mine, and this is what created a problem.

            Apparently, technically Vanguard allows the same SSN to be used in multiple web accounts, but it does not really handle it well. As the result our new account was eventually blocked. At the end of our conference call Vanguard’s technical person (really knowledgeable, unlike others I spoke with) said that he will merge new investment accounts that I created into my wife’s web account, and I will be able to create my personal web account to access them.

            In my defense I can say that I did not see any warnings about SSN not allowed to be used in multiple web accounts. On the contrary the customer service people kept telling me that I would have to create individual web accounts for each investment account that I would like to buy the same security for – e.g. 3 individual web (!) accounts (different username) if I would like to have 3 investment (!) accounts holding the same VTSMX security.

            I hope this time Vanguard’s tech gave us correct information and within 24 hours we will be able to access our new accounts.

            To help others to avoid my experience with Vanguard – don’t open multiple web accounts (different usernames) with the same SSN.

            Thank you for checking with Vanguard and trying to help. 🙂

  20. Kat says

    Hey! I’m looking to start investing soon. I’m 27 and recently inherited a large amount of money. I’ve had it in cash for the last year or so, because I just felt like I still had a lot to learn before I would feel comfortable investing. Your blog has taught me so much so thank you!

    I really gravitate toward your simply philosophy, but I wonder what you think about value-weighted index funds like the one suggested in this article.

    (In summary, if you don’t have time to read it, basically they say the problem with index funds is they force you to buy high, sell low, so they suggest a value-weighted index fund instead.)

    Thoughts? Or can you point me in the direction of an article you’ve written on the subject if you have one?

    Many thanks!

    • jlcollinsnh says

      Hi Kat…

      Over the years I’ve read countless “better index idea” articles including those on the value-weighted approach, so thanks for forgiving me for skipping this one. 🙂

      People are forever trying to build a better index fund and, so far, all they’ve come up with are things that work better some of the time. Of course that implies they work less well the rest of the time.

      Pure index funds as created by Jack Bogle are beautiful things. I’ve yet to see anything I’d rather have my money in.

      Good luck!

  21. Jacek Glinkowski says

    Do you have a comment on the Vanguard “simplifying account structure” – moving Vanguard mutual funds under ” Vanguard Brokerage Account”, so all holdings will be under VBA?

    • jlcollinsnh says

      Hi Jacek…

      I hadn’t heard about this so I reached out to my pal Linda at Vanguard. This is what she had to say:

      “Ok, here you go. The reader is referring to our new consolidated account structure, which will enable all clients to hold Vanguard mutual funds in the same account as Vanguard ETFs and other brokerage assets. The aim is to provide additional investment flexibility and more streamlined service, and it is part of a broad effort to simplify the investing experience with Vanguard.

      “The new account structure will include:
      The ability to manage and view mutual funds, ETFs, and other brokerage securities in the same account.
      A streamlined online process to buy and sell investments.
      The ability to use proceeds from security sales to immediately buy Vanguard funds—no more 4-day wait.
      A single tax statement for tax filing convenience.

      “Clients will receive notification from Vanguard —via e-mail, letter, or prompt when they log on to their account—when their accounts become eligible to upgrade to this simplified structure. To avoid disruption to their existing account options, clients will be unable to upgrade until they receive notification of their eligibility. Clients with questions about eligibility are encouraged to call Vanguard for additional information.

      “Hope that helps. If not, let me know what else I can get for you.”


      My take: Since I only hold the funds, it won’t much effect me. Although I do have a brokerage account with Vanguard dating back to when I used to buy individual stocks.

      For those who it will effect, I can see some advantages in efficiencies with no downsides I can tell.

      Make sense?

      • LeoJr says

        Hi Jim,

        In my continual effort to check my assumptions and further my learning, I wanted to follow up on your reply to Jacek which, I think, states that you have a Vanguard brokerage account owing to your “pre-enlightenment” forays in stock picking. I believe you have also said that you do have taxable accounts as well. So, are these taxable accounts elsewhere (i.e., not at Vanguard) or is it possible to have a taxable account that isn’t a brokerage account?

        Thanks in advance.

        • jlcollinsnh says

          Hi Leo…

          All of my investments are at Vanguard and I have both a brokerage account (dormant at the moment) and a taxable account that holds VTSAX and VMMXX.

  22. Fred Meissner says

    Hi Jim, love the blog, came across it through MMM.

    I’m 23, and about to get into putting more savings into my investment account that my father has been diligently managing since I was very young. It’s an ETrade account, and I was just interested in what your thoughts on ETrade vs. Vanguard were. It seems they both have their pros and cons, and make them almost indiscernable to someone as new to this as me.

    Also, I grew up in NH!


    • jlcollinsnh says

      Thanks Fred…

      Glad you found your way here.

      I am unfamiliar with ETrade other than having heard the name.

      As you read the blog further you’ll learn that I see both trading and trying to pick individual stocks (and the associated high costs) as losers’ games. So if, as their name seems to imply, they encourage this I’d not be a fan.

      You’ll also become more familiar with my views on Vanguard:

      Kudos to you dad for getting you started on investing!

      • Fred Meissner says

        ETrade seems to have a lot of powerful tools for doing as you said…individual investing, something my father does from time to time (his rule of thumb is do exactly the opposite of what he does and you will have success…I like to apply this to everyone, so my views on individual trading and prediction the market are in line with yours). The tools are there if you want them, but you don’t pay extra, so I think from my conversations with my father it is absolutely fine for long-term index fund investing. Thanks for getting back to me, and I look forward to reading more articles!

  23. Dave M says

    Is this a typo? The logic seems backwards:

    “The typical investment advisor’s rule of thumb is: subtract your age from 100 (or 120). The result is the percent of your portfolio that should be in bonds.”

    Going by that, if I were 20, I’d have 80% in bonds. If I’m 50, I’d have 50% in bonds. If I’m 80, I’d have 20% in bonds. I think it’s the other way around, isn’t it? At least going by the “typical” investment advice. 🙂

    • jlcollinsnh says


      This post has been up for 2.5 years and you are the first to catch this, or at least the first nice enough to clue me in. 😉

      Correction made.


      • Dave M says

        LOL! Glad I could help. I’ve always heard the rule stated, “Invest your age in bonds.” Comes out the same either way, and as I’m slowly starting to understand, it is nonsense.

  24. Paula says

    Hi Jim,
    I currently have VTSMX with Vanguard. Could you explain the diff bet this and VTSAX? I could not find a good reason to switch my investments to VTSAX.
    I am a starter at investing. I do have 25k sitting in my bank besides 5k in VTSMX. Should I just dump all that money into a VTSAX fund? should I transfer my money from VTSMX to VTSAX plus add the other 25? can you own those two types of index funds at the same time? I am not sure that’d make too much sense but wanted to know your thoughts on that! thank you again for making investing so simple and understanding. You and MMM are definitely making me feel powerful and secure about investing my money and making my way to being FI asap! thank you so much!

    • jlcollinsnh says

      Hi Paula…

      VTSMX is the “investor shares” version of VTSAX. It has a lower entry level, $3000, and a slightly higher expense ratio. But it is exactly the same portfolio. Once your balence reaches 10k Vanguard will roll it into the lower cost “admiral shares” version: VTSAX.

      Yes, you can own both at the same time. You can even own multiple VTSAX accounts. For instance, I have VTSAX in three: ROTH IRA, IRA and taxable.

      Since I know nothing about you –age, employment, goals, other assets, etc. — I can’t begin to suggest whether you should invest your 25K in VTSAX. But for investing in stocks, that is the tool I use.

      Keep reading the Stock Series and you’ll be able to figure out if it is right for you.

      Good luck!

      • Paula says

        Hi Jim,
        Thanks for your response and the helpful advice!
        I am 41 yrs old, full-time employed (for now). I plan on retiring from full-time by Feb 2017 and do part-time since my husband is 34 and plans on working until he reaches 65! I have no desire to do that and would love to be FI by the time I’m 50.
        We have no assets. We do not want to have kids.
        Our savings rate is probably 65% of our salaries.
        As for the 25k, I would be investing it some time in February… Hope this background helps a little so you can give me some guidelines as to where to put that money. Thank you again!

      • jlcollinsnh says

        Hi Paula…

        Based on what you are saying, your 25k sounds like money you are ready to invest for the long-term (think decades). As such, I would use VTSAX.

        But, again, read the stock series so you fully understand all this implies. Then you’ll be able to decide for yourself much more reliably than going just based on my reply.

        This understanding will serve you well when the market takes one of its inevitable plunges. You’ll be much more likely to stay the course if your own reading brought you to it rather than just my say so.

        • Paula says

          Thank you, Jim. i just finished reading your series and about to start reading them again. I feel so much more confident about investing thanks to you and MMM.
          Looking forward to reading more of your posts!
          Have a prosperous and healthy 2015!

  25. adam says

    Love your blog. Have read and continue to read lots of it. I am from and live in London ,uk. I can’t seem to find the vtsax fund available. The only other one I am considering is the vanguard life strategy 100% Acc in uk which happens to have 40% in the us. Do you have an alternative for your uk audience? What do you think of the life strategy fund?

  26. Justin says

    I’m just getting around to going through the stock-series and I have already learned so much. Thanks for breaking it down to seem so simple….or maybe you just make it look that easy! Anyways I do have a couple concerns/questions regarding this strategy.

    If I had the minimum $20,000 to open these 2 accounts VTSAX & VBTLX would I want to open with the minimum for both and then start adding more so to one depending on if I would like to be more aggressive (add to VTSAX) or more conservative (add to VBTLX)?

    Do I open one with the full $20,000 and wait on the other?

    Is it possible to purchase one with $20,000 initially and then go a % into both funds and adjusting depending on my strategy (is this scenario even possible) I also am questioning whether I open these accounts into a tax-advantage account or not.

    I would be in it more so for the long run (30+ years) but since I am already also investing in an Employee match SIMPLE IRA I am unsure of this option as well. If I did go the advantaged route it would be because I would like to have the potential to dip into it (only if worse comes to worse) and not pay huge penalties (in this case I would more than likely go with a ROTH IRA because I believe you are able to withdraw contributions but not interest/dividends).

    I also don’t know if it would just be better to first ensure I am maxing out on my SIMPLE IRA before I worry about purchasing Vanguard Funds. (Although I believe I just realized I am paying a huge ER by investing in Oppenheimer Portfolio Series Equity Investor Fund Class C (I’m not to sure I have done correct research on this one fund though.)

    (In context I am 27, and currently invest in a employer matched simple IRA. I put 7% in with an additional 3% match on a $50,000 salary. I would like to start investing in other methods and vanguard seems to be the best option. I have a “f-you account” already built up as well.)

    • Justin says

      So I jumped the gun a little bit and had I continued with the reading you already answered almost all of my questions. I may even get to the point where all my questions are answered!!

      I am still questioning which account type is best, and questioning my specific concern with maxing my SIMPLE IRA first or go ahead and also open a separate vanguard account.

    • jlcollinsnh says

      Hi Justin…

      As you keep reading many of these questions will be covered and the pieces should fall into place for you.

      But let’s look at them in order.

      –It depends on the stock/bond allocation you want. Splitting the 20K between VTSAX and VBTLX would give you the 10k minimum you need for each, but with a 50/50 allocation — Not what I’d suggest for a 27 year old.

      If you started with 50/50 in a taxable account each adjustment would be a taxable event. Not good.


      –VTSAX will serve you best if you are really in it for 30 years.

      –You can withdraw your contributions from a Roth tax and penalty free anytime. But money you might need to dip into doesn’t belong in the stock market. Keep a cash emergency fund for that.

      –Max out your tax advantaged accounts first. Every invested dollar you save in taxes has a chance to compound for you over the decades.

      –Here’s how to find the index funds in a Simple IRA (or 401K) plan:

      –Oppenheimer Portfolio Series Equity Investor Fund Class C is very high cost and has only a three star rating from Morningstar, so not all that well regarded either.

      Good luck!

  27. McC.Alexander says

    Hey JLC,

    I am enjoying the blog thus far – the amount of work you have put into is an accomplishment in itself – congrats! I found you via gocurrycracker and I have to say, for me the most exciting piece to all this, is finding a community that has a similar viewpoint on finances (which in my opinion means a community with a similar view point on life).

    However, I am a skeptic (but then again, so are you 😉 ). Ive read your stock series starting from the first post to know and I jump around to other posts of yours (or others) when they are relevant. I jumped to your post about what if Vanguard gets nuked and I still find myself worried that putting all of my hard-earned, long-hours-worked, time-built cash into one place is a bad idea. Bullets 3 and 4 don’t interest me – I get it. Bullets 1 and 2 should answer my skepticism but “if it sounds too good to be true, it is” keeps me at bay. Couldn’t Vanguard go bankrupt just like TRowe, Fidelity, or any other company out there? Being new to investing (the only investing I’ve ever done was via my employer’s 401k) I am not sure what would happen to my money invested with Vanguard (say 10k in the VTSAX) if something unlikely like the company going out of business occurred. Do you have any thoughts on this??


    • jlcollinsnh says

      Welcome McC.A…

      Glad you are enjoying it.

      I have to say, it is a bit odd you are asking a question concerning this post:
      in the comments section here.

      Be that as it may, I address your question in some detail in point #2 in that post. Not much else I can add. If my comments don’t resonate with you, you’ll have to proceed in whatever other way makes you comfortable.

      I just share here what works for me. 😉

      Good luck!

  28. Lindsey says

    I am very new to investing and found your series from “Go Curry Cracker.” A question on the VTSAX. Recognizing that buying stocks in that fund are investments in the corporations it represents, what would you recommend as an alternative stock investment strategy if investors have a moral issue with one or more of the corporations? Are there other strategies that are effective for new investors and successful over the long term, but give more flexibility in terms of corporations supported? Thanks for your guidance! I have really enjoyed the series and am learning a lot from it.

    • jlcollinsnh says

      Hi Lindsey…

      What your are asking about is called “ethical investing.” The challenge is that “ethical” means very different things to different people.

      In response, the mutual fund industry has created any number of funds designed to meet this need. Some avoid certain industries, some invest according the the guidelines of specific religions, some in accordance with certain principles.

      Unfortunately, these tend to have very high expense ratios which are a severe drain on your returns. Plus, they tend to underperform the index funds I recommend both because they are actively managed funds and because whenever you start asking your investments to meet goals other than making money, you put them at a disadvantage.

      As an alternative, you could build your own portfolio by selecting individual stocks that meet your criteria. But again, you will almost certainly underperform. The vast majority of stock pickers do.

      Since you are new to investing, I suggest you carefully read this Series. Once you have an understanding of the concepts here you’ll have a better idea of if and how you might pursue your own ethical investing strategy and the challenges you’ll face in doing so.

      Good luck!

      • Frank says

        Hi JL, enjoying this series of posts so far. My first investment in an IRA was nearly 20 years ago with Vanguard and I am still with them and like being their customer. While reading your post I started to wonder why you were mentioning them so much and then read your reasons and understand now. My question to you though, which I never asked myself before reading your blog, is why there isn’t another investment company with Vanguard’s ‘unique structure’ if it is such a great and successful company. Any thoughts on why they don’t have an equal competitor? I’m not sure they don’t, I’m just going with what you said about them being unique.

      • jlcollinsnh says

        Hi Frank…

        I think the reason is simply that there is huge money to be made running funds for profit rather than at cost.

        In fact my one major concern about Vanguard is the chronic temptation to change course and join this route.

        As long as Jack Bogle is alive, it won’t happen. He’d scream bloody murder. Indeed, I think there are now enough “Bogleheads” out there that it is unlikely to happen even then.

        The remarkable thing isn’t that there is no other Vanguard, it is that Vanguard exists at all. God bless Jack Bogle!

  29. Jason says

    I recently read William Bernstein’s book, “The Intelligent Asset Allocator.” He recommends holding multiple stock index funds of different asset classes so that you can rebalance between them once a year. According to him, this is effectively buying low and selling high (without trying to time the market), and will increase your returns.

    What is your opinion on balancing multiple indexes of different stock asset classes (such as large, mid, and small cap indexes) to simulate the same holdings as VTSAX, then rebalancing each year?

    I realize buying and selling is a taxable event, but what about in tax-advantaged accounts? As someone who is still working, I would also have the option of rebalancing by adding new money, rather than selling.

    Do you think this would produce higher yields? If so, is it enough of a difference to be worth the trouble?

    • jlcollinsnh says

      Hi Jason…

      If you read this post, you should know I don’t feel the need to hold and rebalance multiple indexes.

      Since you’ve read Mr. Bernstein’s book, once you have finished the Stock Series here you should have a sound understanding of where he and I agree and where we don’t.

      From there you can decide which approach resonates with you.

      Good luck!

  30. Andy Lomon says

    Hi Jim,

    This post solves many doubts related to investments. So simple and so clear! Thank you!!

    Just two further questions.
    Would you please explain the main difference between VTI and VIG? (no access to Vanguard mutual funds here). I find that VIG might be something in the middle between VTI and BND but I am not really sure.
    Finally, is there any chance you might suggest other brokers? I’ve been looking for alternatives for ‘alien non residents’ investors and I think I’ll go for TD Ameritrade (no fees or extra cost – only 9.99 commissions.)


    • jlcollinsnh says

      Hi Andy….

      All three are ETFs, or Exchange Traded Funds. This means they are bought and sold like individual stocks. ETFs are also more readily available to investors living outside the US.

      This post might help:

      VTI is the ETF version of VTSAX. It holds exactly the same Total Stock Market Index, so you can think of them as the same.

      BND is the ETF version of VBLTX. It holds exactly the same Total Bond Market Index, so you can think of them as the same.

      VIG is also an index fund, but more specialized. It tracks the NASDAQ US Dividend Achievers Select Index. Basically in owning this you are betting that this type of stock will outperform all others.

      I’m afraid I don’t know enough about the various brokers out there to suggest one.

      Hope this helps!

  31. Nguyen says

    Hi Jim
    I find your site via Gocurrycracker and am fascinated by your sharing, though I am not familiarized at all with VTSAX nor possible to invest in it ( No access from Vietnam though). But you have inspired me to be an investor :). I am planning to ask my friend to help open an account at Vangard and invest 100k in VTSAX and do not touch it at all in 15 years. When the number ( in theory) hits 1,620k I will start to retire and live on 4%. Can you give your comment on this, thanks

    • jlcollinsnh says

      Welcome Nguyen…

      Glad you found your way here.

      Before investing in VTSAX, or anything else, you should take the time to familiarize yourself with it thoroughly. Reading thru this Stock Series should help.

      You might have more access to VTSAX and Vanguard than you think:

      I do like your idea of investing and letting it ride for 15 years. That should work out very nicely.

      But if you are going to open your account thru a friend, be very sure you trust that person absolutely. 100k is a huge temptation. 😉

      Good luck!

  32. Sabrina says

    Hi JL,

    Thank you so much for all the information that you share on your blog. I am going to start by saying that I am 32 years old , married and without any knowledge about investments besides what I have been reading here (Again thank you).

    We would like to start saving/investing for our future, but we never know how to start. Time has been passing and we do not have a real plan to move forward.

    If you could help me to start our journey It would be really really appreciated.

    This is information may be helpful in order to understand our situation:
    – No debt, no mortgage, no kids ,(yet, we are trying right now)
    – We have around $3,000 in cash. We save monthly $1,500 that goes to our savings account and we have had until $20,000, but again there is always a good reason to spend it.
    – I am enrolled in my company 401K (Charles SCHWAB), but they do not give me any match. Currently I am putting 25% of my salary The balance is around $5,000.
    – My husband is also on his company’s 401K, but they match until 5% and he is putting 5%. The balance is around $5,000 as well.
    – We are investing 10% of his salary on his company stocks. We do not understand how it works, but apparently when you sell them back , they give you an additional percent of your money.
    – His salary is our main income around $100,000 yearly and I am making around $50,000.
    – I have an IRA from my old job 401K with $4,000 and he has another one with $2,000.

    We were considering to buy a house as an investment, but after reading your blog it seems like a bad idea.

    In addition to this, we live in Hoboken, NJ and it is really expensive here. We may need to consider moving in a couple of years in order to save the 50% that you recommend, but right now it is not an option. I am willing to learn and cut some expenses in order to be worry – free in our future. I want a long-term investment and enough money to travel occasionally and be comfortable.

    I am sorry for the long post, but we are really lost and I feel if I do not do something soon, It may be too late.

    Thanks in advance for all your help,


  33. Greg says

    Hi Jim,

    Thanks so much for sharing your articles, and wealth of information. My wife and I are looking to start investing, I just have one question. I currently have a Scottrade account and they charge $7 per trade. How do you suggest investing in VTSAX on a regular basis while avoiding trading fees? i.e. if we have $500 to save each month and we want to invest 80% of that it would equal $400 per month. Should we buy $400 of VTSAX each month with a $7 commission fee or wait for a year and purchase $4800 to save on commission fees? By purchasing on a monthly basis we are basically paying 1.75% of the amount being purchase. At a yearly basis its only .14% At what point should you save the money and purchase a larger amount? And how would that change if we could only save $200 per month or less?
    Thanks so much for the help,

    • jlcollinsnh says

      Hi Greg…

      VTSAX is the Vanguard Total Stock Market Index and has a required minimum $10,000 to open. Fortunately, you can own this exact same portfolio in another fund and as an ETF:

      —Admiral Shares: VTSAX .05%ER/$10,000 minimum
      —Investor Shares: VTSMX .17%ER/$3000 minimum
      —ETF: VTI .05%ER (ETF=exchange traded fund. You buy ETFs in any amount you want, just like a stock. And, just like a stock, commissions and/or spreads are frequently involved, adding to your costs.)

      I discribe this in detail here:

      Given the way and the amounts you plan to invest, you’ll be using VTI. You can certainly buy VTI thru Scottrade, but you can also buy thru Vanguard. As that’s where I’d want to be for the long term, that’s what I’d do:

      Once at Vanguard I’d add to the account as I could, maybe waiting till I had $500 each time to keep the commission cost low. Once you hit $3000 you can transfer to VTSMX and(at Vanguard) add money without commission.

      Or just wait till you’ve saved $3000 and open the VTSMX account. At $500 a month that will only take you six months. This might also motivate you to keep your savings rate a bit higher.

  34. Kay says


    I have enjoyed the stock series but still trying to sort things out. I hope I’m not too late! My husband and I are 64 and plan to continue working until 68. Collecting SS at 66.

    We just sold all of our mutual funds that was in a managed account FINNALY and will be transferring that money to Vanguard next week. Being this age is a little scary for the future because we fill we haven’t saved enough. I have a few questions so I will give you a little background.

    Together we have about 108,000 in Roth IRA’s with 8000 of that in individual stocks.
    141,000 in traditional IRA’s. 180,000 is in a 401 target fund (2015) with fidelity. 35,000 in savings. And around 12,00 in individual stocks in a taxable account through a discount broker. Estimated Social Security will be 3,300 together.

    We have no debt except for the house and car. Value of the house is 330,00 with 80,00 left on the mortgage with a 2.875% rate. We pay an extra 300 on the principle each month which will have it paid off in 6 years. 9,000 is left on the car and we pay an extra 100 on the principle with the interest rate being 3%.

    My husband adds around 11,000 per year to the 401 (12%) with NO match. We will try to fully fund our Roth IRA’s for the next four years.

    Here are my questions:

    Should we stop adding the extra on the house and car and up the 401 contributions?

    We plan on putting 75% of the money that was actively managed in VTSAX and 25% in VBTLX. Is this the correct mix for our age?

    Sell the individual stocks in the taxable account? And if so what to do with that money?

    Sell the individual stocks in the Roth account and transfer to Vanguard?

    I am also worried about taxes in retirement and was wondering if something should be done in the next few years about moving some of the traditional IRA to the Roth.

    If you could respond to these I would so appreciate it!!!

    • jlcollinsnh says

      Welcome Kay…

      Unfortunately I can’t begin to answer your questions definitively. Those are choices only you can make. The best I can do is share the posts that might give you ways to think about it and to share what I do. But I’m not you.

      That said, here are your questions with my answers:

      1. Should we stop adding the extra on the house and car and up the 401 contributions?
      —At those interest rate I would pay the minimum and invest the extra. See my chart here:

      2. We plan on putting 75% of the money that was actively managed in VTSAX and 25% in VBTLX. Is this the correct mix for our age?
      —We’re about the same age and that’s what we do. But your temperament and tolerance for risk may well be different than ours. Only you can decide this, but maybe this will help you think about it:

      3. Sell the individual stocks in the taxable account? And if so what to do with that money?
      —If you’ve read the Stock Series you know I believe investing in individual stocks is a loser’s game. Deciding what to do with those you already have is much more difficult.

      You have to consider your tax bracket and and gains/losses you have in the stocks. So you’ll have to do some math. But here are some considerations:

      1. Figure out how much capital gains you have in each stock.
      2. Do any have capital losses you can use to offset the gains?
      3 Are they long-term or short term?
      4. What is your tax bracket?
      5. Can you defer income to 2016 and get down to the 15% bracket?

      The 10% or 15% tax bracket for ordinary income = 0% long-term capital gains rate
      The 25%, 28%, 33%, or 35% tax bracket = 15% long-term capital gains rate
      the 39.6% tax bracket = 20% long-term capital gains rate.

      Where to put the money is up to you. I keep my taxable investments in VTSAX.

      4. Sell the individual stocks in the Roth account and transfer to Vanguard?
      —As above, this is your call. Personally we keep our Roths at Vanguard and we don’t hold individual stocks in them.

      5. I am also worried about taxes in retirement and was wondering if something should be done in the next few years about moving some of the traditional IRA to the Roth.

      While you didn’t ask, since you plan to work till 68 and don’t need the money, you might reconsider taking SS @66:

      • George says

        I’m new to the stock series and have moved our investments to 80% VTSAX & 20% VTBLX. My financial planner friends is strongly recommending that we utilize the VBIIX for a bond fund instead of VBTLX. The VBIIX ER is .16 vs .06 for VTBLX. Although the performance of VBIIX is much better at 4.8% over 5 years vs 3.5% for VTBLX. I’m told that the performance out ways the higher expense ratio. I’d be interested in hearing thoughts about this option.

        • jlcollinsnh says

          Hi George…

          VBIIX is a fine fund and if you prefer it, go for it.

          However, remember the performance of all bond funds these last few years has been strongly influenced by declining interest rates. At some point, rates will begin to rise again. While it might, there is no guarantee VBIIX will continue to outperform going forward.

          Jack Bogle is fond of saying, “Performance comes and goes. ERs are forever.”

  35. Justin says

    I had a question about the VTSAX. I know that you have the admiral shares as opposed to the investor shares. This seems like a good thing as the ER is lower for the admiral shares. What I am confused about is the “performance since inception” number. I thought this was the same fund so assumed they should be the same, but on the Vanguard site it lists the admiral shares as 5.08% and the investor shares as 9.03%. Why the difference and would it still be best to go the admiral shares path? Maybe this has to do with the investor shares being 8 years older, not sure. I am leaning towards admiral shares due to lower ER but was concerned I may be losing out on 4%.

    • jlcollinsnh says

      No need to be concerned Justin…

      You are not losing out and you put your finger on the reason why the difference exists.

      The Admiral Shares were created more recently and so if you compare results since inception you are looking at two different time periods.

      If you compare them in the exact same time periods, you will see AS very slightly outperforming due to the lower cost drag.

      If you have the 10k needed for AS, it is the place to be.

      • Justin says

        Thanks! Glad to know that is the case. I am currently in the process of transferring my wife’s and my Roth IRA from American funds to Vanguard and want to invest in VTSAX. Both of these have well over 10k. The sad part is that I was with Vanguard for several years and a financial advisor talked me into transferring to American funds in 2013. Now I have wised up and moving back. Can’t wait to get my money back in the right place. Thanks for all you do, I have learned much from your stock series and gained the confidence to be a successful investor.

  36. Richard says

    Hi Jim,

    I am a new follower of yours and recently started taking action on my 401k, and savings plan.

    I just changed my contribution of 3% to my 401k to max of 50%. Btw, my 401k has horrible options. I placed 80% in (large/multicap) Putnam S&P 500 Index Fund (No Ticker symbol), expense ratio of 0.35% and 20% in (midcap) VEXAX, expense ratio of 0.10%.

    My next step is starting a Vanguard account, VTSAX.

    Aside from this, I have an emergency fund of $10,000.

    Should I go ahead and use that $10,000 to open up the VTSAX account? Or just save up another $10,000, which will take a long time. Probably a year.

    Thank you.

    • jlcollinsnh says

      Welcome Richard….

      Glad you found your way here.

      How big an emergency fund do you need? This depends on a range of personal factors:

      —Is your job secure?
      —Do you own a house? (houses are prone to require unexpected and expensive repairs)
      —Do you own an older car?

      Unless your job is at risk, $10,000 seems a very large EF to me. Maybe something less and the rest into VTSAX.

      If you don’t have the initial $10,000 for VTSAX, you can open an account using VTSMX which has only a $3000 minimum. It is exactly the same portfolio with a bit higher ER. But once you hit 10k Vanguard will roll it into the lower cost VTSAX for you.

      Also see:

  37. Hannah says

    Dear Jim, More fan mail. In my second reading of the Stock Series I am taking time for the comments for, as you have suggested, the quality of your readers’ comments – and, naturally, of your responses – is outstanding. Thank you.

  38. Robin says

    Hi Jim,

    First of all thank you for this site. I’m sure the concepts here have given me a huge headstart in my life.

    I recently started investing but there is still something that’s bothering me in the back of my mind as I read your comment about being bitten by snakes :): I’m not investing through Vanguard but invest in a low-cost ishares index fund through an online broker. Reason I’m doing this is that the ishares fund is a lot more tax efficient than the vanguard funds (no dividend tax because the fund is accumulating dividends rather than distributing. Yes, we have weird tax policies in Belgium).

    Do you believe the ishares fund (managed by Blackrock, one of the largest asset management companies in the world) is a safe alternative to Vanguard?

    Also, do you think I have to worry about broker (bankruptcy) risk? I invest through the largest online broker in the Netherlands & Belgium so I would assume they are audited sufficiently by government agencies.

    Maybe I’m just worrying too much 🙂

    Thank you,

  39. JTF says

    What do you think about this article: I’m not sure if your enthusiasm for Vanguard is warranted. 0.05% expense ratio for VTSAX, which is really more like 0.072% after hidden costs like turnover, commissions, spread, is still much higher than the 0.029% charged by TSP, or 0.02% charged by some corporate 401(k) plans like ExxonMobil’s.

    Also, Vanguard’s “owner” don’t really get a say on pay. To quote the article: “Vanguard operates with a big money model closer to what you’d expect to see on Wall Street. The ten “independent” directors on Vanguard’s Board average about $215,000/year in compensation for a part-time job. Vanguard doesn’t disclose executive pay to its owners (i.e., Vanguard’s customers), but Investment Week put Vanguard CEO compensation at $6 million to $10 million in 2007. I suspect run-of-the-mill management entitlement has boosted that to the $10 million to $15 million range for 2013.”

    It seems to me like Vanguard’s claim about being different from other mutual fund companies and having its investors’ best interests in mind is just a bunch of BS. Just another snake oil salesman apparently.

    • jlcollinsnh says

      Please take the time to read my policy on commenting on the ideas of others:

      TSP accounts are available only to US government employees. As I say on this blog and in my book, they are a wonderful option for those who have access to them and, due to their lower costs, are preferable even to Vanguard.

      Some organizations offer institutional versions of index funds in their 401k plans, either by Vanguard or other investment firms. These, too, enjoy exceptionally low costs and, again here on the blog and in my book, I suggest the are preferable to Vanguard in an IRA.

      If you have access to neither TSP accounts or low cost institutional index funds thru your 401k, and you don’t like Vanguard, you are free to chose whatever firm you find more appealing.

      Good luck.

  40. Shirley says

    Hello, new to your blog. No clue about investing, not much clue about retirement plans (only enough to know that I should have one). I have funds in the Vanguard 401K retirement plan through my previous employer (resigned a few months ago), I am thinking about rolling it over to the Vanguard Target Retirement Fund (for lower fees), or should I roll it over to a roth IRA? (does it matter where we open a roth by the way?), or should I have both? Also, since the TRF has total stocks index fund and bonds index fund (along with 3 other funds), is there a reason to invest in a separate VTSAX and VBTLX? I am not too clear on that. My apologies if you already answered some of these questions in the comment section.

  41. Matthew Schell says


    This is a great blog, thank you so much!

    I am about half-way through the stock series and am ready to buy some VTSMX, and get to VTSAX as soon as possible.

    My question: Where are individual investors able to buy these? Is starting an IRA directly with Vanguard the way to go?


  42. Mario says

    I have an IRA with Vanguard because I had a 401k with them. I have an IRA with Fidelity also because I had a 401k with them. So in a way I let my former employers pick who holds my savings. Should I just move everything to Vanguard? I don’t have index funds yet, I have individual stocks (I think they are undervalued, I am taking the risk) so I would not be taking the index advantage anyway. I do like the fact that I’d own the holding company but I wonder if there is more risk putting all the money in one company (I realize this may sound ironic since I own individual stoks).
    Also, I don’t understand bonds, sounds like lending money to companies. I assume if they take the money they will make it work and earn money with it so why not just own the stock? It’s like betting on the company just not all the way.

  43. Matt Mecham says

    Hello, Mr. Collins. Well, I pulled the trigger today with the 20k that I transferred from American Funds to Vanguard. After thinking about it for several days, and reading and rereading your stock series, I went ahead and put the full 20k in VTSAX. I feel pretty good about that move, but it was a tad scary, haha. Fear of change, I guess.

    A little about me: 44 years old, paid off house, no debt, and close to 175k in investments (spread between two Roths and two 401k plans). My wife and I are able to save about 70% of our pay – this allows us to invest, on average, about 4.5k per month. We live very comfortably on 2k per month. Health insurance is paid for by my employer, and my wife has an employer-sponsored plan if (when) I quit working.

    I really want to leave the rat race within the next 7 to 8 years (be about 51 years old). My asset allocation is currently about 90% stocks/10% bonds. My wife has no plans for quitting her job anytime soon, so I see us investing over 50k per year for at least the next 7 years or so. I will also be getting a small pension (reduced because of leaving the school district early).

    Is my outlook too rosy, as far as having an adequate nest egg within 7 to 8 years? What are your thoughts on my current allocation, given my age and retirement plans? Thanks for such a wonderful blog, and for any advice you might be able to give me.

    • jlcollinsnh says

      In your situation, I’d do much the same.

      And, even though I’d just put 20k in VTSAX, I’d be praying/hoping for a major crash so my $4500 each month is buying shares at bargain prices. 🙂

      • Matt Mecham says

        I like the way you think, Jim! I appreciate you being there to answer questions and offer encouragement. Please keep doing what you’re doing for years to come – we’ll need the guidance!

    • George says

      Hey Matt,
      Its good to see someone else in their 40s working the early retirement plan. My wife and I are 47 and even though I’ve been a saver all my life just really started on FI about 2 years ago.
      The way that I calculate it with your $175k current nest egg and the additional $4500 per month at 7% interest you’ll be at just under $670K in 6 years. You stated that you can live comfortably at $24k/year. You will only need to draw 3.6% of your new nest egg in 6 years to maintain that rate.

      I think you’re on your way. Great job.

      • Matt Mecham says

        I like your math, George! We may have even more than that, since I didn’t include my wife’s bonuses. She recently got a 20k bonus, but when it pays out this coming Tuesday, she’ll be lucky to see 12k because of taxes. I am not opposed to paying taxes, but 40%?!?! Come on.

        And good fortune to you and your wife as you journey down the FI path!

  44. CG1 says

    Good morning Mr. Collins,
    I just recently became bill free and I’m working on building wealth. All I hear people tell me is to invest in 401k and I’m able to use the TSP as well. I know you talk about using the TSP for there very low fees (I get it). Here is my situation:

    I’ve been in the military for 9 years now. I have another 11 years to go before my retirement and lifetime, inflation adjusted pension about 25 to 30k (hopefully). I would like to retire and never work again after these 20 years, I’ll be 42. My plan which I got from reading all you guys like MMM, Financial Samurai, etc… Save 65% of my wife and I’s income for the next ten years and with the retirement income I get from the government I should be go to go. My dilemma is should I invest in the TSP and have a hard time taking the money out or should I invest in a taxable account and have the money handy once I finish my first career? I’m pretty frugal and my wife is on board, just wanted to get your opinion? Thanks

  45. Henry H says

    Good morning!

    I found your blog through MMM, and have thoroughly enjoyed it thus far. I am 26, and I started investing about a year ago. I’ve made several missteps but I believe I am on the right track (fail quickly).

    401k with my company (not fully vested for another 4 years, then I can move my money to a Vanguard IRA?).
    Roth with Vanguard (but I picked a heavy bond allocation and a few individual stocks). My thought was that the market may crash and I’d already have my bonds purchased at lower prices and my subsequent contributions would go into the total stock market fund.

    in Aspiration bank, earning 1% interest on a checking account with a company donating 10% of its profits.

    I have money in Robin Hood, Motif, and Wealthfront which I (have learned were mistakes and) would like to move out of and put into my ROTH or a taxable account with Vanguard.

    I contribute to an environmental fund run by Aspiration ( I want to invest in ‘green’ and socially responsible companies. They have advertised that I can get tax deductions for this investment (if it is an IRA – not sure about my taxable account-I’ve emailed them). Do these deductions make it worth investing in despite the higher fees?
    I just found VFTSX (vanguard’s ‘socially responsible’ index), which has a lower expense ratio (0.22 compared to 0.5). As much as I like this company and the fund, I am considering moving my money to VFTSX.

    My questions:
    Should I, and what is the best way for me to exit all of my taxable positions and invest in VTSAX (in my ROTH) and a mixture of VTSAX + VFTSX in a taxable account?
    Robin Hood + Motif wise – should I wait a year from purchase date to avoid the extra taxes, or just go ahead and move everything since I have such a long horizon?

    In the ROTH, should I hold on to the bond funds I already purchased and just allocate new funds to my new plan?

  46. Jordain says

    It’s really a shame that vanguard doesn’t allow non-US citizens to invest in these funds you mentioned…as usual…all the good things to americans only 🙁

  47. Sutton says

    Hello! New to the blog and the idea of retirement/investing as a whole.

    What are your thoughts on a target retirement fund with Vanguard such as VFFVX (target retirement 2055 fund)? (For reference, I am 23 years old.)

    Thank you!

  48. Luke Fernandez says

    Mr. Collins,

    I just discovered your blog and this whole FI thing! Your time and knowledge is greatly appreciated. Sadly I am 29 and just getting into finding out it’s possible to live a better life and possibly retire early. My wife and I just set up our 401ks with our company’s. They both have a 6% match so we are doing that for now. Hers is a roth mine a traditional we may change one of those in the future. So to buy into VTSAX it’s $10k up front then you can add funds monthly? We are almost out of debt and working hard to get there and cutting expenses to be able to invest more is our main priority. Since I am very new to the investing world it’s hard for me to understand the taxes and fees and capital gains and compound interests. But all of your advice is helping to clear it up. I can’t wait to get and read your book! Sorry for the novice question and rambling.

    Thank You,
    Luke Fernandez

    • jlcollinsnh says

      Hi Luke…

      Glad you found your way here and you plan to read my book. Both will help you more fully understand the concepts discussed and should answer your questions.

      Once you set up your VTSAX account with Vanguard you can add funds as often and whenever you choose. You can even set it up so the money is transferred in automatically from your bank account if you like and this is something I highly recommend.

      At 29 you are plenty young enough to make this all happen in a timely fashion!

      Enjoy the journey!

  49. matthew says


    Recently found you through the Bigger Pockets Money podcast, great interview, and cool voice, lol.

    My question is, my employer’s 401k gives us the option of picking the percentages we want to place in the stock market; there are a ton options to choose from. Should I go 100% in VTSAX or should I spread it out among a few other categories, like vanguard bonds, etc?

    I’m 33, plan on being in the job market a long time, and want to invest aggressively.

    Thank you,

  50. Michael says

    Hey there,

    I’m new to your blog and finding it very helpful. Thanks for sharing your knowledge!

    I am just starting my investment journey and don’t yet have the initial minimum invested of $10,000 required to start a VTSAX fund. Where would you suggest I start?

    Save up the $10,000 first or start with S&P 500?


  51. Matt says

    VTSAX is available to invest in either an ETF or mutual fund…what is the difference other than the mutual fund requires a $10k minimum to start? Thank you!

  52. Nicole says

    I’m trying to decide on an option for my cash. I have VMMXX but thought the expense ratio might be high at .16% after looking at your other recommendations for VTSAX (.04%) and VBTLX (.05%). I may not be understanding the differences between these types of accounts and how the expense ratios work. Any advice here? Thank you!

    • jlcollinsnh says

      Hi Nicole…

      In looking for options other than VMMXX for your cash, you can consider CDs and savings accounts. Each is fine and personally I have VMMXX (mostly) and a savings account (very small).

      However, while I also own VTSAX (stocks) and VBTLX (bonds), these are not for cash. They are long-term investments:

      ERs are important, but not a consideration in allocating between these three funds.

      Make sense?

      • Nicole says

        Thanks for the quick reply!

        Do you mind sharing why you chose VMMXX as your primary investment tool for cash versus CDs, etc? I guess I don’t understand why the expense ratio is .16% for something I’m treating like a savings account with small returns (what am I paying for?) and wondered if I would be better off with another option. I might be missing something.

        I have number of other investments for long term funds (stocks and bonds) and am thinking of consolidating into the funds you recommended for these. Thank you!

        • jlcollinsnh says

          I’ve had VMMXX for decades, starting back when interest rates were very high. So, habit and convenience mostly.

          When rates dropped to near zero, I opened the savings account. With rates inching back up I’ll drop that at some point.

          • Ty says


            I know this is an old feed, but this question has been on my mind lately what with my wife and I wondering where exactly to keep our 3-6 mo. living expenses for emergencies. We’ve got a dedicated savings rate at our bank (which ends up functioning mostly like a CD) earning just under 3% APY, so barely beating inflation in my understanding–but hey, beats putting it in a hole in the ground. Anyhow, do you think we could benefit from having it in a MMA and investing in VMMXX or are we probably good here?

            Thanks for everything you do! I refer to as “Uncle Collins” when I tell my wife about your posts. You’ve just got a personable feel to your writing, and I admire how you talk about your daughter.

          • jlcollinsnh says

            Hi Ty,

            Thanks for your comment!

            Mr. Collins is currently traveling and unable to respond just now.

            We find for most questions, he has already covered the topic. Using the Search button might very well provide your answer. If not, please post your question again after October 15, 2019.

      • JTF says

        Would you switch from VTSAX to FZROX? Assuming the expense ratios stay the same at 4 and 0 basis points respectively and a $1M investment over 60 years at 10% annual return, the switch could mean a savings of $6,572,470.39. Is a saving of over $6M worth making the switch?

        • jlcollinsnh says


          Vanguard is structured to seek ever lower costs for its shareholders.
          Fidelity is structured to seek maximum profits for its owners, which means raising ERs whenever possible.

          There is, in my view, zero chance that FZROX will maintain a 0% ER for 60 years. Or even six. Loss leaders are short term hooks to lure the suckers, er, investors in.

          Plus, FZROX still has operating expenses. Fidelity is just shifting those expenses to the holders of their other funds. I have an ethical issue with that.

          • nadir says

            I heard about Fidelity doing this and was curious of your opinion. I had no intention of switching from Vanguard. But thank you for taking the time to respond to Josh and JTF.

  53. Aaron says

    Was referred here from MMM. I am a huge fan of your series here and soaking it all up. Just wish I had found this 10 years earlier. Oh well, better to start in my 30’s than never. Hope you continue to create such amazing value for your readers!

  54. Cburns says

    Hi Jim,
    I’ve looked all over your site AND read your book….I’m embarrassed to ask this but i have some my vanguard rothIRA, my vanguard brokerage acct, and a vanguard traditional IRA. I have some extra cash sitting in checking account and want to put it in money market fund so I have quick access to it. My question is….do I put it in my current brokerage account or do I need to set up another individual vanguard account to keep this money in? My concern is getting taxed when I pull money out if it was sitting in brokerage account.

    • jlcollinsnh says

      Hi Cburns…

      If you have an account with Vanguard, you can easily open a money market fund with them.

      If you hold your Vanguard funds in another brokerage you should be able to do the same.

      Money market funds are by design fixed at $1 per share, so there should be no capital gains or losses.

      If you hold your Money market fund in a taxable account the interest it earns will be subject to income taxes.

  55. David Rudge says

    In several different places (e.g. talks, your book) you point out that the wealth preservation stage is not merely determined by age, but rather whenever you are for a time unemployed, e.g. on an unpaid sabbatical, between jobs. And as such, throughout your financial life you might go back and forth between having some of your wealth invested in bonds. I’d like to press back on this. Let me start out with a simple scenario in which I think you would agree it would not be wise for a person to invest in bonds. Imagine someone who is not quite financially independent who is about to go on a year long unpaid sabbatical with assurances from his employer that the job will be waiting for him when he returns. If this person has cash reserves that would cover his expenses for the year, I’m inclined to think you would not advise him to shift his investments from equities into bonds. There’s no need to shift investments if indeed all of his expenses over the year are covered. Now let’s modify this scenario slightly by stipulating that everything is the same, but this person does not have sufficient cash reserves to cover his expenses for the year. In this case, I should think your advice would be to sell some of his equities to get the cash reserves he will need to cover his expenses over the course of the year. Again, no point in shifting to bonds with his remaining investments. Does anything change if the sabbatical is longer, say two, three or five years? I keep thinking the wisest thing to do would be to sell some equities in favor of CDs with different maturation rates, but again keeping the remaining investments in equities. All of this is predicated on the person’s intention and ability to go back to work at the end of the sabbatical. Someone who leaves work because they quit or are fired might view things differently, but here I’m inclined to think that if they intend to get a job as soon as possible, a short period of being invested in the bond market would not be worth it. So I go back to thinking that starting to shift from equities into bonds really only makes sense when a person not only ceases regular employment, but also who has no plans for returning to regular work.

  56. Justin says

    Mr. Collins,

    I’m 38 and thought I was doing great until I started reading your series and others about how to truly become financially independent. I really enjoy this and can’t wait to begin teaching my three kids (9, 7, and 4) how to get started on the right track much earlier than I have.

    Concerning a good place to hold cash, there are no doubt many online banks that give a great return on money market accounts, but the one that I current have and LOVE is Redneck Bank. Sounds funny, I know, and it is, but the return on cash is serious, and the bank is a subsidiary of All America Bank and is run by real humans in Oklahoma that answer the phone when you call. They even sent me a birthday card signed by all of the workers in the local branch.

    As of this writing, the money market account is at 2.50% APR, but it was recently as high as 2.75%. I’ve been with them for about six months and have had zero issues with their service. It’s been fun showing off my debit card as well!

    To be clear, I am in no way connected to them except as a happily satisfied customer. I just believe in spreading the good word about good companies.

    Take care. I can’t wait to learn more from you!

  57. Midori H. says

    Hi Jim,

    I’ve recently getting into the journey of investment and love your blog and book! Especially I appreciate that you make the investment as simple as possible. Our goal is to have 2 M together before we retire! I am currently 35 with husband (age 35) 2 small children (3 and 1.5 year old). Here is the summary of our simple portfolio.
    1. 401(K) through work: I max out my contributions and my husband has some room to contribute more if we decide to.
    2. plan 529 for both kids: $150 for each child per month
    3. Betterment: $200 per month
    4. Roth IRA: We both max out the contributions.
    5. CDs – approx. $20K
    I noticed that capital gains are recognized when we did our tax return this year which was from Betterment account. I noticed that betterment is one of the “important resources” listed in your blog. I do like Betterment that we treat it like 401K where we contribute and forget about it – only check it for quarterly or so. We would like to explore investment ideas where we can minimize our realized income. I see that VTSAX and VBTLX are your choice of investment – are there only unrealized gain/loss associated with them? How come you list Betterment as one of the important resources when there is a realized gain/loss associated with it? what would be your recommendations for the $30K that we have in our CDs currently – betterment or vanguard VTSAX and VBTLX? Additionally, do you suggest to contribute more to my husband’s 401K before we invest more toward Betterment or Vanguard? Thank you so much for your response in advance.

    • jlcollinsnh says

      Hi Midori…

      If you click on the Betterment link, you can read my full take and how it fits in with the Simple Path approach.

  58. Eric Germann says

    Hi Jim:

    Appreciate all the great thought/content you’ve provided here.

    Had a question regarding the focus on VTSAX. Looking at the vanguard list I also see the growth index funds which are all stock which appear to outperform VTSAX across all time periods. One specific example is VMGMX (Midcap growth index). If the logic is simply weather the storms over the long run, then why not put all your eggs in the growth basket? The 10 year return in VTSAX is ~6% but the 10 year return in mid cap growth is ~14%. Both are index with expense ratios under .075%.

    • jlcollinsnh says

      Hi Eric,

      Thanks for your comment!

      Mr. Collins is currently traveling and unable to respond just now.

      We find for most questions, he has already covered the topic. Using the Search button might very well provide your answer. If not, please post your question again after October 15, 2019.

  59. Luke says

    Hello! Just wondering if you have any thoughts on the VTSAX vs the VFIAX funds? I have most of my money in the VFIAX and it is almost identical to the VTSAX, but thinking about switching solely based of your articles. Thanks in advance.

  60. Megan says

    Hi there!

    This is my first time commenting on any type of financial forum. I’ve been reading various blogs for a while now and just wanted to thank you for making investing feel like something I can do, too. I’m 26 and a self employed creative entrepreneur, and while creative thinking comes easy to me, I find myself working hard to understand all the information surrounding investing. Your simple words are appreciated as numbers and stocks don’t come naturally to me!

    Currently, I am contributing what I can to my accounts (all through Fidelity), which include a profit sharing Keogh, maxing out my Roth IRA, and contributing $300 a month to the Fidelity index funds 90% stocks 10% bonds (I’d like to eventually increase this contribution as well).

    I know there are other ways to diversify a portfolio, but as someone who is self-employed, is there something else I could take advantage of that would continue to move me forward in my financial freedom quest?

    Thank you!

    • jlcollinsnh says

      Hi Megan…

      Your 90/10 allocation is fine for someone your age and if you are using broad-based index funds you are already diversified. No reason to complicate things further.

      When you have fully funded your tax advantaged accounts and are ready to invest still more, you can use those same funds and open taxable accounts.

      Fidelity is fine, but as you read through the stock series here you’ll note my preference for Vanguard and the reasons why.

      Congrats on the early start at age 26! 🙂

      • Edwin McQ says

        i just want to follow on from what megan said.

        i am a long time listener of “the mad fientist” and listened to the market crash podcast. needless to say, the information you provide on this blog flows perfectly. im 21 and in aus. but thanks to my mom i am a US citizen and at the end of reading this serious ill be implementing most of the stuff youve put out. so yeah, as megan said, thanks for making it simple.

  61. Chad says

    Great read, I found this series thru comments in MMM, love all the information and very great for self-guided education about money and investments!

  62. Cristina NF says

    I am a total newbie Mr. Collins and still has so much to learn. I am so glad to find you and your site. I haven’t gotten thru everything but I want to invest already. ***My main question: Will it be a good idea to use my IRA with Merril-Edge to build a Vanguard portfolio? That IRA has earned $11k in 11 years as of today. I have no idea how much they are paying themselves to not grow that IRA. Should I rollover the ML IRA and close that account? Will it cost me in taxes and fees if I do?

    I wanna retire in 9 years, at which time I will be 63 years old, have worked the minimum 20 years with a state government and eligible for a small amount of pension. I don’t want to work a desk job longer than that. I really wish I have figured this out sooner or found you sooner.

    I kinda went thru Choose FI’s calculator , using some rough numbers and got 35 savings rate as a result and 18 years of working before retiring. Heck no. How do I make that to 9 years? How do I make the investment double the savings rate so I can retired in half time than that? I am surprised to get 35 % savings rate. I am a single mom with one job.

    I hope you still read your comments and reply. I have so much to learn and my head feels overwhelmed but I need to act right now. I appreciate you and your blog.

  63. Robert says

    great article.

    I am planning to invest 50% VTI, 10% VXUS, 20% VGT, 10% VNQ and 10% ARKW.
    Or just use 60% VTI, 20% VXUS, 20% VGT?

    Is this good to choose some 10% HIGH growth funds too?

  64. Jinny says

    Hi Mr Collins,

    I was referred here by a wonderful mentor who is an avid reader. I’m very new to the whole investing game so apologize if this seems like a silly question. As a Canadian, is there a “Canadian” version of Vanguard stocks you would recommend investing in? Given how awful the exchange rate is I’m not 100% confident with exchanging all my Canadian $s to USD to test out some of the strategies.

  65. Remi Castonguay says

    Hi there! I’m a newbie with a conservative TIAA portfolio but at my age (46) I want to change that! VTSAX doesn’t seem to be availble for me (at least for one of my investments) but Vanguard Total Stock Market Index Fund Institutional Plus (VSMPX) seems to be. Is is the same thing? It doesn’t seem to be but it has a good performance (10.6% over the last 10 years).

  66. Ethan Alexander says

    Had to share this for some renewed faith and input straight from the horse’s mouth.

    From a recent Facebook post:
    Post: “Would you spend $500 to get some financial advice and help setting up your portfolio?”

    I commented that I wouldn’t, and read another comment saying “And the VTSAX are lazy investors and you should ignore them. Their strategy may work for them, but it doesn’t work for everyone.”

    My thoughts from all the JL training: are you kidding me? For what investors does this not work? I thought the point was that it does work for everyone, and it works better for most than putting in extra work and toying with it!

    Maybe I’m still being naive, but I seem to be running into more and more opinion out there that paying for financial advice and not doing simple index funds is better somehow 🙄 is this just the broken record of the public personal finance debate?

  67. Greg says

    Hi Mr. Collins,

    Many thanks for your timeless and life-changing advice on long-term investing and finances in general. Your wisdom has motivated all of my investment decisions and has inspired me to be completely debt-free. I am 26 and Canadian and I have 30% of my total funds (25 grand) invested between two ETFs, VEQT (Vanguard all equity ETF) and XIC. I am wondering if you think these are good ETFs to be invested in for many decades to come or if I should switch to another ETF or index fund. Thanks for your time.


  68. Dan says


    Just want to make sure I read this part of the post correctly: “Most of us are, or should be, long-term investors. The typical investment advisor’s rule of thumb is: subtract your age from 100 (or 120). The result is the percent of your portfolio that should be in stocks. A 60-year-old should, by this calculation, have 40% in conservative, wealth preserving bonds. Nonsense.”

    Shouldn’t the last part read “A 60-year-old should, by this calculation, have 60% in conservative, wealth preserving bonds. Nonsense.”?

  69. LC says

    Hi there! Thank you for this post. I’m late in the game but I appreciate your information on Vanguard. Apologies for my ignorance, but I had left a job a few years back and actually have been receiving mail from Vanguard telling me my 401k transferred to them. I imagine this is good (?) considering your glowing review of them, but I lack the knowledge to know what I’m supposed to do. Again, forgive me if this question is low-scope, but maybe someone has some simple information for me so I may continue (or start!) my investing. Thanks so much for your help!

  70. LK says

    Hello, I agree with the author that the 60/40 rule should not be the default approach. Especially during high inflation periods.

    I am a strong believer in the All Weather portfolio idea, that in order to achieve lower volatility it is better to mix multiple asset classes, rather than increasing bond share.

    Although I own some bonds, I diversify using REITs, ETF, ETC and physical gold coins. This way I achieve higher security without sacrificing performance.

    It’s worth pointing out that 1% in avg return rate makes a huge difference over 30 years.
    For example $100k on 8% gives $781k of interests over 30 years vs $580k on 7% of interests. My calculation:

    In this case 1% higher return rate translates into 35% higher interests.

    Of course the key is to not overcomplicate things.

  71. Mel says

    Was curious to get your take on sector funds to compliment VTSAX for additional diversification as well as growth (e.g Utilities-VPU, Tech-VGT, etc)



    • Ryan says

      Read the rest of his posts. You don’t need diversification when VtSax owns the entire us market many of which are stocks that also have locations internationally. You are fully diversified with VtSax or vti

  72. NS says

    Hi Mr. Collins,

    I’m reading your book and really appreciate your simple, sober approach. I have historically been a relatively active trader and I still own a dozen or so individual stocks.

    If I want to simplify my portfolio, would you recommend selling my existing holdings (in an ordinary brokerage account within Vanguard) in order to buy VTSAX, even though this will come with a tax burden?

    I also own mutual funds and ETFs with higher expense ratios than VTSAX. How do you balance the cost/benefit of the tax on capital gains vs the lower ER of VTSAX?

    Any help is appreciated. Thank you!


  73. Ryan says

    What do you think about using VOO instead of VTI as the investment of choice? Less stocks….more condensed to the actual winners instead of having losers too

  74. Irina says

    Hello Mr Collins, I have read the updated post with VMMXX miracle fund giving high yelds, but Vanguard page says that it is closed and sounds like was replaced with VMRXX with 2.8% yeld to date. It is also listed as actively managed 👀 is this normal? Where to keep my rainy day fund then? Thanks for your help!

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