Is investing in VTI a good idea?
The Vanguard Total Stock Market ETF (VTI)
VTI is a balanced fund, with a healthy mix of small-cap, midcap, and blue-chip stocks. VTI is a highly efficient fund with a low expense ratio. AUM are also impressive at more than $289 billion.
VTI offers a good choice for investors looking for broad market exposure, with low cost, and high liquidity. It provides diversification over the entire market spectrum, encompassing large-, mid-, and small-cap equity across growth and value styles.
VTI has no minimum initial investment beyond the cost of purchasing one share. You simply have to buy at least one share at the current market price.
For ETF investors, costs are an important factor to consider. In that regard, VTV isn't a bad choice. Its expense ratio is just 0.04% according to Seeking Alpha, making it one of the cheapest ETFs to own. SPY, a broad-market ETF with even higher assets under management, has a 0.09% expense ratio for comparison.
Choosing the right ETF
Some funds are riskier than others, though, so not all of them make for good long-term investments. One ETF that's relatively safe and has still earned healthy long-term returns is the Vanguard Total Stock Market ETF (VTI 2.68%).
Comparatively Risky Holdings
VTI's holdings have a broadly average level of risk, this is a diversified equity index after all. VTI's holdings are, however, slightly riskier than those of most large-cap equity indexes, including the S&P 500.
Average | NAV Return | Sharpe Ratio |
---|---|---|
1 Year | -3.36 | -0.15% |
3 Year | +13.00 | 0.69% |
5 Year | +12.96 | 0.74% |
10 Year | +13.24 | 0.92% |
In VTI, this drops to 24.7%. Looking back at the number of stocks in both funds, it becomes clear why this is the case. VOO, since it tracks the S&P 500, comprised solely of large-cap stocks, currently contains exactly 507 holdings. In contrast, VTI, since it tracks the entire U.S. market, holds some 4,070 stocks.
This ETF holds over 3,500 U.S. stocks across all cap sizes. Specifically, VTI is comprised of roughly 82% large-cap, 12% mid-cap, and 6% small-cap stocks.
Vanguard Total Stock Market (VTI): Dividend Yield. The Vanguard Total Stock Market (VTI) ETF granted a 1.51% dividend yield in 2021.
How much should I put into an ETF?
Low barrier to entry – There is no minimum amount required to begin investing in ETFs. All you need is enough to cover the price of one share and any associated commissions or fees.
With VTSAX you can purchase fractional shares, but with VTI you cannot - at least through Vanguard.
- iShares Russell Top 200 Growth ETF (IWY) ...
- Schwab U.S. Large-Cap Growth ETF (SCHG) ...
- Vanguard Russell 1000 Growth ETF (VONG) ...
- Vanguard Mega Cap Growth ETF (MGK) ...
- iShares Russell 1000 Growth ETF (IWF) ...
- SPDR Portfolio S&P 500 Growth ETF (SPYG)
Symbol | Name | Dividend Yield |
---|---|---|
GTO | Invesco Total Return Bond ETF | 7.96% |
JEPI | JPMorgan Equity Premium Income ETF | 7.95% |
IAUF | iShares Gold Strategy ETF | 7.85% |
SDIV | Global X SuperDividend ETF | 7.76% |
- iShares MSCI USA Value Factor ETF (VLUE)
- Vanguard Russell 1000 Value Index Fund ETF (VONV)
- Invesco S&P 500 Revenue ETF (RWL)
- Schwab Fundamental U.S. Large Company Index ETF (FNDX)
- Invesco FTSE RAFI US 1000 ETF (PRF)
- Vanguard Value Index Fund ETF (VTV)
- Nuveen ESG Large-Cap Value ETF (NULV)
...
Reaching millionaire status.
Number of Years to Invest | Amount Invested per Month | Total Savings |
---|---|---|
40 | $200 | $1.062 million |
35 | $325 | $1.057 million |
30 | $525 | $1.036 million |
For most personal investors, an optimal number of ETFs to hold would be 5 to 10 across asset classes, geographies, and other characteristics. Thereby allowing a certain degree of diversification while keeping things simple.
- SPDR Portfolio S&P 500 ETF (SPLG)
- Invesco S&P 500 Equal Weight ETF (RSP)
- Vanguard Mega Cap ETF (MGC)
- Schwab U.S. Small-Cap ETF (SCHA)
- iShares Core S&P Mid-Cap ETF (IJH)
- Schwab U.S. Dividend Equity ETF (SCHD)
- iShares Core U.S. Aggregate Bond ETF (AGG)
Today VTI ranks #7258 as sell candidate.
VTI is an extremely diversified fund. Its large amount of holdings reflect the entire universe of investable U.S. securities. The fund has exposure to small-cap stocks which can be more volatile than mid- or large-cap holdings. The fund has a beta of 1 when compared to the larger market.
What is the Sharpe ratio of VTI?
VYMSharpe Ratio Chart
The current Vanguard High Dividend Yield ETF Sharpe ratio is 0.46.
Vanguard Total Stock Market (VTI): Historical Returns. In the last 30 Years, the Vanguard Total Stock Market (VTI) ETF obtained a 10.09% compound annual return, with a 14.94% standard deviation. In 2021, the ETF granted a 1.51% dividend yield.
Real estate investment trusts are included in most broad stock index funds, like Vanguard Total Stock Market ETF (VTI), where they represent 4% of the portfolio.
An ETF pays out qualified dividends, which are taxed at the long-term capital gains rate, and non-qualified dividends, which are taxed at the investor's ordinary income tax rate.
VTI is better than VOO because it offers more diversification and less volatility for the same expense ratio of 0.03%. VTI also provides exposure to large, mid, and small-cap companies compared to only large-cap with VOO.
VTI is a better candidate to play the mean reversion trade, is more well-rounded, and is available at cheaper valuations. VGT has a solid track record of mitigating risk and delivering ample returns, whilst it also appears to have the requisite earnings and growth potential to justify its forward valuations.
VTI is an attractive option as a foundation for an Ally Roth IRA because it is an inexpensive and broad stock fund. Many investors may find that an ETF like VTI is sufficient to build a long-term portfolio for retirement.
Rank/holdings | Percentage | |
---|---|---|
1 | Apple Inc. | 5.90% |
2 | Microsoft Corp. | 5.10% |
3 | Alphabet Inc. | 3.50% |
4 | Amazon.com Inc. | 3.10% |
...
Expense ratio | |
---|---|
Total Stock Market ETF | 0.03% |
Average expense ratio of similar funds** | 0.80% |
The VTI portfolio pays dividends every 3 months or 4 times per year. The amount of each quarterly dividend payment is different.
What are disadvantages of ETFs?
- Trading fees. Although ETFs generally have lower costs compared to some other investments, such as mutual funds, they're not free. ...
- Operating expenses. ...
- Low trading volume. ...
- Tracking errors. ...
- Potentially less diversification. ...
- Hidden risks. ...
- Lack of liquidity. ...
- Capital gains distributions.
VOO and VTI are much more diversified than VYM. VOO and VTI have significantly outperformed VYM going back to VYM's inception in 2006. In fairness, the Value premium has suffered greatly over that time period. Historical performance of VTI and VOO has been nearly identical.
Assuming a deduction rate of 5%, savings of $240,000 would be required to pull out $1,000 per month: $240,000 savings x 5% = $12,000 per year or $1,000 per month.
Exchange traded funds (ETFs) are ideal for beginner investors due to their many benefits such as low expense ratios, abundant liquidity, range of investment choices, diversification, low investment threshold, and so on.
If you took an initial $100 investment and added $100 per month for 20 years, you would have about $77,000. Now, say you invested $100 per month for 25 years -- you would have approximately $134,000. Keep in mind, this hypothetical is based on past performance, which is no guarantee of future results.
The good news is that you don't have to buy an entire share at a time. A strategy called "fractional investing" allows you to purchase portions of a share.
While both apps are well-rated on the App Store, Fidelity has far more reviews. Vanguard has 4.7 stars from about 170,000 reviews, while Fidelity has a 4.8-star rating from some 1.9 million reviews. 23 Overall, we found that Fidelity's app offers more functionality and will be valuable to a greater range of investors.
Fractional share investing lets investors buy less than a full share at one time. This can be helpful when share prices are too high for an investor to be able to afford. It also makes it easier for investors to invest very precise amounts in a company.
If you want to double your money in 5 years, then you can apply the thumb rule in a reverse way. Divide the 72 by the number of years in which you want to double your money. So to double your money in 5 years you will have to invest money at the rate of 72/5 = 14.40% p.a. to achieve your target.
Symbol | Name | 5-Year Return |
---|---|---|
PALL | abrdn Physical Palladium Shares ETF | 129.28% |
IXN | iShares Global Tech ETF | 127.99% |
BNO | United States Brent Oil Fund LP | 127.70% |
PBW | Invesco WilderHill Clean Energy ETF | 125.85% |
Which ETFs will perform the best in 2022?
...
Best & Worst Performing ETFs Of 2022.
Ticker | Fund | Q1'22 Return |
---|---|---|
PXE | Invesco Dynamic Energy Exploration & Production ETF | 43.9% |
PSCE | Invesco S&P SmallCap Energy ETF | 43.5% |
BNO | United States Brent Oil Fund LP | 43.1% |
FCG | First Trust Natural Gas ETF | 42.0% |
...
1. Global X SuperDividend ETF
- Yanzhou Coal Mining Company.
- Fortescue Metals Group.
- Electra Consumer Products.
- Iron Mountain Inc1.
Look at the ETF's underlying index (benchmark) to determine the exposure you're getting. Evaluate tracking differences to see how well the ETF delivers its intended exposure. And look for higher volumes and tighter spreads as an indication of liquidity and ease of access.
Vanguard Dividend ETFs Paying The Highest Dividends
It is the Vanguard International Dividend Appreciation ETF (VIGI).
- Expense Ratio: 0.03%
- Five-Year Return: 16.66%
- Risk Potential: 4.
- Homebuilding – iShares U.S. Home Construction ETF (ITB) ...
- Materials – Materials Select Sector SPDR ETF (XLB) ...
- Healthcare – Health Care Select Sector SPDR ETF (XLV) ...
- Consumer Staples – Invesco Dynamic Food & Beverage ETF (PBJ)
...
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