Buying Vanguard ETF's VTI and VXUS

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GridironGems
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Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Mon Oct 30, 2017 7:24 pm

I put in $1,000 into my Vanguard Brokerage account yesterday and want to invest it 60% VTI and 40% VXUS

I did not realize you have to buy whole shares of ETF's so I am buying 4 shares of VTI and 7 shares of VXUS and will have about $80 left.

I intend to put in $1,000 every month so should I just put that $80 into my Money Market Fund for a month? I guess I do not know the best way accomplish my 60% VTI and 40% VXUS goal with having part of my money left over.

Also for the dividends, should I reinvest those or get in cash? Will they reinvest dividends into partial shares or wait until the dividend amount builds up enough to equal 1 share?

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Re: Buying Vanguard ETF's VTI and VXUS

Post by lack_ey » Mon Oct 30, 2017 7:32 pm

You have automatic dividend reinvesting, they will give you partial shares.

Money that you don't allocate to any fund or ETF is in the settlement fund, which at Vanguard's brokerage is Vanguard Federal Money Market Fund (VMFXX).

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Tyler Aspect
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Re: Buying Vanguard ETF's VTI and VXUS

Post by Tyler Aspect » Mon Oct 30, 2017 8:32 pm

Set dividends and capital gains of your ETFs to the settlement fund. Small fractional shares are annoying. Buy in multiple of 10 shares to keep your lots neat. Messiness breeds confusion!
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Re: Buying Vanguard ETF's VTI and VXUS

Post by MotoTrojan » Mon Oct 30, 2017 8:46 pm

As you get a bigger pot you can maintain close to 60/50 and never have more cash than cost of a vxus; not bad.

I reinvest in Roth but to keep lots neat I don't in taxable.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by CyclingDuo » Mon Oct 30, 2017 10:46 pm

Tyler Aspect wrote:
Mon Oct 30, 2017 8:32 pm
Set dividends and capital gains of your ETFs to the settlement fund. Small fractional shares are annoying. Buy in multiple of 10 shares to keep your lots neat. Messiness breeds confusion!
Annoying? We would disagree. We've been using DRIP's for years and years with individual stocks and ETF's. It's like seamless clockwork with the quarterly dividends being invested without any hassle on the investor's part.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by Tyler Aspect » Mon Oct 30, 2017 11:17 pm

CyclingDuo wrote:
Mon Oct 30, 2017 10:46 pm
Annoying? We would disagree. We've been using DRIP's for years and years with individual stocks and ETF's. It's like seamless clockwork with the quarterly dividends being invested without any hassle on the investor's part.
Vanguard's stock/ETF dividend reinvestment purchases occur at market opening, which is known to have wider ask/bid spreads. That is arguably the worst time to be making such automatic purchases.

By turning off automatic repurchases you can avoid all these issues and take a more intentional control of your investments.
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Re: Buying Vanguard ETF's VTI and VXUS

Post by Longtermgrowth » Mon Oct 30, 2017 11:37 pm

This thread has me thinking about reading threads a while back, with one member mentioning they wouldn't bother buying with much less 7k per lot. It makes me wonder what the average lot size is for a Boglehead.

The question regarding $80 in money market per month, why not just buy an extra share of VXUS (Vanguard Total International ETF) with $50 something per share, currently, to reduce the cash drag?

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CyclingDuo
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Re: Buying Vanguard ETF's VTI and VXUS

Post by CyclingDuo » Mon Oct 30, 2017 11:43 pm

Tyler Aspect wrote:
Mon Oct 30, 2017 11:17 pm
CyclingDuo wrote:
Mon Oct 30, 2017 10:46 pm
Annoying? We would disagree. We've been using DRIP's for years and years with individual stocks and ETF's. It's like seamless clockwork with the quarterly dividends being invested without any hassle on the investor's part.
Vanguard's stock/ETF dividend reinvestment purchases occur at market opening, which is known to have wider ask/bid spreads. That is arguably the worst time to be making such automatic purchases.

By turning off automatic repurchases you can avoid all these issues and take a more intentional control of your investments.
Sounds like you are suggesting that one with more "intentional control" of when additional shares are purchased would be better able to "time" their investments. When it comes to DCA and quarterly dividends, we're not big fans of trying to time it. It goes in when it goes in from our pre-tax deductions to our quarterly dividends and distributions. Auto pilot. In the case of suggesting the OP do a DIY reinvestment rather than DRIPs, the same could be said of mutual fund dividends reinvested. You get the NAV per share at the end of the day. What if tomorrow were a better day? Should you also DIY as opposed to automatic reinvestment?

I guess if we saw data that could support DIY on our own choosing of time being a better method as opposed to automatic reinvested dividends that showed over decades a material of enough of a difference, we might be convinced. In the meantime, it would just be one more thing to have to try and time and be on top of monthly/quarterly.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by livesoft » Mon Oct 30, 2017 11:47 pm

Tyler Aspect wrote:
Mon Oct 30, 2017 11:17 pm
Vanguard's stock/ETF dividend reinvestment purchases occur at market opening, which is known to have wider ask/bid spreads. That is arguably the worst time to be making such automatic purchases.
There is no bid/ask spread at the opening cross when Vanguard buys dividend reinvestment purchases. And no ask/bid spread either.
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Re: Buying Vanguard ETF's VTI and VXUS

Post by Longtermgrowth » Tue Oct 31, 2017 12:57 am

livesoft wrote:
Mon Oct 30, 2017 11:47 pm
Tyler Aspect wrote:
Mon Oct 30, 2017 11:17 pm
Vanguard's stock/ETF dividend reinvestment purchases occur at market opening, which is known to have wider ask/bid spreads. That is arguably the worst time to be making such automatic purchases.
There is no bid/ask spread at the opening cross when Vanguard buys dividend reinvestment purchases. And no ask/bid spread either.
Ah, the opening cross. livesoft, I remember you mentioning market orders before the U.S. market opens. It sounds pretty simple for U.S., but admittedly I would have to do some research to do the same for International :happy

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Re: Buying Vanguard ETF's VTI and VXUS

Post by beehappy » Tue Oct 31, 2017 3:59 am

Longtermgrowth wrote:
Mon Oct 30, 2017 11:37 pm
This thread has me thinking about reading threads a while back, with one member mentioning they wouldn't bother buying with much less 7k per lot. It makes me wonder what the average lot size is for a Boglehead.

The question regarding $80 in money market per month, why not just buy an extra share of VXUS (Vanguard Total International ETF) with $50 something per share, currently, to reduce the cash drag?
This is what I'd recommend as well.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Tue Oct 31, 2017 8:20 am

Thanks for all the replies. I think I will just let the dividend automatic reinvest.

As for the $80, I will buy another share of VXUS, and next month add a little bit more than $1,000 so I can buy an extra share of VTI

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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Tue Oct 31, 2017 8:30 am

After more thought..should I just do the Investor Shares of VTI and VXUS and put in the minimum of $3,000 required instead of messing with whole shares of the ETF's?

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Re: Buying Vanguard ETF's VTI and VXUS

Post by CantPassAgain » Tue Oct 31, 2017 9:38 am

GridironGems wrote:
Tue Oct 31, 2017 8:30 am
After more thought..should I just do the Investor Shares of VTI and VXUS and put in the minimum of $3,000 required instead of messing with whole shares of the ETF's?
Yes, and I can't believe no one suggested this already. Just buy the mutual funds and be done with it. IMO probably 90+% of people buying ETFs don't know what they are doing and would be better served just buying the mutual fund equivalent. The other 10% are....I dunno what they are. Market timers? Or Livesoft (no offense intended to Livesoft)

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Re: Buying Vanguard ETF's VTI and VXUS

Post by David Scubadiver » Tue Oct 31, 2017 9:43 am

CantPassAgain wrote:
Tue Oct 31, 2017 9:38 am
GridironGems wrote:
Tue Oct 31, 2017 8:30 am
After more thought..should I just do the Investor Shares of VTI and VXUS and put in the minimum of $3,000 required instead of messing with whole shares of the ETF's?
Yes, and I can't believe no one suggested this already. Just buy the mutual funds and be done with it. IMO probably 90+% of people buying ETFs don't know what they are doing and would be better served just buying the mutual fund equivalent. The other 10% are....I dunno what they are. Market timers? Or Livesoft (no offense intended to Livesoft)
I don't buy mutual funds because I can't stand the stupid capital gains I get whacked with even though I did not realize them. Both funds would have very very low distributions, if any. But they still annoy me. I also don't like making an investment and having to wait until the end of the day to realize what I paid for it. Silly, perhaps. But not so when you make a large investment or withdrawal.

Finally, mutual funds are crappy when it comes to porting them to another brokerage because you may not be able to buy and sell them without commission whereas if you own the ETFs you can move them to a brokerage that doesn't charge you anything to sell them.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by drzzzzz » Tue Oct 31, 2017 10:39 am

David Scubadiver regarding this statement of yours "I don't buy mutual funds because I can't stand the stupid capital gains I get whacked with even though I did not realize them". If VTI is an ETF and VTSAX a mutual fund, don't they contain the same holdings and so wouldn't they both generate capital gains and subsequent distributions? If this isn't the case, are capital gains not thrown off by VTI or are they allocated differently within the ETF class. Thanks

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Re: Buying Vanguard ETF's VTI and VXUS

Post by David Scubadiver » Tue Oct 31, 2017 10:44 am

drzzzzz wrote:
Tue Oct 31, 2017 10:39 am
David Scubadiver regarding this statement of yours "I don't buy mutual funds because I can't stand the stupid capital gains I get whacked with even though I did not realize them". If VTI is an ETF and VTSAX a mutual fund, don't they contain the same holdings and so wouldn't they both generate capital gains and subsequent distributions? If this isn't the case, are capital gains not thrown off by VTI or are they allocated differently within the ETF class. Thanks
When a mutual fund sells a stock (rarity for VTI) and realizes a gain, it must distribute that gain to the mutual fund shareholder. ETFs do not have this peculiar problem. I was burned as a child buying a growth mutual fund shortly before they distributed a whopping capital gains. I got to reinvest my own money as a capital gains distribution and pay taxes on my own contribution as a result.

That happens to some degree with any mutual fund though to a much smaller one with a mutual fund that tracks an entire market and is therefore not engaged in buying and selling underlying securities.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by triceratop » Tue Oct 31, 2017 11:12 am

CantPassAgain wrote:
Tue Oct 31, 2017 9:38 am
GridironGems wrote:
Tue Oct 31, 2017 8:30 am
After more thought..should I just do the Investor Shares of VTI and VXUS and put in the minimum of $3,000 required instead of messing with whole shares of the ETF's?
Yes, and I can't believe no one suggested this already. Just buy the mutual funds and be done with it. IMO probably 90+% of people buying ETFs don't know what they are doing and would be better served just buying the mutual fund equivalent. The other 10% are....I dunno what they are. Market timers? Or Livesoft (no offense intended to Livesoft)
People who want to tax gain harvest into the same fund. People who want to not be tied to an individual brokerage (see what happened when TDA changed its commisison-free lineup). People who want to productively use their assets to get higher credit card rewards and brokerage signup bonuses. People who like the tax efficiency of some ETFs. People who did the requisite reading about ETFs to not blow their foot off with a simple order. People who are attracted to the idea that those who transact pay the transaction costs; those who do not, do not.

Or maybe I am just livesoft.
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Re: Buying Vanguard ETF's VTI and VXUS

Post by triceratop » Tue Oct 31, 2017 11:15 am

drzzzzz wrote:
Tue Oct 31, 2017 10:39 am
David Scubadiver regarding this statement of yours "I don't buy mutual funds because I can't stand the stupid capital gains I get whacked with even though I did not realize them". If VTI is an ETF and VTSAX a mutual fund, don't they contain the same holdings and so wouldn't they both generate capital gains and subsequent distributions? If this isn't the case, are capital gains not thrown off by VTI or are they allocated differently within the ETF class. Thanks
This is true for Vanguard ETF/mutual fund pairs; in fact there is a bit of inequity here in that the ETF share class benefits the mutual fund shareholders. But it is only true for Vanguard. Other fund companies do not have this dual share class structure for their ETFs and mutual fund produts; the patent is held by Vanguard and expires in 2019. As a result you will see Fidelity index mutual funds throw off capital gains distributions, which can be slightly annoying and, worse, costly in a taxable account.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Buying Vanguard ETF's VTI and VXUS

Post by donaldfair71 » Tue Oct 31, 2017 1:07 pm

Tyler Aspect wrote:
Mon Oct 30, 2017 11:17 pm
CyclingDuo wrote:
Mon Oct 30, 2017 10:46 pm
Annoying? We would disagree. We've been using DRIP's for years and years with individual stocks and ETF's. It's like seamless clockwork with the quarterly dividends being invested without any hassle on the investor's part.
Vanguard's stock/ETF dividend reinvestment purchases occur at market opening, which is known to have wider ask/bid spreads. That is arguably the worst time to be making such automatic purchases.

By turning off automatic repurchases you can avoid all these issues and take a more intentional control of your investments.
This is why I went from ETFs to MF once I qualified for the lower ER. I didn't like DRIP in ETFs that would be subject to wide bid/ask spreads.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by donaldfair71 » Tue Oct 31, 2017 1:08 pm

livesoft wrote:
Mon Oct 30, 2017 11:47 pm
Tyler Aspect wrote:
Mon Oct 30, 2017 11:17 pm
Vanguard's stock/ETF dividend reinvestment purchases occur at market opening, which is known to have wider ask/bid spreads. That is arguably the worst time to be making such automatic purchases.
There is no bid/ask spread at the opening cross when Vanguard buys dividend reinvestment purchases. And no ask/bid spread either.
Wow, this is news to me. Thanks for sharing (and disregard my previous response in this thread).

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Re: Buying Vanguard ETF's VTI and VXUS

Post by CantPassAgain » Tue Oct 31, 2017 1:33 pm

triceratop wrote:
Tue Oct 31, 2017 11:12 am
CantPassAgain wrote:
Tue Oct 31, 2017 9:38 am
GridironGems wrote:
Tue Oct 31, 2017 8:30 am
After more thought..should I just do the Investor Shares of VTI and VXUS and put in the minimum of $3,000 required instead of messing with whole shares of the ETF's?
Yes, and I can't believe no one suggested this already. Just buy the mutual funds and be done with it. IMO probably 90+% of people buying ETFs don't know what they are doing and would be better served just buying the mutual fund equivalent. The other 10% are....I dunno what they are. Market timers? Or Livesoft (no offense intended to Livesoft)
People who want to tax gain harvest into the same fund. People who want to not be tied to an individual brokerage (see what happened when TDA changed its commisison-free lineup). People who want to productively use their assets to get higher credit card rewards and brokerage signup bonuses. People who like the tax efficiency of some ETFs. People who did the requisite reading about ETFs to not blow their foot off with a simple order. People who are attracted to the idea that those who transact pay the transaction costs; those who do not, do not.

Or maybe I am just livesoft.
I thought you were a phd student with a low income....you are doing all those things?

Anyway sorry I triggered you but I think most of those benefits are overblown for most folks and possibly cancelled out by the increased urge to trade and tinker that ETFs can introduce. Very high net worth and in 39% tax bracket, yeah maybe but I doubt the op is that.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by triceratop » Tue Oct 31, 2017 1:37 pm

CantPassAgain wrote:
Tue Oct 31, 2017 1:33 pm
triceratop wrote:
Tue Oct 31, 2017 11:12 am
CantPassAgain wrote:
Tue Oct 31, 2017 9:38 am
GridironGems wrote:
Tue Oct 31, 2017 8:30 am
After more thought..should I just do the Investor Shares of VTI and VXUS and put in the minimum of $3,000 required instead of messing with whole shares of the ETF's?
Yes, and I can't believe no one suggested this already. Just buy the mutual funds and be done with it. IMO probably 90+% of people buying ETFs don't know what they are doing and would be better served just buying the mutual fund equivalent. The other 10% are....I dunno what they are. Market timers? Or Livesoft (no offense intended to Livesoft)
People who want to tax gain harvest into the same fund. People who want to not be tied to an individual brokerage (see what happened when TDA changed its commisison-free lineup). People who want to productively use their assets to get higher credit card rewards and brokerage signup bonuses. People who like the tax efficiency of some ETFs. People who did the requisite reading about ETFs to not blow their foot off with a simple order. People who are attracted to the idea that those who transact pay the transaction costs; those who do not, do not.

Or maybe I am just livesoft.
I thought you were a phd student with a low income....you are doing all those things?

Anyway sorry I triggered you but I think most of those benefits are overblown for the most folks. Very high net worth and in 39% tax bracket, yeah maybe but I doubt the op is that.
You didn't "trigger" me; I just don't agree with your dichotomy of who can see an advantage in ETFs.

For tax efficiency: this still matters for someone with a low income, just not to the same degree.

For tax gain harvesting: this applies most in a low tax bracket.

The other things apply no matter my particular job situation.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Buying Vanguard ETF's VTI and VXUS

Post by MotoTrojan » Tue Oct 31, 2017 1:50 pm

I use ETFs for Total US and Total World simply because I also hold other indexes (S&P 600 Value) that aren't available via Mutual Fund, and it is easier to just buy everything the same way each month.

I do use a mutual fund for tier-2 of my EF.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by CantPassAgain » Tue Oct 31, 2017 1:53 pm

triceratop wrote:
Tue Oct 31, 2017 1:37 pm
You didn't "trigger" me; I just don't agree with your dichotomy of who can see an advantage in ETFs.

For tax efficiency: this still matters for someone with a low income, just not to the same degree.

For tax gain harvesting: this applies most in a low tax bracket.

The other things apply no matter my particular job situation.
IMO people should first be taking advantage of all tax-advantaged opportunities first before investing in taxable and for a heck of a lot of "ordinary" middle class folks, they really have no business investing in a taxable account because nine times out of ten they aren't maxing out tax advantaged opportunities. Are you maxing out your 401K or 403B or whatever and a roth? And have money left over to invest in taxable....and then buying ETFs and tax gain harvesting and chasing rewards and changing institutions and worrying about transaction costs all who knows what else? Anyway you can tax gain harvest with mutual funds, just buy a similar fund and wait the 30 days or whatever it is now.

Lets face it, most people don't buy ETFs because of these things. They buy them because they have heard of them, and it seems like the thing to do.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by Tyler Aspect » Tue Oct 31, 2017 1:57 pm

livesoft wrote:
Mon Oct 30, 2017 11:47 pm
There is no bid/ask spread at the opening cross when Vanguard buys dividend reinvestment purchases. And no ask/bid spread either.
Really? I remember I read a few times about this topic, and they all described the spread in quite some details.

http://etf.com/sections/blog/23595- ... nopaging=1
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Re: Buying Vanguard ETF's VTI and VXUS

Post by triceratop » Tue Oct 31, 2017 2:05 pm

CantPassAgain wrote:
Tue Oct 31, 2017 1:53 pm
triceratop wrote:
Tue Oct 31, 2017 1:37 pm
You didn't "trigger" me; I just don't agree with your dichotomy of who can see an advantage in ETFs.

For tax efficiency: this still matters for someone with a low income, just not to the same degree.

For tax gain harvesting: this applies most in a low tax bracket.

The other things apply no matter my particular job situation.
IMO people should first be taking advantage of all tax-advantaged opportunities first before investing in taxable and for a heck of a lot of "ordinary" middle class folks, they really have no business investing in a taxable account because nine times out of ten they aren't maxing out tax advantaged opportunities. Are you maxing out your 401K or 403B or whatever and a roth? And have money left over to invest in taxable....and then buying ETFs and tax gain harvesting and chasing rewards and changing institutions and worrying about transaction costs all who knows what else? Anyway you can tax gain harvest with mutual funds, just buy a similar fund and wait the 30 days or whatever it is now.

Lets face it, most people don't buy ETFs because of these things. They buy them because they have heard of them, and it seems like the thing to do.
I fully agree with you that tax advantaged investing should be done before investing to taxable, because of tax drag.

I'm a graduate student; we don't have 401ks or 403bs at my institution. And due to the nature of my funding none of my income is eligible for Roth IRA contributions, so as a result yes I am filling up my tax-advantaged space. At the same time, 100% of contributions go to taxable.

What most people do is a valid question; I won't opine on the sophistication of the typical investor. I only know there are perfectly valid reasons apart from market timing to use ETFs. Reasons that have been discussed at length on this board (and on this thread!). I don't view what I am doing as rocket science; it's just applying an understanding of the product and using its features to my benefit.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Tue Oct 31, 2017 5:38 pm

I am low income and in the 15% tax bracket. So would ETF's or the mutual funds be better for me?

If I decide to go the mutual fund route with 3,000 in each to start, am I able to move my ETF's over? I think I read you can only move mutual funds to ETF's and not the the other way around?

Thanks for all your help!

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Re: Buying Vanguard ETF's VTI and VXUS

Post by triceratop » Tue Oct 31, 2017 5:44 pm

GridironGems wrote:
Tue Oct 31, 2017 5:38 pm
I am low income and in the 15% tax bracket. So would ETF's or the mutual funds be better for me?

If I decide to go the mutual fund route with 3,000 in each to start, am I able to move my ETF's over? I think I read you can only move mutual funds to ETF's and not the the other way around?

Thanks for all your help!
There is less reason to prefer ETFs to mutual funds in a tax-advantaged account, which is probably what you will be used. Mutual funds from Vanguard will be fine for you.

Please don't take my defense of ETFs above to be an endorsement of ETFs over mutual funds in general; just that in my particular case I prefer them.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Tue Oct 31, 2017 5:48 pm

triceratop wrote:
Tue Oct 31, 2017 11:12 am
CantPassAgain wrote:
Tue Oct 31, 2017 9:38 am
GridironGems wrote:
Tue Oct 31, 2017 8:30 am
After more thought..should I just do the Investor Shares of VTI and VXUS and put in the minimum of $3,000 required instead of messing with whole shares of the ETF's?
Yes, and I can't believe no one suggested this already. Just buy the mutual funds and be done with it. IMO probably 90+% of people buying ETFs don't know what they are doing and would be better served just buying the mutual fund equivalent. The other 10% are....I dunno what they are. Market timers? Or Livesoft (no offense intended to Livesoft)
People who want to tax gain harvest into the same fund. People who want to not be tied to an individual brokerage (see what happened when TDA changed its commisison-free lineup). People who want to productively use their assets to get higher credit card rewards and brokerage signup bonuses. People who like the tax efficiency of some ETFs. People who did the requisite reading about ETFs to not blow their foot off with a simple order. People who are attracted to the idea that those who transact pay the transaction costs; those who do not, do not.

Or maybe I am just livesoft.
What credit card rewards you speak of?

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Re: Buying Vanguard ETF's VTI and VXUS

Post by triceratop » Tue Oct 31, 2017 5:51 pm

GridironGems wrote:
Tue Oct 31, 2017 5:48 pm
triceratop wrote:
Tue Oct 31, 2017 11:12 am
CantPassAgain wrote:
Tue Oct 31, 2017 9:38 am
GridironGems wrote:
Tue Oct 31, 2017 8:30 am
After more thought..should I just do the Investor Shares of VTI and VXUS and put in the minimum of $3,000 required instead of messing with whole shares of the ETF's?
Yes, and I can't believe no one suggested this already. Just buy the mutual funds and be done with it. IMO probably 90+% of people buying ETFs don't know what they are doing and would be better served just buying the mutual fund equivalent. The other 10% are....I dunno what they are. Market timers? Or Livesoft (no offense intended to Livesoft)
People who want to tax gain harvest into the same fund. People who want to not be tied to an individual brokerage (see what happened when TDA changed its commisison-free lineup). People who want to productively use their assets to get higher credit card rewards and brokerage signup bonuses. People who like the tax efficiency of some ETFs. People who did the requisite reading about ETFs to not blow their foot off with a simple order. People who are attracted to the idea that those who transact pay the transaction costs; those who do not, do not.

Or maybe I am just livesoft.
What credit card rewards you speak of?
See: viewtopic.php?t=150033 (BOA/ME Preferred Rewards)
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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Tue Oct 31, 2017 5:59 pm

Alright, looks like something I am not interested in.

Do you know about the moving my VTI and VXUS to mutual funds or do I have to sell them?

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Re: Buying Vanguard ETF's VTI and VXUS

Post by Earl Lemongrab » Wed Nov 01, 2017 10:40 am

GridironGems wrote:
Tue Oct 31, 2017 5:59 pm
Do you know about the moving my VTI and VXUS to mutual funds or do I have to sell them?
You have to sell them. If it's a taxable account, then there might be capital gains tax due.
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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Wed Nov 01, 2017 7:53 pm

Well I'm leaning towards selling my shares of VTI and VXUS in my brokerage account and will add enough funds for a total of $6,000. This way I can put in $3,000 into Vanguard Total Stock Market Index Fund Investor Shares and $3,000 into Vanguard Total International Stock Index Fund Investor Shares.
Then when I add more money I will put that in the Total Stock Market to get closer to my 60/40 allocation

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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Wed Nov 01, 2017 8:16 pm

I have one last question before I make the switch. What are the tax differences between these ETF's and Mutual Funds? Is there enough difference to sway me one way or the other?

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Re: Buying Vanguard ETF's VTI and VXUS

Post by NEInvestor » Wed Nov 01, 2017 8:51 pm

I would stick with the ETFs if it is a taxable account.

Mutual Funds have to sell assets when investors net redemptions each day exceed net subscriptions. This results in capital gains being distributed to all investors in the fund regardless of if you traded. In a taxable account, you owe tax on the long/short term distributed gains.

ETFs match buyers with sellers when shares are exchanged daily in the market. This is optimal if you are a buy and hold investor because you will not owe tax on other investors trades as you would with a mutual fund.

I would not sweat cash drag on $80. It is so small, that you can adjust by purchasing an extra share of VXUS or just wait a month till you have 160 and buy the full share of VTI. Even if the market moved 10%, it is only an $8 difference in value.

If the funds are in a tax advantage account, I would go mutual fund equivalents all the way for simplicity.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by F150HD » Wed Nov 01, 2017 8:53 pm

GridironGems wrote:
Wed Nov 01, 2017 7:53 pm
Well I'm leaning towards selling my shares of VTI and VXUS in my brokerage account and will add enough funds for a total of $6,000. This way I can put in $3,000 into Vanguard Total Stock Market Index Fund Investor Shares and $3,000 into Vanguard Total International Stock Index Fund Investor Shares.
Then when I add more money I will put that in the Total Stock Market to get closer to my 60/40 allocation
https://personal.vanguard.com/us/funds/ ... 1691#tab=2

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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Wed Nov 01, 2017 9:07 pm

NEInvestor wrote:
Wed Nov 01, 2017 8:51 pm
I would stick with the ETFs if it is a taxable account.

Mutual Funds have to sell assets when investors net redemptions each day exceed net subscriptions. This results in capital gains being distributed to all investors in the fund regardless of if you traded. In a taxable account, you owe tax on the long/short term distributed gains.

ETFs match buyers with sellers when shares are exchanged daily in the market. This is optimal if you are a buy and hold investor because you will not owe tax on other investors trades as you would with a mutual fund.

I would not sweat cash drag on $80. It is so small, that you can adjust by purchasing an extra share of VXUS or just wait a month till you have 160 and buy the full share of VTI. Even if the market moved 10%, it is only an $8 difference in value.

If the funds are in a tax advantage account, I would go mutual fund equivalents all the way for simplicity.
This is in my Vanguard brokerage account, so yes it is a taxable account. So now I am torn between the two and not sure what to do

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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Wed Nov 01, 2017 9:08 pm

F150HD wrote:
Wed Nov 01, 2017 8:53 pm
GridironGems wrote:
Wed Nov 01, 2017 7:53 pm
Well I'm leaning towards selling my shares of VTI and VXUS in my brokerage account and will add enough funds for a total of $6,000. This way I can put in $3,000 into Vanguard Total Stock Market Index Fund Investor Shares and $3,000 into Vanguard Total International Stock Index Fund Investor Shares.
Then when I add more money I will put that in the Total Stock Market to get closer to my 60/40 allocation
https://personal.vanguard.com/us/funds/ ... 1691#tab=2
I have a Roth IRA with Vanguard as well and have that in the 2050 Target Fund

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Re: Buying Vanguard ETF's VTI and VXUS

Post by Longtermgrowth » Thu Nov 02, 2017 1:13 am

I think once the portfolio gets larger, it won't make much difference either way. No need to incur capital gains tax if the ETF buying process doesn't bother you.
Who knows, maybe you'll want to transfer to another brokerage later on, and having ETFs makes it that much easier...

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Re: Buying Vanguard ETF's VTI and VXUS

Post by spdoublebass » Thu Nov 02, 2017 2:20 am

Longtermgrowth wrote:
Tue Oct 31, 2017 12:57 am
livesoft wrote:
Mon Oct 30, 2017 11:47 pm
Tyler Aspect wrote:
Mon Oct 30, 2017 11:17 pm
Vanguard's stock/ETF dividend reinvestment purchases occur at market opening, which is known to have wider ask/bid spreads. That is arguably the worst time to be making such automatic purchases.
There is no bid/ask spread at the opening cross when Vanguard buys dividend reinvestment purchases. And no ask/bid spread either.
Ah, the opening cross. livesoft, I remember you mentioning market orders before the U.S. market opens. It sounds pretty simple for U.S., but admittedly I would have to do some research to do the same for International :happy
If you place a market order before the US market opens what happens? Do you get the opening price? Is this a good strategy?
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Re: Buying Vanguard ETF's VTI and VXUS

Post by Longtermgrowth » Thu Nov 02, 2017 2:36 am

spdoublebass wrote:
Thu Nov 02, 2017 2:20 am
Longtermgrowth wrote:
Tue Oct 31, 2017 12:57 am
livesoft wrote:
Mon Oct 30, 2017 11:47 pm
Tyler Aspect wrote:
Mon Oct 30, 2017 11:17 pm
Vanguard's stock/ETF dividend reinvestment purchases occur at market opening, which is known to have wider ask/bid spreads. That is arguably the worst time to be making such automatic purchases.
There is no bid/ask spread at the opening cross when Vanguard buys dividend reinvestment purchases. And no ask/bid spread either.
Ah, the opening cross. livesoft, I remember you mentioning market orders before the U.S. market opens. It sounds pretty simple for U.S., but admittedly I would have to do some research to do the same for International :happy
If you place a market order before the US market opens what happens? Do you get the opening price? Is this a good strategy?
I, for one, am too chicken to find out, but I'm a control freak :wink: I can imagine myself checking futures making sure nothing crazy is already priced in, along with worrying about other things... What if I wanted to do this with DGS (WisdomTree Emerging Markets Small Cap Dividend Fund), a more thinly traded ETF? livesoft, will this work with ETFs that don't have many millions exchanged everyday?
Also, when typing this, I checked the average daily volume of DGS... I swear it has more than doubled since the last time I checked (10.44M)! Though livesoft did mention selling off some DGS not long ago :D

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Re: Buying Vanguard ETF's VTI and VXUS

Post by mortfree » Thu Nov 02, 2017 2:44 am

GridironGems wrote:
Wed Nov 01, 2017 9:07 pm
NEInvestor wrote:
Wed Nov 01, 2017 8:51 pm
I would stick with the ETFs if it is a taxable account.
This is in my Vanguard brokerage account, so yes it is a taxable account. So now I am torn between the two and not sure what to do
Agree with the above-ETF is the way to go in the taxable account. I have VTI in a Vanguard taxable account.

You are getting caught up in the perceived glamour of owning the mutual fund b/c it is the SatuMedia way. You will be fine with the ETFs b/c the key point is you are investing your money.

Has it been mentioned that the ER for the investors shares mutual fund is “higher” than the ETF?

Stick with the ETFs for the long term and you’ll be fine.

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Re: Buying Vanguard ETF's VTI and VXUS

Post by livesoft » Thu Nov 02, 2017 6:05 am

spdoublebass wrote:
Thu Nov 02, 2017 2:20 am
If you place a market order before the US market opens what happens? Do you get the opening price? Is this a good strategy?
Yes, you get the opening price. See, e.g.:
viewtopic.php?p=2600976#p2600976

Is this a good strategy? See the same thread I just linked. In the exact post linked, I sold shares.
Last edited by livesoft on Thu Nov 02, 2017 6:07 am, edited 1 time in total.
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Re: Buying Vanguard ETF's VTI and VXUS

Post by livesoft » Thu Nov 02, 2017 6:05 am

For the OP: You don't have to decide now between ETFs and mutual funds: You can buy both at Vanguard, so buy some of each and decide in the future which one you prefer.
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Re: Buying Vanguard ETF's VTI and VXUS

Post by Earl Lemongrab » Thu Nov 02, 2017 12:26 pm

I wouldn't incur taxes to make the switch. What concerns do you have about ETFs?
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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Thu Nov 02, 2017 12:46 pm

Longtermgrowth wrote:
Thu Nov 02, 2017 1:13 am
I think once the portfolio gets larger, it won't make much difference either way. No need to incur capital gains tax if the ETF buying process doesn't bother you.
Who knows, maybe you'll want to transfer to another brokerage later on, and having ETFs makes it that much easier...
Why are moving ETF's easier than mutual funds?

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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Thu Nov 02, 2017 12:49 pm

Earl Lemongrab wrote:
Thu Nov 02, 2017 12:26 pm
I wouldn't incur taxes to make the switch. What concerns do you have about ETFs?
It was more of a convenience factor and just putting in 1,000 per month and not worrying about buying shares and having extra money leftover

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Re: Buying Vanguard ETF's VTI and VXUS

Post by Earl Lemongrab » Thu Nov 02, 2017 1:21 pm

GridironGems wrote:
Thu Nov 02, 2017 12:46 pm
Longtermgrowth wrote:
Thu Nov 02, 2017 1:13 am
I think once the portfolio gets larger, it won't make much difference either way. No need to incur capital gains tax if the ETF buying process doesn't bother you.
Who knows, maybe you'll want to transfer to another brokerage later on, and having ETFs makes it that much easier...
Why are moving ETF's easier than mutual funds?
While you can sometimes (often?) move Admiral index funds to another custodian and even reinvest dividends, you generally can't buy new shares. I'm not aware of any that allow that for a self-directed investor. ETFs on the other hand, can be transacted anywhere. People like me that prefer to use custodians other than Vanguard often prefer ETFs for that flexibility.
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Re: Buying Vanguard ETF's VTI and VXUS

Post by GridironGems » Thu Nov 02, 2017 8:34 pm

I am trying to set my settings to Reinvest Dividends on my VTI and VXUS ETF's, and it doesn't look like it will let me. Just has Transfer to settlement fund

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