When to buy in on VTSAX?

[riverwed070707]

After reading the Simple Path to Wealth, I've decided I'd like to add VTSAX to my portfolio. I know that investing for the long term isn't about timing the market, but with the initial buy in being $3000 (a big investment for me!) I'd ideally like to not buy in and instantly lose half even if it will rebound over time. Currently it's trading at it 52 week high (roughly $30/share difference from its low). I'm ready to pull the trigger any time and after my initial purchase, I plan to make regular contributions without concern for timing. Would you wait until there's another dip in the market or just go for it?

[Petunia 100]

Personally, I would just go for it. If you are concerned about plunking in 3k all at once, you might consider buying the ETF version (VTI) and buying in more slowly. With an ETF you need only buy one share at a time.

[disneysteve]

I would just go for it.

Earlier this week, as part of some rebalancing, I made 3 lump sum investments in my accounts. I could have broken it up to reduce the risk of an immediate drop, but it could just as well continue to climb and backfire on me. I just decided to do it and be done with it.

[cypher1]

I'll admit I haven't been buying it (or any funds) since market as been moving up. But ultimately from a DCA perspective, the best time is now, not tomorrow. As for lump sum or small chunks spread out, I'd go with the latter, especially if you think the market may take another dip or correction soon.

[riverwed070707]

Personally, I would just go for it. If you are concerned about plunking in 3k all at once, you might consider buying the ETF version (VTI) and buying in more slowly. With an ETF you need only buy one share at a time.

ohhh I didn't know this was a thing. I'll look more into it! Any downsides of going with this over VTSAX?

[riverwed070707]

I'll admit I haven't been buying it (or any funds) since market as been moving up. But ultimately from a DCA perspective, the best time is now, not tomorrow. As for lump sum or small chunks spread out, I'd go with the latter, especially if you think the market may take another dip or correction soon.

If I go with VTSAX, small chucks spread out isn't an option as it has a min $3000 buy in. That's the dilemma... I think we're in a bubble, I think its going to be very volatile for the next several months especially leading up to the election and so I'm questioning if I should hold on my initial buy in until it drops at least a bit below the 52 week high.

[Petunia 100]

ohhh I didn't know this was a thing. I'll look more into it! Any downsides of going with this over VTSAX?

No downsides. There are a few minor differences between an ETF and a mutual fund. An ETF trades like a stock so is re-priced constantly throughout the day; a mutual fund is re-priced only once per day after the market closes. You can buy fractional shares of mutual funds; you usually need to buy whole shares of an ETF (I have heard that some brokers do allow fractional shares). That's about it.

[disneysteve]

No downsides. There are a few minor differences between an ETF and a mutual fund. An ETF trades like a stock so is re-priced constantly throughout the day; a mutual fund is re-priced only once per day after the market closes. You can buy fractional shares of mutual funds; you usually need to buy whole shares of an ETF (I have heard that some brokers do allow fractional shares). That's about it.

I'd add that there are also some advantages to an ETF when it comes to taxes (assuming this is a taxable account). You have a lot more control over things.

[Singuy]

ETF is best as it doesn't generate taxable events if this is added to a taxable account compared to index funds. Own any of it's in nontaxable account, only go for ETF in taxable account.

[cypher1]

If I go with VTSAX, small chucks spread out isn't an option as it has a min $3000 buy in. That's the dilemma... I think we're in a bubble, I think its going to be very volatile for the next several months especially leading up to the election and so I'm questioning if I should hold on my initial buy in until it drops at least a bit below the 52 week high.

Almost two years exactly, I put 10K into VTSAX for Taxable account at 71.38 per share not realizing it was at peak price. It was the first time actually focusing on taxables, and felt I was procrastinating too long (outside of having Roths already). Shortly it started dropping in value, and I was kicking myself for putting so much in at once, and regretted the decision initially. But I stayed the course, finally realizing these ups and downs is to be expected in the long run, and to not let my emotions dictate my decisions. I'm assuming most of us had that similar story or experience of initial remorse when starting out.

So while VTSAX is currently at 85.68 today, I would still say to buy it now, if you're planning to hold for at least 10 years.

As for VTI, another great option, as well as more tax efficient. If I was doing it all over, I'd go ETFs. While Index Funds have higher minimum deposit, and fractional share option, they're a little more convenient for setting up automatic/scheduled purchases. The schedule is main reason I continue to stick with them.

[Jluke]

I believe VTI and VTSAX are equally tax efficient given a patent that Vanguard holds.

downside to VTI? Need to buy at least one share; not partial shares like with VTSAX.

Though some brokerages are allowing partial shares now so that may not matter depending on where you invest.

[riverwed070707]

ETF is best as it doesn't generate taxable events if this is added to a taxable account compared to index funds. Own any of it's in nontaxable account, only go for ETF in taxable account.

I should have specified this will be in a Roth IRA.

[riverwed070707]

Almost two years exactly, I put 10K into VTSAX for Taxable account at 71.38 per share not realizing it was at peak price. It was the first time actually focusing on taxables, and felt I was procrastinating too long (outside of having Roths already). Shortly it started dropping in value, and I was kicking myself for putting so much in at once, and regretted the decision initially. But I stayed the course, finally realizing these ups and downs is to be expected in the long run, and to not let my emotions dictate my decisions. I'm assuming most of us had that similar story or experience of initial remorse when starting out.

So while VTSAX is currently at 85.68 today, I would still say to buy it now, if you're planning to hold for at least 10 years.

As for VTI, another great option, as well as more tax efficient. If I was doing it all over, I'd go ETFs. While Index Funds have higher minimum deposit, and fractional share option, they're a little more convenient for setting up automatic/scheduled purchases. The schedule is main reason I continue to stick with them.

I did more reading yesterday and saw that about the auto purchases. I already have a set deposit that goes to my vanguard holding fund. It would definitely be ideal to auto schedule the investment and not have to log in to buy shares.

[cypher1]

I should have specified this will be in a Roth IRA.

Since Roth, I'd say just go VTSAX whenever you're comfortable with it, since it's for long-term savings/retirement. As Singuy pointed out, VTI for Taxables, and spread out purchases.

[~bs]

just buy vti n smaller quantity. Vti has some components that are pretty toppy, namely the tech components, but it does have a lot of lagging value stocks, so it is a decent mix.