Learn About Vanguard Total Stock Market Index Fund (VTSMX)
***Our information is for educational purposes only.***
Have you heard of Vanguard? Vanguard is a big name in investing that many people think of when they hear the term “mutual fund”. The Vanguard Group has been around for decades and offers a variety of investment options to fit any investor’s needs. So if you’ve had your guard up and been hesitant to invest, consider an index fund. Specifically, let’s take a look at the Vanguard Total Stock Market Index Fund.
Vanguard Total Stock Market Index Fund (VTSMX)
Established in 1992, VTSMX is an attractive investment option due to its low cost, tax efficiency and diversification. The fund’s parent company, Vanguard, is the largest mutual fund provider in the United States.
VTSMX tracks the performance of a benchmark index that measures the investment return of the overall stock market. Specifically, this fund tracks the CRSP US Total Market Index. In simple terms, you’ll see VTSMX gain value with the stocks in the overall market increase.
When you invest money into an index fund such as this, the funds are distributed across all of the stocks held by the fund. This allows you to diversify your portfolio without having to purchase multiple stocks and increases the chance that you’ll see a good return in the future. Oftentimes, index funds will outperform mutual funds.
The fund’s top holdings are in familiar high profile companies such as Apple, Facebook, Amazon.com, Johnson & Johnson, and Microsoft. With funds invested in over 4,000 stocks, the fund has assets of nearly $242 billion dollars.
What Does It Cost To Invest In VTSMX?
One of the top reasons to invest in this fund is the low cost. The current expense ratio sits at a low 15% and there is no initial investment amount for this fund. VTSMX carries an average risk compared to other funds in its peer group.
Generally, index funds are a great option for beginners because they require little to no management by the investor. Index funds are considered passive investing for this reason and this is one of the things that sets them apart from mutual funds.
While VTSMX is an attractive investment fund, unfortunately, it is not open for new investors to purchase at this time. Keep an eye on new information coming out about the fund because this may change at some point in the future.
This type of fund is a great option for long term investors to consider. The best practice is to invest money that you don’t anticipate needing in the next couple of years. You’ll see smaller growth, but it will add up over time. If you have the patience to wait it out, definitely consider investing in VTSMX.
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