Jan 08

We moved from England to Portland, USA in 2012 and we decided to liquidate our savings in the UK stock market and bring them over to the US. There’s all sorts of tax complications if you hold foreign investment accounts and I didn’t want to deal with it.

Ever since we’ve moved, I’ve been on the hunt for where to invest our savings and I finally decided on two options:

  1. Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)
  2. Vanguard 500 Index Fund Investor Shares (VFINX)

The reason is because of this simple book: The Little Book of Common Sense Investing. Here’s a quick overview:

Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser’s game. Common sense tells us—and history confirms—that the simplest and most efficient investment strategy is to buy and hold all of the nation’s publicly held businesses at very low cost. The classic index fund that owns this market portfolio is the only investment that guarantees you with your fair share of stock market returns.

If you are investing any money, anywhere, you have to read this book. I blazed through it in one day.

How I chose the funds

Cost, cost, cost. On Index Funds, it’s all that really matters and it’s insane how cheap the fees are on these two funds. 

  1. Vanguard Total Stock Market Index Fund Investor Shares (VTSMX): 0.18% per year
  2. Vanguard 500 Index Fund Investor Shares (VFINX): 0.17% per year

What’s crazier is that if you can invest $10,000+ you get even cheaper fees by going with these two funds (which are identical to the above two):

  1. Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX): 0.06% per year
  2. Vanguard 500 Index Fund Admiral Shares (VFIAX): 0.05% per year

I’ve decided to go with the Vanguard 500 Index Fund Admiral Shares for now for one main reason: The fees on typical index tracker mutual funds (1.12%) are 2,140% more than the Vanguard fund (0.05%).

Please read that again: 2,140% cheaper. This has a ridiculous impact on the amount of money you end up making over time.

I’d like to thank MMM for the Vanguard recommendations and my buddy Chris Zervis for lending me Bogle’s book.

FYI, I have no financial stake in recommending these funds.

Recent comments

Blog comments powered by Disqus

16 Notes

  1. calvinchu reblogged this from drpizza
  2. drpizza reblogged this from ryanleecarson and added:
    small players. No more messing with bets.
  3. matmullen reblogged this from ryanleecarson
  4. ryanleecarson posted this

Stuff I Like

@ryancarson on Twitter