why would you want the S&P 500 rather than a total stock market index fund...
I am open to choosing either one. Since you mentioned VTSMX, I assume you see it has an advantage over VFIAX?
The expense ratio is higher. My plan was to hold small caps (IWM) separately.
The advantage is more theoretical than actual, but it goes like this: what is your rationale for investing in an S&P 500 fund in the first place?
In my case, my rationale was "I don't want to pick stocks, I want to own the whole market." At the time when I first learned about the fund, the S&P 500 was taken as a reasonable proxy for the market. It still is--it's what's cited on the news. And although all the smart connoisseur types dump on it, it's not
a bad proxy for the whole market. It covers about 80% of the market and the effect of adding the other 20% in midcaps and small caps has been surprisingly small.
Still, now that you can get a total market stock fund, if what you want is the whole market, a total market fund is a more faithful realization of that goal. So it tends to be be the default recommendation here.
Expense ratios don't matter much once you get under 0.10%, do the math, and in any case for comparable share classes the difference are small. For Admiral shares, 0.06% for VTSAX (total market) vs. 0.05% for VFIAX (S&P 500 only). For the ETF, same thing.
For small caps, you need to say, again, what your reasons are. Do you want small caps beyond what's already in the total market. Do you in fact want a "small-cap tilt" or a "small-cap value tilt?" That's a topic in itself.
I would certainly not flail around trying to shave 0.01% in expense ratios by buying three separate funds or ETFs and gluing them together to make up the total market. Not when total market funds are so easy to come by and with such low expense ratios.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.