VTSAX or VEXAX [Vanguard Total Stock Market vs. Extended Market Index]

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LIGuy82
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VTSAX or VEXAX [Vanguard Total Stock Market vs. Extended Market Index]

Post by LIGuy82 » Sun May 13, 2018 4:01 pm

I was recently re-balancing my portfolio and was considering adding Vanguard Extended Market Index Fund Admiral Shares (VEXAX) to my portfolio, as it is the equivalent of the TSP S-fund, which has outperformed the C Fund/VTSAX for the last ten years, and since inception. Am I missing something? The current and proposed allocations are for all accounts - TSP, Roth IRA, and Taxable. Before you lambaste me for the cryptocurrency part - I turned $6,000 into $10,000 in six months, and the $7,500 left in there is all "house money" that I am willing to lose on the gamble, as I already made a real profit.

Current Allocation:

S&P 500 $70,153.00 33%
Extended Market $36,479.00 17%
Total Stock Market $51,977.00 24%

Internationals $46,673.00 22%
Cryptocurrency $7,500.00 4%

Proposed Allocation:

S&P 500 $70,153.00 33%
Extended Market $56,479.00 27%
Total Stock Market $31,977.00 15%

Internationals $46,673.00 22%
Cryptocurrency $7,500.00 4%

retiredjg
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Re: VTSAX or VEXAX

Post by retiredjg » Sun May 13, 2018 4:09 pm

It would be helpful if you break this down by account.

As you have shown it here, it is non-sensical to hold both the total stock market and the 500 index + extended market. But there is probably a reason for that....we just can't see it in the way you displayed your portfolio.

mortfree
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Re: VTSAX or VEXAX

Post by mortfree » Sun May 13, 2018 4:10 pm

Performance chasing??

aristotelian
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Re: VTSAX or VEXAX

Post by aristotelian » Sun May 13, 2018 4:10 pm

Doesn't make much sense to have VTSAX, S&P, and Extended Market, since VTSAX is made up of S&P plus Extended Market.

If you want to overweight small and midcap, you would want to get rid of S&P. If you want total stock market, you would just do VTSAX and nothing else.

Having all three is needlessly complex.

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oldcomputerguy
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Re: VTSAX or VEXAX

Post by oldcomputerguy » Sun May 13, 2018 4:11 pm

The purpose of Extended Market is to provide the underlying investments that are not included in the S&P500. By holding S&P500, Extended Market, and Total Stock, you're needlessly duplicating underlying investments while adding complexity. Is there a reason for this?
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arcticpineapplecorp.
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Re: VTSAX or VEXAX

Post by arcticpineapplecorp. » Sun May 13, 2018 4:17 pm

The extended market is the 20% of the market (roughly) that is not S&P500 (the other 80% roughly). So why do you have S&P500, extended market AND total stock market? It would seem you should have either 1 or 2 less funds in that you should have either:
1. s&p500 and extended market or
2. total stock market

Why have all three? You're just complicating the portfolio and you have large caps in the total stock market index and the S&P500. Similary, if you have the total stock market index fund that already has the extended market index fund in it, so why hold it separately?

I'm not sure what all accounts you have. Are all these percentages in the TSP or do you have TSP and some other account (like Roth IRA)?? You're mentioning, "as it is the equivalent of the TSP S-fund". I don't really know what you're saying by that.

If you have the TSP and you want to tilt to small/mid caps then you have to get the extended market index fund. But if you have an IRA and want small caps, it's often recommended to invest in a small cap value fund, rather than an extended market index fund.

Also the past is not prologue, meaning just because one fund outperformed another in the past doesn't mean it will do so in the future. caveat emptor.

Regarding crypto...is this in a tax advantaged account? I'm assuming that's not in your TSP, right? If you made money on crypto why wouldn't you sell it (other than if it's in a taxable account) since it's way more volatile and undiversified than the rest of your portfolio? Yes it's a small part overall, but if it's so small then you really don't have the courage of your convictions do you? And if it's so small, it's really not going to do that much for you overall is it?
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averagedude
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Re: VTSAX or VEXAX

Post by averagedude » Sun May 13, 2018 4:31 pm

I believe both of your domestic allocations are reasonable. If you are young or middle aged, I like your proposed slightly better as it tilts your portfolio to small and midsize domestic stocks. If you are over 60 years old i would stick with your current allocation. In my opinion, over the long term you are only looking at increasing or decreasing your annual return 25 basis points at the most.

LIGuy82
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Re: VTSAX or VEXAX

Post by LIGuy82 » Sun May 13, 2018 4:35 pm

Thanks for the replies and sorry for the confusion. The percentages below are of my total portfolio. The reason for the S&P 500 is that there is no Total Stock Market Index equivalent in the TSP.

My TSP Allocations are:

TSP - S Fund $36,479.00 17% (This is the same as the Extended Market Fund)
TSP - C Fund $70,153.00 33% (This is the same as the S&P 500 Index Fund)
TSP - I Fund $33,673.00 16% (This is the same as the Total International Index Fund)

My Roth IRA allocations are:

VTSAX (Total Stock Market Index Fund) $40,000.00 19%
VTIAX (Total International Index Fund) $10,000.00 4.5%
VMMSX (Emerging Markets Index Fund) $3,000.00 1.5%

My Taxable allocations are:

VTSAX (Total Stock Market Index Fund) $11,977.00 6%

Regarding Crypto, I gambled (won't say invested) $6,000 in the summer of 2017 and sold the bulk of it in December, 2017 for $10,000 ($4,000 profit). The $7,500 remaining in there is all unrealized profit. This is a taxable account

LIGuy82
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Re: VTSAX or VEXAX

Post by LIGuy82 » Sun May 13, 2018 4:53 pm

LIGuy82 wrote:
Sun May 13, 2018 4:35 pm
Thanks for the replies and sorry for the confusion. The percentages below are of my total portfolio. The reason for the S&P 500 is that there is no Total Stock Market Index equivalent in the TSP.

My TSP Allocations are:

TSP - S Fund $36,479.00 17% (This is the same as the Extended Market Fund)
TSP - C Fund $70,153.00 33% (This is the same as the S&P 500 Index Fund)
TSP - I Fund $33,673.00 16% (This is the same as the Total International Index Fund)

My Roth IRA allocations are:

VTSAX (Total Stock Market Index Fund) $40,000.00 19%
VTIAX (Total International Index Fund) $10,000.00 4.5%
VMMSX (Emerging Markets Index Fund) $3,000.00 1.5%

My Taxable allocations are:

VTSAX (Total Stock Market Index Fund) $11,977.00 6%

Regarding Crypto, I gambled (won't say invested) $6,000 in the summer of 2017 and sold the bulk of it in December, 2017 for $10,000 ($4,000 profit). The $7,500 remaining in there is all unrealized profit. This is a taxable account
After rereading the responses, I think that just putting into the Total Stock Market Index makes sense for my Roth IRA and taxable accounts. Regarding the TSP, it is two-parts S&P 500 and one-part Extended Market, so a little weighted towards extended than the Total Stock Market Fund, which I am comfortable with. That said, thank you for explaining how the Total Stock Market Fund is comprised of both S&P 500 and the Extended Market.

Regarding Crypto, I have zero convictions about it. It is wild speculation and I had some money to gamble with. If it skyrockets, I'll make a few thousand dollars. If it drops to zero, I already made $4000 (a 66% return in six months). Either way, I will wait until at least the summer to pass the one year mark and have it taxed as a capital gain. Yes, I reported all crypto transactions on my 2017 tax return, which seems to put me in the minority after reading a few articles.

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grabiner
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Re: VTSAX or VEXAX [Vanguard Total Stock Market vs. Extended Market Index]

Post by grabiner » Sun May 13, 2018 7:00 pm

If you want to increase your overweighting of small-caps, Extended Market in a Vanguard account is not the best way to do this; it makes more sense to use a dedicated small-cap fund such as Small-Cap Index. It might be best to replicate Total Stock Market exactly in your TSP (holding the C and S funds in a 4:1 ratio) and do all your small-cap overweighting in the Roth, because this makes it easier to manage your allocation. It also gives you more options; some Bogleheads (including me) prefer to overweight both small-cap and value, and use Small-Cap Value Index (or ETFs in this class) rather than Small-Cap Index.
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PFInterest
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Re: VTSAX or VEXAX [Vanguard Total Stock Market vs. Extended Market Index]

Post by PFInterest » Mon May 14, 2018 6:59 pm

this is just tilting.

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Texas Radio
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Re: VTSAX or VEXAX [Vanguard Total Stock Market vs. Extended Market Index]

Post by Texas Radio » Mon May 14, 2018 8:08 pm

I believe S&P plus Extended Market have more stocks that Total Stock Market. I'm too lazy to check right now though :D
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