VOO PLUS VTI

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hope25
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VOO PLUS VTI

Post by hope25 » Mon Jan 13, 2020 10:52 pm

HELLO,

Does it make sense to add an S&P 500 fund to a Total Stockmarket fund? Or just invest in one?

I have a considerable capital gain in VTSAX( in a taxable fund) and have just received new money to invest. I was told to put the new money into an S&P 500 fund. I do not plan to touch this money for 20 yrs or more.

Thanks for all replies.

HC

sf_tech_saver
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Re: VOO PLUS VTI

Post by sf_tech_saver » Mon Jan 13, 2020 11:13 pm

VTI provides the broadest diversification by extending to middle/small-cap as a portion of the fund.

Instead of trying to be smart about tilting to large/small/mid I prefer to just invest according to their capitalization with VTI.

What is your tax bracket and state tax treatment of dividends? In California and a high federal bracket, I've started buying some VTCLX which shaves some taxable dividends but still generally tracks the market.
VTI is a modern marvel

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Re: VOO PLUS VTI

Post by Ferdinand2014 » Mon Jan 13, 2020 11:14 pm

VTSAX. Difference between the 2 is noise. One fund is easier.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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Re: VOO PLUS VTI

Post by 1789 » Mon Jan 13, 2020 11:58 pm

hope25 wrote:
Mon Jan 13, 2020 10:52 pm
HELLO,

Does it make sense to add an S&P 500 fund to a Total Stockmarket fund? Or just invest in one?

I have a considerable capital gain in VTSAX( in a taxable fund) and have just received new money to invest. I was told to put the new money into an S&P 500 fund. I do not plan to touch this money for 20 yrs or more.

Thanks for all replies.

HC
VTSAX hands down. BTW, who told you to put money in SP500 in taxable? Is tax loss harvesting the reason for this advice?
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Re: VOO PLUS VTI

Post by 22twain » Tue Jan 14, 2020 12:04 am

hope25 wrote:
Mon Jan 13, 2020 10:52 pm
I have a considerable capital gain in VTSAX( in a taxable fund) and have just received new money to invest. I was told to put the new money into an S&P 500 fund.
Did they explain why they thought you should do that instead of simply adding the money to your VTSAX?
My investing princiPLEs do not include absolutely preserving princiPAL.

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Re: VOO PLUS VTI

Post by anon_investor » Tue Jan 14, 2020 12:09 am

Just add more to VTSAX, keep it simple.

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Re: VOO PLUS VTI

Post by jhfenton » Tue Jan 14, 2020 8:45 am

I agree with the consensus. Just keep adding to VTI/VTSAX. Adding VOO/VFIAX would just complicate things without adding any diversification at all.

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Re: VOO PLUS VTI

Post by livesoft » Tue Jan 14, 2020 8:53 am

hope25 wrote:
Mon Jan 13, 2020 10:52 pm
I was told to put the new money into an S&P 500 fund.
I am interested in how this advice came to be. VTI is an S&P 500 fund in that it holds the S&P 500 stocks. While VTI is not an S&P index fund, as you have just been told, it is a total US stock market index fund.

So you have just been told to put the new money into VTI. Now you have two "put the new money into" statements. How are you going to decide?
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Re: VOO PLUS VTI

Post by retiredjg » Tue Jan 14, 2020 9:02 am

hope25 wrote:
Mon Jan 13, 2020 10:52 pm
I have a considerable capital gain in VTSAX( in a taxable fund) and have just received new money to invest. I was told to put the new money into an S&P 500 fund. I do not plan to touch this money for 20 yrs or more.
There is no reason to use 500 index instead of adding the money to the total stock you already have.

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Re: VOO PLUS VTI

Post by 3funder » Tue Jan 14, 2020 9:40 am

Ferdinand2014 wrote:
Mon Jan 13, 2020 11:14 pm
VTSAX. Difference between the 2 is noise. One fund is easier.
+1

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hope25
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Re: VOO PLUS VTI

Post by hope25 » Tue Jan 14, 2020 12:05 pm

I thank everyone for their unanimous and supportive replies.

To answer some of your questions:

A Vanguard personal advisor, a few years ago, suggested that I add an S&P 500 index to VTSAX in my portfolio. I did not do that, not because I had any real knowledge, but because I thought it did not make sense ( however, I make" sense"of investing), though I did keep the thought in mind.
More recently, a relative, who adamantly feels that it is better to have large cap US stocks than anything else, brought up the issue again.
Thus, I wondered if it DID make sense to tilt to large caps.

I apologize for my doubts. Obviously, I do not have educated convictions, but I am not sure the people who advised me do either, though I tend to listen to, and try to explore, their comments. Hence, I inquired of the forum, who are much more astute than any of the people I have met as advisors.

My tax bracket is 22%

Thanks, Livesoft, for the clarifications. I appreciate them and the goad to think more. I have decided to stay with VTI/VTSAX. Simpler for me, just to walk down one road..

Sincerely,

HC

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Re: VOO PLUS VTI

Post by abuss368 » Tue Jan 14, 2020 1:14 pm

hope25 wrote:
Mon Jan 13, 2020 10:52 pm
HELLO,

Does it make sense to add an S&P 500 fund to a Total Stockmarket fund? Or just invest in one?

I have a considerable capital gain in VTSAX( in a taxable fund) and have just received new money to invest. I was told to put the new money into an S&P 500 fund. I do not plan to touch this money for 20 yrs or more.

Thanks for all replies.

HC
Not much difference in terms of performance. Either is an excellent choice. I would simply take a little more diversification and invest in Total Stock.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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Re: VOO PLUS VTI

Post by ruralavalon » Tue Jan 14, 2020 1:19 pm

hope25 wrote:
Mon Jan 13, 2020 10:52 pm
HELLO,

Does it make sense to add an S&P 500 fund to a Total Stockmarket fund? Or just invest in one?

I have a considerable capital gain in VTSAX( in a taxable fund) and have just received new money to invest. I was told to put the new money into an S&P 500 fund. I do not plan to touch this money for 20 yrs or more.

Thanks for all replies.

HC
Use just one. There is no need to be more complex.

Vanguard Total Stock Market ETF (VTI) ER 0.03% is a little more diversified, so I suggest that instead of Vanguard S&P 500 ETF (VOO).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: VOO PLUS VTI

Post by 3-20Characters » Tue Jan 14, 2020 1:21 pm

hope25 wrote:
Tue Jan 14, 2020 12:05 pm


To answer some of your questions:

A Vanguard personal advisor, a few years ago, suggested that I add an S&P 500 index to VTSAX in my portfolio.
Am I the only one who finds this surprising? OP, is it possible that you misunderstood?

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Re: VOO PLUS VTI

Post by saver1 » Tue Jan 14, 2020 1:27 pm

Go with VTSAX... There isn't much difference between the two.

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Re: VOO PLUS VTI

Post by abuss368 » Tue Jan 14, 2020 1:28 pm

I am surprised to hear Vanguard recommended both. Especially considering they recommend the four total market index funds.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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hope25
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Re: VOO PLUS VTI

Post by hope25 » Tue Jan 14, 2020 2:37 pm

YES,I was surprised the the VG ADVISOR recommended to add the S&P 500 fund. It was a small amount, and that made the suggestion even more confusing.

Thank you for your responses.

HC

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Re: VOO PLUS VTI

Post by retiredjg » Tue Jan 14, 2020 4:41 pm

3-20Characters wrote:
Tue Jan 14, 2020 1:21 pm

A Vanguard personal advisor, a few years ago, suggested that I add an S&P 500 index to VTSAX in my portfolio.
Am I the only one who finds this surprising? OP, is it possible that you misunderstood?
We don't really know what account they were discussing or why such a suggestion should be made.

For example, if hope25 had money to invest in an IRA instead of taxable, I would suggest using a 500 index instead of total market just to avoid the possibility of wash sales. I know there are other ways to accomplish that, but the fewer things people need to remember, the fewer things will be overlooked.

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Re: VOO PLUS VTI

Post by abuss368 » Tue Jan 14, 2020 6:49 pm

hope25 wrote:
Tue Jan 14, 2020 2:37 pm
YES,I was surprised the the VG ADVISOR recommended to add the S&P 500 fund. It was a small amount, and that made the suggestion even more confusing.

Thank you for your responses.

HC
Well that is a head scratcher for sure. Go with Total Stock. Buy as much as you can until it hurts. Then buy even more. Years down the road you will be thankful you did.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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hope25
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Re: VOO PLUS VTI

Post by hope25 » Tue Jan 14, 2020 8:26 pm

I found the reason for the suggestion to buy the S&P fund. It was to balance VTMSX, a small cap tax managed fund in the taxable account.
At the time, I had a a few other funds ,but most $ was in VTSAX AND VTIAX.

Thank you for your comments and interest.

Sincerely,
HC

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Re: VOO PLUS VTI

Post by stan1 » Tue Jan 14, 2020 8:58 pm

hope25 wrote:
Tue Jan 14, 2020 8:26 pm
I found the reason for the suggestion to buy the S&P fund. It was to balance VTMSX, a small cap tax managed fund in the taxable account.
At the time, I had a a few other funds ,but most $ was in VTSAX AND VTIAX.

Thank you for your comments and interest.

Sincerely,
HC
Unless the holding in VTMSX is very large I wouldn't worry about it. The performance of Total Stock Market and Index 500 is almost identical over more than 25 years. I'd just use Total Stock Market.

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Re: VOO PLUS VTI

Post by abuss368 » Tue Jan 14, 2020 9:19 pm

stan1 wrote:
Tue Jan 14, 2020 8:58 pm
hope25 wrote:
Tue Jan 14, 2020 8:26 pm
I found the reason for the suggestion to buy the S&P fund. It was to balance VTMSX, a small cap tax managed fund in the taxable account.
At the time, I had a a few other funds ,but most $ was in VTSAX AND VTIAX.

Thank you for your comments and interest.

Sincerely,
HC
Unless the holding in VTMSX is very large I wouldn't worry about it. The performance of Total Stock Market and Index 500 is almost identical over more than 25 years. I'd just use Total Stock Market.
I would agree.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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Re: VOO PLUS VTI

Post by PaulS » Wed Jan 15, 2020 3:21 am

I carry a big chunk of my taxable account in VOO and also I Have VTI. As per my research both VOO and VTI have same ER of .03%.
VOO has monthly dividend distribution but VOO has QDI of 97%.
My plan is to hold both VOO and VTI for long term in Taxable account. My thought process is only difference is between VOO and VTI is that VOO has more risk than VTI and so in return VOO has higher yield than VTI. Correct me if I am wrong to hold VOO in taxable account for long term

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Re: VOO PLUS VTI

Post by ruralavalon » Wed Jan 15, 2020 10:47 am

PaulS wrote:
Wed Jan 15, 2020 3:21 am
I carry a big chunk of my taxable account in VOO and also I Have VTI. As per my research both VOO and VTI have same ER of .03%.
VOO has monthly dividend distribution but VOO has QDI of 97%.
My plan is to hold both VOO and VTI for long term in Taxable account. My thought process is only difference is between VOO and VTI is that VOO has more risk than VTI and so in return VOO has higher yield than VTI. Correct me if I am wrong to hold VOO in taxable account for long term
Both are fine for a taxable account. They have had almost identical performance.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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hope25
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Re: VOO PLUS VTI

Post by hope25 » Wed Jan 15, 2020 10:06 pm

DEAR PAULS,

You said that VOO has a monthly dividend distribution: "...VOO has monthly dividend distribution but VOO has QDI of 97%..." Was that a typographical error?
E'Trade Specs on it, say it has a quarterly dividend.

Thanks.

HC

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Re: VOO PLUS VTI

Post by anon_investor » Wed Jan 15, 2020 10:16 pm

hope25 wrote:
Wed Jan 15, 2020 10:06 pm
DEAR PAULS,

You said that VOO has a monthly dividend distribution: "...VOO has monthly dividend distribution but VOO has QDI of 97%..." Was that a typographical error?
E'Trade Specs on it, say it has a quarterly dividend.

Thanks.

HC
VOO has a quarterly dividend distribution.
https://investor.vanguard.com/etf/profi ... utions/voo

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Re: VOO PLUS VTI

Post by PaulS » Thu Jan 16, 2020 6:08 am

I am sorry for the error. Yes VOO has quarterly distribution and not Monthly. Thank you for correcting it.

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Re: VOO PLUS VTI

Post by Wiggums » Thu Jan 16, 2020 6:11 am

Ferdinand2014 wrote:
Mon Jan 13, 2020 11:14 pm
VTSAX. Difference between the 2 is noise. One fund is easier.
+1

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Re: VOO PLUS VTI

Post by dhuser » Thu Jan 16, 2020 8:14 am

I hold both (well the mutual fund equivalents) but I do it because I have S&P 500 fund in my 401k offerings and then I hold Total Stock Market in my taxable for TLH considerations. That's about the only time it probably makes sense to have both as far as I know.

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Re: VOO PLUS VTI

Post by 3-20Characters » Thu Jan 16, 2020 8:39 am

dhuser wrote:
Thu Jan 16, 2020 8:14 am
I hold both (well the mutual fund equivalents) but I do it because I have S&P 500 fund in my 401k offerings and then I hold Total Stock Market in my taxable for TLH considerations. That's about the only time it probably makes sense to have both as far as I know.
I do something similar. I TLH-ed out of VTSAX into VFIAX in taxable but still hold VTSAX in tax deferred. I added a % Vanguard Extended Market Index Fund (VEXAX) in tax deferred in order to mirror total market over total portfolio but not sure that’s even necessary.

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Re: VOO PLUS VTI

Post by ruralavalon » Thu Jan 16, 2020 1:34 pm

dhuser wrote:
Thu Jan 16, 2020 8:14 am
I hold both (well the mutual fund equivalents) but I do it because I have S&P 500 fund in my 401k offerings and then I hold Total Stock Market in my taxable for TLH considerations. That's about the only time it probably makes sense to have both as far as I know.
It is very common that there is a S&P 500 fund, but no total stock market fund, offered in a 401k plan.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: VOO PLUS VTI

Post by abuss368 » Thu Jan 16, 2020 3:05 pm

Exactly. Many employer plans offer the S&P 500 and not Total Stock. I have that with my employer. I simply select that knowing it is recommended by Warren Buffett and that it will make practically no difference over the long term.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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Re: VOO PLUS VTI

Post by deltaneutral83 » Thu Jan 16, 2020 3:18 pm

I guess if you were handed a huge windfall and it was going in a taxable I can see finding a similar alternative in case the market tanks 20% in the near future to TLH. I guess most don't have large amounts at one time so they just add it to whatever they currently have and don't worry about TLH.

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hope25
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Re: VOO PLUS VTI

Post by hope25 » Fri Jan 24, 2020 11:39 pm

Thank you for your comments and suggestions. There is a lot to think about always.

Sincerely,

HC

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Re: VOO PLUS VTI

Post by gold99xx » Sat Jan 25, 2020 10:35 am

I have both ( SP500 and Total US both VG ) in taxable and IRA. It is a cross-over but as I sell off my individual stocks and redeploy to those index funds, it makes me feel better about giving up the individual positions...If that is what it takes, that's fine for me. The goal is to sell all individual positions and hold only index funds.

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Re: VOO PLUS VTI

Post by nisiprius » Sat Jan 25, 2020 10:53 am

A mixture of S&P 500 and Total Stock is, as others have said, harmless but puzzling. Most of the people who want to depart from Total Stock want a tilt toward small stocks, not large; and even if you wanted to tilt toward large-caps, the difference between them isn't enough to move the needle detectably.

The most plausible reason I can think of--but surely it wouldn't apply to a Vanguard advisor?--is that the person giving you advice was being careless. Perhaps you are talking to someone who isn't too familiar with Vanguard index funds and isn't quite sure what the Vanguard Total Stock Market Index Fund is; or wasn't listening carefully and just said "S&P 500 index fund" mechanically without thinking. As in "I don't really know about other index funds, and I know that S&P 500 index funds are good and that they are a safe recommendation."
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Re: VOO PLUS VTI

Post by Pikel » Sat Jan 25, 2020 12:16 pm

I have a lot in taxable, early on I decided on S&P 500, so I'm sticking with it.

If I have the opportunity to tax loss harvest I will move funds into VTI.

Someone else may be able to chime in, but it you have VTI and VOO in taxable, and want to tax loss harvest both isn't that difficult from a tax perspective - how to avoid it being considered a wash sale?

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Re: VOO PLUS VTI

Post by pkcrafter » Sat Jan 25, 2020 1:30 pm

hope, total stock market is about as tax-efficient as you can get, but here are a few additional ideas.

https://www.thebalance.com/best-vanguar ... ts-4121221

https://www.bogleheads.org/wiki/Tax-eff ... _placement


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Re: VOO PLUS VTI

Post by Rowan Oak » Sat Jan 25, 2020 10:17 pm

Pikel wrote:
Sat Jan 25, 2020 12:16 pm
I have a lot in taxable, early on I decided on S&P 500, so I'm sticking with it.

If I have the opportunity to tax loss harvest I will move funds into VTI.

Someone else may be able to chime in, but it you have VTI and VOO in taxable, and want to tax loss harvest both isn't that difficult from a tax perspective - how to avoid it being considered a wash sale?
You could tax loss harvest both and put money in Vanguard Large-Cap ETF (VV).

https://investor.vanguard.com/etf/profile/VV
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Re: VOO PLUS VTI

Post by Lafder » Sat Jan 25, 2020 10:37 pm

To be clear on why people are saying it doesn't really matter if you go with an SP 500 or total stock market index:

The total stock market index (VG) is made up of

81% Large cap = SP 500
4% Mid Cap (Still very giant companies)
15% Small Cap (Also surprisingly large recognizable companies)

An SP 500 fund is the biggest of the big companies.

A total stock market index at VG is 81% large cap/SP 500.

Here is my reference https://www.bogleheads.org/wiki/Approxi ... ock_market

lafder

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Re: VOO PLUS VTI

Post by MotoTrojan » Sat Jan 25, 2020 11:47 pm

hope25 wrote:
Tue Jan 14, 2020 2:37 pm
YES,I was surprised the the VG ADVISOR recommended to add the S&P 500 fund. It was a small amount, and that made the suggestion even more confusing.

Thank you for your responses.

HC
Sometimes advisors will try to complicate portfolios without causing tracking error from a simple/basic portfolio to make you feel like you need their help, without causing you to underperform the market and leave. Sad to see Vanguard potentially stooping to this level. I’ve seen them do it in PAS bond suggestions too, putting people in short, intermediate, and long bonds.

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Re: VOO PLUS VTI

Post by MotoTrojan » Sat Jan 25, 2020 11:48 pm

Rowan Oak wrote:
Sat Jan 25, 2020 10:17 pm
Pikel wrote:
Sat Jan 25, 2020 12:16 pm
I have a lot in taxable, early on I decided on S&P 500, so I'm sticking with it.

If I have the opportunity to tax loss harvest I will move funds into VTI.

Someone else may be able to chime in, but it you have VTI and VOO in taxable, and want to tax loss harvest both isn't that difficult from a tax perspective - how to avoid it being considered a wash sale?
You could tax loss harvest both and put money in Vanguard Large-Cap ETF (VV).

https://investor.vanguard.com/etf/profile/VV
Or ITOT which follows a different index than VTI.

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Re: VOO PLUS VTI

Post by Bernard » Sat Jan 25, 2020 11:50 pm

When Warren Buffet made that now famous bet, he chose VOO. I hold VTI, VOO (about equally) and VGT. I don't see any problem in having VTI and VOO.

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Re: VOO PLUS VTI

Post by Bernard » Sat Jan 25, 2020 11:50 pm

When Warren Buffet made that now famous bet, he chose VOO. I hold VTI, VOO (about equally) and VGT. I don't see any problem in having VTI and VOO.

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Re: VOO PLUS VTI

Post by tripelkonzert » Sun Jan 26, 2020 7:00 am

First off: Comparison table:

https://etfdb.com/tool/etf-comparison/VOO-VTI/

The performance of these two vehicles will be very similar, but the SP500 version is exclusively allocated to large cap. If you consider the mechanic of a market cap weighted index (the larger the company, the larger the allocation to this company in the portfolio) you realize why the difference is so small. Less than 10% of VTI is allocated to small/micro companies. By holding VOO in addition to VTI you just allocate even more to large cap.

https://screener.fidelity.com/ftgw/etf/ ... ymbols=VTI

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