I am looking to invest some savings and plan to use it when the kids get older. Kids are currently 4 - 7 - 10. I already have my 6 months of expenses, retirement, and college savings all funded. This money will be used for cars for the kids, misc college expenses, daughter's wedding, etc. I've been putting $50/week away for 2 years now, and it's just in a savings account. My thought is to move it to something with a better return. I use Vanguard for some of my other investments, so I was going to do the same with this one. A few days ago, I opened a Vanguard Star account and put 3000 in it to start this. Now, after a little more reading, I am having some second thoughts because of the tax implications. Would the VTSMX, total stock market index fund be a better fit?
Investment for 10-15 year savings
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JustCurious
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Yes.
steelyman
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I've owned both, and for quite a long time, and remain in them. I think they are both good funds with different goals.
One thing I find helpful when considering how to pick between two different investments is to visit Yahoo! Finance (finance.yahoo.com), enter the symbol for one of the funds in the little "Get quote" box that appears near the top left of the page, click on "Basic Chart" in the menu that appears on the left. Then, just above the chart itself, there is a box labeled "Compare XXX with". Enter the other fund symbol in that box, and you will get a comparison over a default period of time. You can adjust the time frame in various ways and get a feel how they have done head-to-head.
The two tickers you are interested in are VGSTX and VTSMX. As I said, I have them both, but for different reasons. It was interesting to see what happened as the market tanked a couple of years ago.
One thing I find helpful when considering how to pick between two different investments is to visit Yahoo! Finance (finance.yahoo.com), enter the symbol for one of the funds in the little "Get quote" box that appears near the top left of the page, click on "Basic Chart" in the menu that appears on the left. Then, just above the chart itself, there is a box labeled "Compare XXX with". Enter the other fund symbol in that box, and you will get a comparison over a default period of time. You can adjust the time frame in various ways and get a feel how they have done head-to-head.
The two tickers you are interested in are VGSTX and VTSMX. As I said, I have them both, but for different reasons. It was interesting to see what happened as the market tanked a couple of years ago.
steelyman
Moderator Emeritus
Also, remember that eventually there will be tax implications no matter what you do. While one investment may not declare as many capital gains and dividends on a yearly basis, eventually you will have to sell (if you want to actually use the money). And at that point, the one with the greatest unrealized gain will trigger the higher taxes. It seems to me that for the chance to have the higher overall gain, then Total Stock is probably the better choice (as mentioned by someone else), but for lower volatility, STAR is better, as a more balanced fund. It also has a lower cost of entry.
JustCurious
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Steelyman, she did not ask if STAR was a better fund, she asked if the total stock market was a better fit in a taxable account for tax reasons.
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