One of the most common questions at the investment firm I worked for was about VTSAX vs VTI. Both track the U.S. total market index and seem nearly identical at first glance.
The main difference is structure. VTSAX is a mutual fund, while VTI is an exchange-traded fund. This insignificant difference impacts expense ratios, trading flexibility, tax efficiency, and minimum investment.
Both are low-cost index funds that cover the full stock market and are ideal for investors avoiding individual stocks and building long-term portfolios. If you’re in the FIRE community or investing in a taxable account, small details like capital gains and tax loss harvesting can significantly impact you.
This guide explains exactly how I used to explain VTI and VTSAX to the clients I supported so that you can choose the right one for your goals. I had this conversation with dozens of clients each month, especially those just starting out or getting serious about FIRE.
Table of Contents
VTSAX vs VTI – Side-by-Side Comparison
Both funds track the same index, but they’re built differently. Here’s a quick breakdown to help you decide:
When clients at the investment firm I worked for called and asked about VTSAX vs VTI, it was usually because the funds seemed identical, but they weren’t sure which made more sense for their situation.
My answer was simple: it depends on how you like to invest.
If you want to automate and forget about it, VTSAX is great. If you’re starting with less or want real-time control, VTI may be the better fit. The key is choosing based on your style, not which one is “better.”
So, what are the real differences?
Keep reading to see the breakdown that can help you decide.
What Is VTSAX?
VTSAX mutual fund gives you broad exposure to the entire U.S. stock market. It was launched in 2000 and includes small-, mid-, and large-cap equities, averaging 8.20% annual returns since inception.
It requires a $3,000 minimum investment and has a low 0.04% expense ratio—far below the 0.75% average of similar funds. Vanguard’s index fund approach keeps fees down, which makes it appealing for investors focused on long-term growth and tax efficiency.
Many clients I worked with preferred VTSAX because of its “set it and forget it” structure. One client even called it their “sleep-well-at-night” fund. Once they set up recurring investments, they didn’t have to think about it again, and for a lot of people, that’s priceless.
Pros
- Passively managed: VTSAX doesn’t try to beat the market but instead mimics its returns. This helps with the low expense ratios, keeping more money in your pocket.
- Well-diversified: VTSAX invests in all market caps, so you don’t have to choose between small, mid, or large-cap stocks; you get them all with this fund.
- Additional investments allowed: After meeting the initial $3,000 investment requirement, you can continue investing in increments as low as $1.
Cons
- Large minimum investment: You can’t invest in VTSAX until you have $3,000 to invest. This makes it challenging or risky for new investors and is a much higher minimum investment than VTI.
- Only domestic funds: VTSAX only invests in domestic funds. No international funds are included in the fund.
- Won’t outperform the market: VTSAX was built to track the market, not beat it.
Top Portfolio Holdings
| Company | Ticker |
| Apple Inc. | AAPL |
| Microsoft Corp. | MSFT |
| NVIDIA Corp. | NVDA |
| Amazon.com Inc. | AMZN |
| Facebook Inc. Class A | META |
| Berkshire Hathaway Inc. Class B | BRK.B |
| Alphabet Inc. Class A | GOOGL |
| Broadcom Inc. | AVGO |
| Alphabet Inc. Class C | GOOG |
| Tesla Inc. | TSLA |
Historical Performance
VTSAX has had stable returns since its inception despite the economy’s rocky road during the 2000 dot.com crash, housing recession, and, most recently, the 2020 crisis. Its 10-year return is 11.74%, the 5-year return is 18.08%, and the current year-to-date return is -10.37%, reflecting recent market volatility but still strong for long-term index investing.
What Is VTI?
The Vanguard Total Stock Market ETF is the exchange-traded fund version of VTSAX. It launched in 2001 and also tracks the US total market index using a passive strategy. Since its inception, VTI has averaged 8.57% annual returns.
With a lower expense ratio of 0.03% and no large minimum to start, it’s a great entry point for newer investors or those who want flexibility.
Some of my more hands-on clients liked VTI because it felt more active. They could trade during the day, monitor prices in real time, and still stay invested in the entire market.
Pros
- Low expense ratio: VTI has a slightly lower expense ratio of 0.03% than the VTSAX expense ratio because it is an exchange-traded fund.
- Tracks the entire market: VIT is a diversified portfolio that comprises all the market’s stocks from small to large.
- Low minimum initial investment: Only requires a $1 minimum initial investment or the equivalent of one share.
Cons
- It tracks but doesn’t beat the market: VTI isn’t an aggressively traded fund, so it will only mimic the market’s returns, not beat them.
- A lot of weight in top ten stocks: Most of the fund’s weight is in the top ten stocks, skewing the investment funds slightly.
- Must wait for funds to settle to reinvest: You can’t reinvest settled funds on the same day; you must wait two days after order execution.
Top Portfolio Holdings
| Company | Ticker |
| Apple Inc. | AAPL |
| Microsoft Corp. | MSFT |
| NVIDIA Corp. | NVDA |
| AMZN | Amazon.com Inc. |
| META | Facebook Inc. Class A |
| BRK.B | Berkshire Hathaway Inc. Class B |
| GOOGL | Alphabet Inc. Class A |
| AVGO | Broadcom Inc. |
| GOOG | Alphabet Inc. Class C |
| TSLA | Tesla Inc. |
Historical Performance
VTI has also had stable returns since its inception. VTI has average returns of 8.57% and a 10-year average of 11.74%. Its most recent 1-year return was 7.10%, and its current YTD is -10.40%.
VTSAX vs VTI – Key Differences
With a basic understanding of how the funds work, let’s look at the difference between Vanguard VTI and VTSAX.
Investment Type
The largest difference between VTI and VTSAX is that VTI is an ETF, while VTSAX is a mutual fund. VTI shares trade like stocks throughout market hours, reflecting real-time prices. VTSAX only executes trades at the end of the trading day, based on its net asset value (NAV). That means all buy and sell orders settle at the same closing price, regardless of when the order was placed during the day.
Expense Ratio
When comparing the VTI vs VTSAX expense ratio, the difference is negligible. VTI has a 0.03% expense ratio, while VTSAX is 0.04%. Both investment funds are well below the 0.75% average expense ratio for similar mutual funds and ETFs.
Tax Efficiency
Tax efficiency is just as important as returns. High tax liabilities can reduce your earnings and affect your retirement income over time.
ETFs like VTI are typically more tax-efficient because they use a structure that avoids triggering capital gains when shares are traded. Instead of selling securities, shares are exchanged between participants, which limits taxable events.
Mutual funds like VTSAX usually create and redeem shares directly, which can generate capital gains. However, Vanguard’s unique share class structure helps offset this by moving assets through the ETF version using a process often called a “heartbeat” trade.
While VTI still has a slight advantage in tax efficiency, both funds are structured with tax-conscious investors in mind. Many people choose one or the other based on their account type and long-term goals.
Minimum Investment
The minimum investment is another key difference between Vanguard VTI and VTSAX. As an ETF, VTI allows investors to start with as little as $1 and buy fractional shares. In contrast, the VTSAX requires a $3,000 minimum investment. After that, you can add smaller amounts, but the upfront cost is higher.
Real-Time Pricing
Again, because VTI is an ETF, it has real-time pricing, trading during the regular trading day. VTSAX, as a mutual fund, doesn’t have real-time pricing. Traders get the end-of-the-day price or the NAV. VTI is best for active traders who want to trade often, whereas VTSAX usually makes a good passive or hands-off investment for long-term investors. Some of my clients felt the urge to “do something” with their portfolio – VTI gave them that flexibility without derailing their long-term strategy.
Automatic Investments and Withdrawals
Mutual funds, like VTSAX, often allow automatic investments and withdrawals because you can hold fractional shares.
However, ETFs require manual investments and withdrawals because the price always changes throughout the day, and you cannot hold fractional shares (except at some brokers).
Liquidity
The liquidity of VTSAX vs VTI is somewhat similar, but the price you get when you place the order and the funds settle depends on the type of investment.
VTI provides real-time pricing, so you know the exact price you’ll get when you settle.
VTSAX, on the other hand, doesn’t settle until the end of the day, so your settled price is yet to be determined.
Investing Style
Your investing style plays a vital role in choosing between VTI vs VTSAX. VTI is a better choice if you’re an active investor who often trades. However, if you want something more passive that you could invest and forget, VTSAX is the better choice.
I’ve seen people start with ETFs, thinking they’d stay active, but they often wish they had just gone with VTSAX for its simplicity.
Transparency
ETFs, as a whole, are more transparent than mutual funds. Anyone can find information on ETFs, including VTI. Mutual funds only provide information quarterly, often with a 30-day lag.
VTSAX vs VTI – Similarities
As different as VTI and VTSAX are, they have some similarities, too.
Index Tracking
Both funds track all domestic funds, including small-, mid-, and large-cap stocks. They aren’t in it to beat the market. Instead, they track the market, providing similar returns with automatic diversification.
Volatility
VTI and VTSAX are highly volatile because they invest in the entire stock market. As you’ve likely seen, the stock market can be highly volatile, but if you’re in it long-term, you can ride out the volatility and see high annual returns.
Diversification
Both VTSAX and VTI are highly diversified for you. Once you invest in one of the funds, you’re invested in all domestic funds without diversifying.
Why Do Investors Choose One Over The Other?
From what I saw working with clients, the choice between VTSAX and VTI really came down to their investing style.
VTI was often the go-to for beginners – it’s accessible, trades in real time, and doesn’t require much to get started. A lot of the younger investors I worked with loved that flexibility early on. They felt like they were in control and could dip their toes in without a huge commitment.
But here’s the interesting part: once they hit the $3,000 mark, many of them ended up switching to VTSAX.
Why?
Because they realized they didn’t want to monitor prices or place trades manually. They wanted to automate their contributions, simplify everything, and just let the market work over time. VTSAX gave them that peace of mind.
It wasn’t about which fund was “better” but which matched where they were in their journey.
Where To Find VTSAX and VTI
While you can find VTSAX and VTI at brokers besides Vanguard, you’ll likely pay more fees, reducing your earnings. Your best bet is to purchase these funds through Vanguard to keep your expenses minimal.
Converting From VTI to VTSAX
If you have an eye on the passive nature of VTSAX but don’t have the $3,000 required investment, you can first invest in VTI. Once you have the $3,000 minimum investment, you can settle your VTI funds and purchase VTSAX funds. I’ve helped clients walk through this exact process, and it’s usually much smoother than they expected.
Can I Transfer VTSAX to VTI?
Yes, you can transfer VTSAX to VTI by calling Vanguard. This method avoids creating a taxable event, making it more tax-efficient. If you sell VTSAX manually and then buy VTI, you may trigger capital gains taxes in a taxable account.
FAQs
Are VTSAX and VTI The Same?
VTSAX and VTI are both total market index funds. VTSAX is a mutual fund, while VTI is an ETF. They offer similar exposure but differ in minimum investment and trading. VTI trades during market hours at real-time prices, while VTSAX settles once daily based on net asset value.
Which Is Better, VTI or VTSAX?
When comparing VTI vs VTSAX, one isn’t necessarily better. It depends on your investment preferences. VTSAX, a mutual fund, requires a $3,000 minimum investment and supports passive investing. VTI, an ETF, requires only $1 and offers real-time trading. The better option depends on your strategy and how hands-on you want to be.
Is It Easier to Invest in VTSAX or VTI?
VTSAX and VTI are easy to invest in; however, the minimum investment requirement may be a barrier to some. VTSAX requires a $3,000 investment, which may limit the opportunity for some investors.
Why Do People Love VTSAX?
VTSAX is popular because it automatically diversifies your money across over 3,000 stocks with a single investment. Many investors prefer it as a passive investment option. You can buy VTSAX and hold it for years, making it a simple way to work toward long-term retirement goals.
Is VTSAX Enough?
VTSAX can be enough, depending on your investment strategy. It’s a well-diversified and, in my experience, a strong option. For most clients I worked with, it met about 95% of their goals. If needed, we’d layer in international exposure later.
Is VTSAX A Good Retirement Fund?
VTSAX has a 10.47% 10-year average return, making it a good option for a retirement fund. Since the key to retirement is diversifying your investments, VTSAX does the work for you, making it a great option to capture the total stock market.
Is VTSAX Good For Beginners?
VTSAX is good when you begin investing if you have at least $3,000 to invest. Because it’s passively managed, you can set it and forget it. When someone had the full $3,000 ready, VTSAX was always my first suggestion. But when they didn’t? VTI was a great on-ramp.
Is VTSAX Good For a Roth IRA?
VTSAX is suitable for traditional and Roth IRAs. Even though Roth IRAs are already tax-efficient, VTSAX offers diversification needed for retirement funds.
Does VTI or VTSAX Have Better Returns?
The VTI vs VTSAX returns are pretty similar, with VTI funds having a 10.46% 10-year return and VTSAX having a 10.47% 10-year return.
Is There a Penalty For Withdrawing From VTSAX or VTI?
There is no penalty for withdrawing from VTSAX or VTI. They are investment options, not the actual type of investment account. However, you may pay capital gains taxes if you realize a profit from the sale of either investment.
Does Owning Both VTSAX and VTI Make Sense?
It usually doesn’t make sense to own both VTSAX and VTI since they are nearly identical investments, mimic the same market, and have similar investments. Instead, decide which investment style you prefer, ETF or mutual fund, and which is more affordable.
Does One Offer More Growth Than The Other?
When comparing average returns over time, VTI and VTSAX are almost identical.
What Is Better, VTI or VTSAX?
Choosing between VTI and VTSAX can feel like a big decision, especially when you’re just getting serious about investing or working toward FIRE. But honestly? You can’t go wrong with either. They both offer broad diversification, low fees, and long-term growth potential.
What I saw over and over again with clients was this: it wasn’t about finding the “perfect” fund – it was about finding the one that made investing feel doable. For some, that meant starting small with VTI and enjoying the control of trading whenever they wanted. For others, especially those who didn’t want to think about it too much, VTSAX gave them the simplicity and automation they needed to stay consistent.
So, ask yourself: do you want to be more hands-on or hands-off? Your answer will probably lead you to the right choice.
If you’re ready to dive deeper into how investing can help you reach financial independence (and maybe even retire early), check out our full-guide to investing.
>> Want to see how investing could impact your retirement date? Check out our FIRE Calculator.
Samantha Hawrylack is a personal finance expert and full-time entrepreneur with a passion for writing and SEO. She holds a Bachelor’s in Finance and Master’s in Business Administration and previously worked for Vanguard, where she held Series 7 and 63 licenses. Her work has been featured in publications like Grow, MSN, CNBC, Ladders, Rocket Mortgage, Quicken Loans, Clever Girl Finance, Credit Donkey, Crediful, Investing Answers, Well Kept Wallet, AllCards, Mama and Money, and Concreit, among others. She writes in personal finance, real estate, credit, entrepreneurship, credit card, student loan, mortgage, personal loan, insurance, debt management, business, productivity, and career niches.
