You don’t need $10,000 to invest at Vanguard

VTSAX – What is that?

VTSAX is a common term heard around the Financial Independence community. It is an index fund called the Vanguard Total Stock Market Index Fund Admiral Shares and many believe it is the best index fund to own. I have to agree.

Per Vanguard’s site “since 1992, Vanguard Total Stock Market Index Fund is designed to provide investors with exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks.” It holds over 3,000 stocks.   Yes, you read that right it has over 3,000 stocks.  It is one of the most diversified index funds out there.

What are index funds? Why index funds?

In short, an index fund per Vanguard’s website:  “Instead of hiring fund managers to actively select which stocks or bonds the fund will hold, an index fund buys all (or a representative sample) of the securities in a specific index, like the S&P 500 Index.

The goal of an index fund is to track the performance of a specific market benchmark as closely as possible. That’s why you may hear it referred to as a “passively managed” fund.”

Why index funds? This is a great question and it all comes down to cost and being diverse.   Here is a simple explanation from Vanguard’s site.

“Why do costs matter?

Investment costs might not seem like a big deal, but they add up, compounding along with your investment returns. In other words, you don’t just lose the tiny amount of fees you pay—you also lose all the growth that money might have had for years into the future.”

This can become another post entirely and so many bloggers and authors have gone over this topic.

How do I invest into VTSAX?

I just want to make the point that you don’t need $10,000 to start. You will hear or read that you need $10,000 to start investing in VTSAX because it is what is called  “admiral funds”.

Wait… What?!  I don’t have $10,000!

So, you want to start investing at Vanguard but don’t have $10,000? Don’t fret!  You can still invest at Vanguard for less.

Here are your options:

1. VTI is the equivalent of VTSAX as an ETF or Exchange Traded Fund.  You just have to purchase the whole share which is $145 per share, as I write this post.  You can’t purchase partial shares.  When you reach $3000 sell them and switch to VTSMX or when you reach $10,000 sell them and switch to VTSAX or leave them in VTI.  The choice is up to you.

2. VTSMX is the equivalent of VTSAX in the basic share.  You need a min of $3,000 to invest in this fund.  As soon as your account reaches $10,000 Vanguard gives you the option to convert right to VTSAX.  No cost to you.  It is a click on a link to switch.  So easy!

What does this cost?

The cost to start investing is free.  Vanguard does not charge you for opening an account or for purchasing or even selling Vanguard funds.  The cost is in the funds and that is why I like low cost funds.  Per their website “We’ll waive the $20 annual account service fee if you register for online access and sign up for electronic delivery of account documents.” Easy!

Get started today

Note: I’m not an affiliate.   I just like the company.

How to purchase an ETF?

1. First, you need to transfer money into your Vanguard Federal Money Market Fund.
2. Go to your account and select purchase Buy Sell link and a drop down will appear.
3. Click on Trade Vanguard ETFs and Non-Vanguard ETFs
4. Then search for VTI.
5. You can only purchase whole shares in an ETF.  So if it is $100, you will need $100.
6. Select Market (that is the current market price.)
7. Submit

Wait?!   What about other companies? Why Vanguard?

You can still invest in Fidelity and Schwab.  I have no biased against them.  In fact, I like both of them too since they both are very good competitors to Vanguard.  Do they have an index fund and ETFs like Vanguard?   Yes, they do.   In fact, Schwab Total stock index fund cost less then Vanguard which is something to look at.

I like Vanguard the most at this point in time and my reasons are:

1.  WE the investors are the owners of Vanguard.

2. I’m fond of the founding principals of Vanguard and how it started.

3. They have done low cost fees for years and I truly believe they will continue.   

Invest Today!

I hope this post helps you to go out and invest.  Don’t be scared and just do it!  I know I was scared to jump in and I have made some mistakes over the years and the biggest mistake is not doing it.   In my opinion, this is the best method and has worked really well for us.

For more details I highly recommend reading:

The Simple Path to Wealth by JL Collins – Stock Series

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits) Hardcover by John C. Bogle

The Bogleheads’ Guide to Retirement Planning by Taylor Larimore,‎ Mel Lindauer,‎ Richard A. Ferri,‎ Laura F. Dogu

The Bogleheads’ Guide to Investing by Taylor Larimore,‎ Mel Lindauer,‎ and Michael LeBoeuf

Keep saving!


Disclaimer: This is my opinion.  I’m not a financial advisor or tax advisor so please ask your advisor.  Take this advice at your own risk.

10 thoughts on “You don’t need $10,000 to invest at Vanguard

  • JD

    This was so helpful!! Thank you! I just recently opened my Roth IRA with Vanguard and had 400 just sitting in my money market account. So glad I came across your article!

  • Steven

    My question, and this will sound really basic…how do I go about investing in VTSMX or VTSAX? On the Vanguard website I see where to “open an account”…. Do I open a Roth, Traditional IRA, etc to THEN invest in VTSMX (and later VTSAX)? Do I open a “general savings” account to then invest?

    I have read Simple Path to Wealth a while back, but have since misplaced the book.. :/ I’m sure the answers were in there.

    • holly

      Hi Steven,

      Thanks for stopping by! Great question!

      You are correct you need to open a particular type of account.
      That can be a Roth IRA, Traditional IRA, or Taxable Brokerage account BEFORE you can invest. I highly suggest confirming with a tax accountant/CPA on which one that meets your needs.

      This is the best front page to Vanguard.
      Click on Need Help deciding and the website can help you.

      After you open the account you will need to transfer money into the money market account located in the account. After the money is transferred in then you can purchase any fund you want.

      Like my previous comments and in the post, ETFs can only be purchased whole shares in an ETF.


    • holly

      Hi Angela! Thank you for stopping by.
      I’ll create a post on how to purchase ETFs and more about them. Here is a quick summary. ETF is not a mutual fund so to purchase it is different then VTSAX.
      1. First you need to transfer money into your Vanguard Federal Money Market Fund.
      2. Go to your account and select purchase Buy Sell link and a drop down will appear.
      3. Click on Trade Vanguard ETFs and Non-Vanguard ETFs
      4. Then search for VTI.
      5. You can only purchase whole shares in an ETF. Currently, it is above $145 so you need at least what the market value is at the time you purchase.
      6. Select Market (that is the current market price.)
      7. Submit

      I just made a purchase just now. I hope that answers your questions.

    • holly

      Thanks for stopping by and leaving a comment. Congratulations! That is fantastic. Maxing out is the way to go.

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