Making the Best Investment Options with VTI and VOO
When it comes to retirement planning, there are many investment options to consider. Two of these options are VTI (Vanguard Total Stock Market Index ETF) and VOO (Vanguard S&P 500 EFT). There's nothing saying you can invest into one or the other, but the question is which one is more beneficial? This article will explain the differences between these two ETFs and how they can be used to help you make the best decisions for your retirement.
VTI is a market weighted bundle of every publicly traded stock in the US, while VOO is a cap-weighted index that follows the S&P 500. Both ETFs are comprised of stocks from the same 500 companies, but VTI has a broader range of holdings than VOO. VTI provides investors with a diversified portfolio of stocks from small and mid-cap companies, while VOO is more concentrated on the large-cap companies in the S&P 500.
However, Vanguard Total Stock Market ETF (VTI - Get Rating) comes to the rescue by providing cost-effective diversification to protect investors from market volatility and ensure the safety of their nest egg. It's important to note that VTI is not just a US stock ETF; it also includes international stocks and bonds. This means that it offers a wide range of diversification, which is important for investors who are looking to diversify their retirement portfolio.
So let me make sure I understand this. VTI is a market weighted bundle of every publicly traded stock in the US. Growth stocks have been the focus of VTI, which provides investors with exposure to the larger and more established companies in the US. On the other hand, VOO is more focused on the more established companies in the S&P 500.
When it comes to returns, VTI has outperformed VOO in the long run. In fact, over the past 5 years, VTI has returned an average annualized return of 8.9%, while VOO has returned 7.4%. This means that VTI has provided investors with higher returns than VOO over the past 5 years.
AIEQ takes concentrated bets on the U.S. stock market, and has only 114 securities in its portfolio versus VTI's nearly 4,000 holdings. Of these 4,000 holdings, over half of them are international stocks, which provides investors with greater diversification. This diversification can help to reduce risk and create a more balanced portfolio.
Another advantage of investing in VTI is that it is not subject to the same taxes that other ETFs can be subject to. This is because as a U.S. listed ETF, VTI is not subject to the IRS's 15% foreign withholding tax on dividends if held in an RRSP. VTI charges a low expense ratio of 0.03% and has a relatively high yield of 1.86%.
On the other hand, the Vanguard Total Stock Market ETF (AMEX:VTI) will earn only 5.7% annually, with the same 90% probability that the actual return will be within a range of -2.9% and 13.4%. This lower return may be attractive to investors who are risk-averse and want to ensure that their money is safe.
The Vanguard Total Stock Market ETF (AMEX:VTI) seeks to track the performance of the CRSP US Total Market Index, which is a cap-weighted index that measures the performance of the entire US stock market. This means that VTI is composed of stocks from both the large and small-cap companies in the US.
Finally, when it comes to the best retirement options, two of the top choices for future retirees to consider are the Vanguard Total Stock Market ETF (VTI -0.09%) or the Vanguard S&P 500 ETF (VOO -0.12%). Both ETFs provide investors with a diverse portfolio of stocks and bonds, and both have low expenses and high yields.