financial

Navigating the Vanguard Universe: VT, VTI, and VXUS—Which Is Right for You?

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In the realm of investing, the brand ‘Vanguard’ has become synonymous with low-cost, high-quality index funds. Their offerings like VT, VTI, and VXUS have gained almost cult-like followings among passive investors. Yet, despite the fame of these funds, they serve different investment goals, and understanding these distinctions can be pivotal in sculpting your portfolio.

The Funds Unpacked

Before diving into the pros and cons, let’s decode what these acronyms stand for.

  • VT: Vanguard Total World Stock ETF
  • VTI: Vanguard Total Stock Market ETF
  • VXUS: Vanguard Total International Stock ETF

What Do They Invest In?

  • VT: A one-stop-shop for global equity exposure. VT encapsulates the entire world’s stock markets, including the U.S. and international equities.
  • VTI: This ETF focuses on the U.S. stock market from large-cap to small-cap companies. Think of it as a snapshot of Wall Street.
  • VXUS: This fund is the international counterpart to VTI, offering exposure to all countries except the United States.

Risk and Return: Diversification Matters

  • VT: Since VT combines both U.S. and global markets, it’s like having a bit of VTI and VXUS in one package. It’s diversified but still subject to the whims of global economics.
  • VTI: U.S.-centric, which means it’s a little more volatile than a global mix but also reaps the benefits of a strong U.S. market.
  • VXUS: Risk and returns can vary based on global market conditions, but having international exposure can hedge against a downturn in the U.S. market.

Cost Considerations

All three funds are relatively cost-efficient, but there are slight variations in their expense ratios. At the time of this writing, VTI had an expense ratio of 0.03%, VXUS was at 0.07%, and VT was at 0.07%. While these differences may seem minor, they can add up in the long run, especially for larger portfolios.

Tax Efficiency

Tax laws can be labyrinthine, and I’m no tax advisor, but broadly speaking, all three funds are fairly tax-efficient due to their ETF structure. However, owning international stocks (as in VT and VXUS) can lead to foreign tax withholding, which might impact your returns.

Why Pick One Over the Other?

  • Simplicity: If you want to set it and forget it, VT offers a one-stop solution for global equity exposure.
  • Geographic Preference: If you have a bullish outlook on the U.S., VTI is your guy. If you’re looking to diversify away from Uncle Sam, say hello to VXUS.
  • Customization: Want to tailor your U.S. to international ratio? Combining VTI and VXUS gives you that flexibility.
  • Cost: If you’re a stickler for fees, VTI has the lowest expense ratio.

Conclusion

Your investment choice between VT, VTI, and VXUS should align with your risk tolerance, investment goals, and belief in the future performance of global vs. U.S. markets. While each fund offers its own set of advantages, the right choice for you might even be a blend of these options. As always, consult a financial advisor for personalized advice tailored to your unique financial situation.

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Tamatoa the Crab: What a Disney Character Can Teach Us About Fulfillment

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Tamatoa is a character from the Disney movie Moana. He is better known as the giant crab who lives in Lalotai, the realm of monsters. Tamatoa is known for his love of treasure and his massive collection of shiny objects. He sings a song called “Shiny” in which he boasts about his love for all things glittery and flashy.

Tamatoa’s love of shiny things can be seen as a metaphor for the human tendency to be attracted to external appearances and superficial qualities, rather than focusing on the more important aspects of life. Just as Tamatoa is obsessed with collecting shiny objects, many people become obsessed with accumulating material possessions, wealth, or social status, often at the expense of neglecting their relationships, personal growth, and inner fulfillment.

This emphasis on superficiality and external validation can lead to a sense of emptiness and dissatisfaction, as people realize that the things they thought would bring them happiness and fulfillment do not actually fulfill them. I myself am guilty of this phenomenon (damn you Amazon and Facebook for making it so easy!). Keeping up with the Jones’ is a very real problem that if left unchecked can really cause emotional and financial harm. In contrast, focusing on the more important aspects of life such as personal growth, relationships, and inner fulfillment can bring a deeper sense of satisfaction and contentment. And as a bonus, these things are often much cheaper financially and pay much larger dividends over the long term.

Furthermore, Tamatoa’s love of shiny objects can also be seen as a warning against becoming too attached to material possessions. Just as Tamatoa becomes so focused on his collection of shiny objects that he loses sight of everything else, people can become so attached to their possessions that they forget about the more important things in life. In fact, it is this attachment to shiny things that allow Moana and Maui to escape his grip

In summary, Tamatoa’s love of shiny things can remind us to focus on the more important aspects of life, such as personal growth, relationships, and inner fulfillment, and to avoid becoming too attached to material possessions.

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Building Wealth with Benjamin (Franklin that is)…

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Benjamin Franklin was not only a founding father of the United States, but he was also an accomplished author, inventor, and diplomat. He is also remembered for his financial acumen. In this article, we will draw on Franklin’s wisdom to provide practical tips for achieving financial success.

  1. Develop a frugal lifestyle

One of Franklin’s most famous sayings is, “A penny saved is a penny earned.” He was a firm believer in living a frugal lifestyle. This means avoiding wasteful spending and being mindful of where each dollar (or cent for that matter) goes. Living within your means, avoiding debt, and making smart spending decisions are paramount to financial success.

  1. Make a budget and stick to it

Another key to financial success is to create a budget, and more importantly, stick to it! A budget helps ensure you are living within your means; it can also help you identify areas where you can cut back on spending. Franklin was known for his meticulous record-keeping; he kept detailed records of his income and expenses. By doing the same, you can gain a better understanding of your finances and make informed decisions about your spending habits.

  1. Invest wisely

Franklin was a savvy investor, and he believed in the power of compound interest. He famously said, “Money makes money. And the money that money makes, makes money.” To achieve financial success, it is important to invest wisely, whether it is in stocks, real estate, or other assets. It is also important to start investing early, as the earlier you start, the more time your investments have to grow. Remember that, almost invariably, time in the market beats timing the market.

“If you would know the value of money, go and try to borrow some; for he that goes a borrowing, goes a sorrowing.” – Ben Franklin


  1. Pursue multiple streams of income

Franklin believed in the importance of pursuing multiple streams of income. He was an accomplished author, inventor, and diplomat, and he leveraged his talents to create a diverse portfolio of income streams. To achieve financial success, it is important to find ways to diversify your income, whether it is through a side hustle, freelance work, or passive income streams.

  1. Cultivate a growth mindset

Finally, Franklin believed in the power of a growth mindset. He was a lifelong learner, and he believed that anyone could achieve success if they were willing to put in the effort. Learn new skills, take risks, and persist in the face of challenges; the more skills and knowledge you have the better equipped you are to take advantage of opportunities.

Benjamin Franklin’s wisdom on financial success is still relevant today. By living a frugal lifestyle, making a budget, investing wisely, pursuing multiple streams of income, and cultivating a growth mindset, anyone can achieve financial success. The key is to be disciplined, patient, and willing to put in the effort to achieve your financial goals.

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