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

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.


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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Tax Loss Harvesting: A Strategy for Maximizing Your Investment Potential

Tax loss harvesting is an investment strategy that can help investors minimize their capital gains tax liability and ultimately achieve their financial goals more effectively. By understanding the concept of tax loss harvesting and implementing it in a strategic manner, investors can save thousands of dollars in taxes, allowing them to redirect those funds towards their long-term financial objectives.

Before we go any further you have to understand some basic concepts…

What is a capital loss? A capital loss occurs when you sell any asset (ie: stock, ETF, mutual fund, etc.) at a loss. In other words you read the tea leaves wrong, or the monkey threw the dart poorly, or whatever metaphor you want to use, and now you are paying the price.

What is a capital gain? A capital gain occurs when you sell an asset for a gain. In other words you buy something and it goes up in value. Don’t think for a minute that you get to keep all that gravy… Uncle Sam wants his share of the “gained” money. This is what a capital gains tax is! As Benny Franklin said, “there are two certainties in life: death and taxes.”

With that understanding we can discuss tax loss harvesting. At its core, tax loss harvesting involves selling an underperforming investment at a loss and using that loss to offset capital gains realized from other investments. This process can help to reduce an investor’s overall tax burden, as capital gains taxes are only applied to the net gains after accounting for the losses. In other words, tax loss harvesting allows investors to turn an unfortunate situation, such as a declining stock value, into a financial advantage.

Step-by-step explanation of how tax loss harvesting works:

  • Identify underperforming investments: Review your investment portfolio and pinpoint any assets that have experienced a decline in value. These losses may be eligible for tax loss harvesting.
  • Sell the underperforming investment: By selling the investment at a loss, you can now use that loss to offset capital gains realized from other investments, effectively reducing your overall tax burden.
  • Reinvest the proceeds: It is important to reinvest the proceeds from the sale of the underperforming investment into a similar, but not identical, asset. This is to avoid the “wash-sale rule,” which prevents investors from claiming a tax loss if they repurchase the same or a substantially similar investment within 30 days before or after the sale. By reinvesting the proceeds, you can maintain your desired asset allocation and continue to work towards your financial goals.
  • Report the loss on your tax return: When filing your taxes, you will need to report the capital loss from the sold investment. This loss can be used to offset capital gains from other investments, reducing your overall tax liability.

Let’s work through this in a hypothetical scenario…

Joe has a stock that he bought for $100. The stock plummets to 1 dollar representing a loss of $99 and his wife is pissed. He sells the stock taking it on the chin like a man. Fortunately, he bought another stock for $100 and the stock increased in value to $199. He sold that stock and netted a profit of $99 so his wife is not nearly as pissed now. He now has a net loss of $99 and a net gain of $99 meaning he owes NO taxes on the gains from the winning stock.

However, had he not sold the losing stock and instead only sold the winning stock he would owe capital gains on the $99 win. In a perfect world he would reinvest that one dollar on the losing stock into another stock and watch it ride the market back up (assuming he is good at picking stocks, which his wife is not so sure of yet). If he is not good at picking stocks, and most people are not, he should read our article on the wisdom of the Bogleheads.

Tax loss harvesting is what large corporations do to minimize their tax burdens for years potentially. This is why some companies have almost zero tax burden in some years because they are using losses from prior years to offset gains from current years. Donald Trump, love him or hate him, used this to his advantage very well.

Stamp Act and Taxation
Just a Little History Bomb on Taxation (Stamp Act of 1765)

If you had a particularly horrendous year in the stock market and your wife is now contemplating divorce, you can say, “hey babe, I can use some of these losses against our earned income taxes.” It may not keep her from divorcing you, but, hey, at least you tried. Please note that only $3000 per year of capital losses can be deducted against ordinary income. The nice thing is that remaining losses can be held over to the subsequent tax years in perpetuity.

It’s important to note that tax loss harvesting is most effective for investors with taxable investment accounts, as tax-advantaged accounts, such as 401(k)s and IRAs, have different tax treatment rules. Moreover, tax loss harvesting is subject to certain limitations, such as the annual $3,000 limit on net capital losses that can be deducted against ordinary income.

In conclusion, tax loss harvesting is a valuable strategy for investors seeking to minimize their capital gains tax liability and maximize their investment potential. By implementing tax loss harvesting in a thoughtful and strategic manner, investors can leverage their losses to achieve their long-term financial goals more effectively. As always, it is advisable to consult with a financial advisor or tax professional to ensure you are implementing this strategy in a manner that is compliant with tax regulations and aligned with your specific financial situation.

More Financial Advise to (Hopefully) Keep Your Wife Happy…

Building Wealth with Benjamin (Franklin that is)…

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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