Is VTSAX Good for Long-Term Investing?

Does investing feel overwhelming? You hear you’re supposed to do it, but the flood of options and scary jargon makes it feel impossible to start. You’re not alone; this confusion is a common roadblock that stops many people from taking the first step toward their financial goals.

In your search for a simpler way, you might have seen a name pop up on websites or in podcasts: VTSAX. It’s often mentioned as a powerful, single solution for getting started with investing, praised by everyone from legendary investors to everyday people on internet forums. But what is it, really?

This guide answers the big question: is VTSAX good for long-term investing? We’ll break down what this fund is and how it works in plain English—no confusing terms, just clear explanations to help you decide if it’s the right choice for you.

This one investment could be the key to overcoming hesitation and finally starting on the path toward building wealth with index funds. Let’s demystify the process and give you the confidence you need to begin.

What Exactly is VTSAX? The “All-You-Can-Eat Buffet” of Investing

That string of letters, VTSAX, can look intimidating. It’s not a secret code; it’s just a name for a very popular investment: the Vanguard Total Stock Market Index Fund. To see why so many people trust it, here’s what that means for your money, piece by piece.

Let’s start small. A single stock is just a tiny piece of ownership in a company. If you own a stock in Amazon, you own a sliver of its entire business. When Amazon does well, the value of your piece can go up. When it does poorly, it can go down.

Now, betting on just one company is risky. That’s why mutual funds were created. A mutual fund is like a big basket where thousands of people pool their money to buy stocks from many different companies at once. It’s like buying a whole pizza with various toppings instead of just one slice of pepperoni.

VTSAX is a special, low-cost type of mutual fund called an index fund. Instead of paying a manager to pick what they think are the “best” stocks, VTSAX simply aims to buy a tiny piece of every publicly traded company in the entire U.S. stock market—over 3,500 of them. Think of it as an all-you-can-eat buffet: you get a small taste of everything available.

So, when you invest in VTSAX, you aren’t just betting on Apple or Tesla. You’re making a broad bet on the success of the entire U.S. economy. This is a powerful concept, because owning a piece of everything is one of the most effective ways to manage risk over the long run.

Why Owning “Everything” Is Safer: The Power of Diversification

The biggest fear for many new investors is picking the “wrong” stock and watching their money disappear. What if the company you choose gets outcompeted or goes out of business? VTSAX is designed to sidestep this exact problem through a powerful concept called diversification.

This strategy is the ultimate form of not putting all your eggs in one basket. Instead of concentrating your money and your risk into one or even a dozen companies, VTSAX gives you instant diversification by spreading your investment across the entire U.S. stock market—over 3,500 different businesses in every industry imaginable.

For example, imagine one of those companies has a terrible year and its stock tumbles. If that was the only stock you owned, it would be a disaster. But inside VTSAX, that single failure is just a tiny ripple in a vast ocean. The thousands of other companies, many of which are doing just fine, help balance out the poor performer, minimizing its impact on your overall investment.

Ultimately, this broad market exposure means you aren’t relying on the success of a single player; you’re betting on the long-term growth of the U.S. economy as a whole. This dramatically reduces your risk compared to picking individual stocks. This built-in safety is only half of the story; just as important is how VTSAX helps you keep more of your own money.

The Hidden Fee Eating Your Returns: How Low Costs Boost Your Wealth

That incredible diversification comes with a cost, as every managed fund charges a fee for its services. This is called the expense ratio—a small percentage of your investment that’s automatically deducted each year to cover the fund’s operating costs. Think of it as a tiny annual maintenance fee.

This is where VTSAX truly shines and stands out from the crowd. While many actively managed funds charge 0.50% or even 1.00% per year, the VTSAX expense ratio is an incredibly low 0.04%. That difference might sound like splitting pennies, but over a lifetime of investing, those pennies turn into a mountain of money.

The problem with higher fees isn’t just the amount you pay today; it’s the future growth you lose forever. Every dollar taken for a fee is a dollar that can no longer work and compound for you. The difference this makes on a $10,000 investment over 30 years is staggering:

• High-Fee Fund (1.00%): Your investment could grow to roughly $57,400.

• VTSAX (0.04%): Your investment could grow to over $75,500.

By simply choosing the lower-cost fund, you could end up with an extra $18,000. This is the power of minimizing costs when building wealth with index funds. Keeping more of your returns is a critical advantage, but it’s only powerful if the fund is growing in the first place. So, what kind of growth can you actually expect?

What Kind of Growth Can You Expect? A Look at Long-Term Performance

So, the fees are low, but what about the actual growth? Historically, the U.S. stock market—which VTSAX tracks—has delivered an average return of around 10% per year over the long run. This isn’t a guarantee for any single year; it’s an average calculated over many decades. Some years will be much better, and some will be worse.

Investing in the stock market is never a smooth, straight line to the top. It’s more like a long hike up a big mountain, full of smaller hills and valleys. The journey is bumpy, and seeing your account value drop can be unnerving. This up-and-down movement is a normal and expected part of investing. The key is not to get shaken off the trail.

The chart of the U.S. stock market’s growth over the last few decades clearly shows the scary dips, like the financial crisis in 2008 and the sharp drop in 2020. While these events felt like disasters at the time, zooming out shows they were temporary setbacks on a long-term upward path. This visual proof highlights the secret to solid VTSAX long term performance: patience.

Ultimately, the power of VTSAX isn’t about chasing quick wins, but about participating in the steady, long-term growth of the entire U.S. economy. This “buy the whole market” approach is simple and effective. But you might have also heard of funds that track just the 500 largest companies. Does it matter which one you pick?

VTSAX vs. VOO (S&P 500): Does It Matter Which You Pick?

As you start your journey, you’ll quickly encounter a common debate: should you invest in the entire U.S. stock market with VTSAX, or just the 500 largest companies? This second option is known as an S&P 500 index fund, with VOO being a popular example from Vanguard. It’s a great question that can easily lead to analysis paralysis.

The key difference is simple. An S&P 500 fund invests in about 500 of the biggest, most well-known U.S. companies, like Apple, Amazon, and Microsoft. VTSAX invests in all of those, plus over 3,000 smaller and medium-sized companies. It’s the difference between buying the biggest players versus buying the entire league.

Here’s the secret, though: because those 500 companies are so massive, they make up over 80% of the total market’s value. This means that the long-term performance of VTSAX and an S&P 500 fund have been remarkably similar. If you put their growth charts side-by-side, you’d have to squint to see the difference.

For a beginner, agonizing over VTSAX vs. VOO is like trying to pick the “perfect” grain of sand on a beautiful beach. The important thing is that you’ve made it to the beach. Choosing either fund is an excellent decision and a far better financial move than choosing nothing. Now that you know both paths lead to a great destination, what are the real risks to be aware of on the journey?

What Are the Real Risks of Investing in VTSAX?

The primary risk with VTSAX is something called market risk. Because the fund is designed to mirror the entire U.S. stock market, it has nowhere to hide when the market as a whole goes down. It’s not about picking the “wrong” fund; it’s about the fact that the entire economy has good and bad years. When the market falls, your investment will fall, too. This is a normal, expected part of the journey.

This is why VTSAX is not a “get rich quick” plan; you can lose money in the short term. Overcoming this requires having a long time horizon—the number of years you plan to stay invested. While market performance is unpredictable year-to-year, its growth over decades has been remarkably consistent. By staying invested for many years, you give your money time to recover from downturns and capture that long-term growth.

Success with this passive investing strategy, therefore, isn’t about timing the market. It’s about your ability to stay calm and remain invested through the inevitable dips, trusting in the long-term trend. This strategy rewards patience, not panic. If you have that long-term mindset, the next step is surprisingly straightforward.

How to Actually Buy VTSAX (Even Inside a Roth IRA)

Getting started is simpler than you might think. You don’t buy funds like VTSAX from your bank; you buy them through a brokerage account, which is just an online account for holding investments. Think of it like a specialized shopping account for the stock market. You can open one for free with companies like Vanguard, Fidelity, or Schwab.

Once your account is open, the process is straightforward:

1. Fund your account: Securely link your checking or savings account and transfer the money you want to invest.

2. Find the fund: Use the search bar on the brokerage website and type in the fund’s ticker symbol: “VTSAX”.

3. Place your order: Enter the dollar amount you wish to invest and confirm your purchase. That’s it—you’re an owner.

Before you buy, consider what kind of brokerage account to open. You can hold VTSAX inside a powerful retirement account like a Roth IRA. Think of the Roth IRA as a special container for your investments. The money you put inside it grows completely tax-free, and you won’t pay any taxes on it when you withdraw it in retirement. This tax advantage can save you tens or even hundreds of thousands of dollars over a lifetime.

VTSAX itself has a minimum investment of $3,000. If that feels like a hurdle, don’t worry. Other companies offer nearly identical “total stock market” funds with no minimum, such as Fidelity’s FSKAX or Schwab’s SWTSX. The goal is the same: own the whole market, simply.

The “Set It and Forget It” Method: Automating Your Investments

A huge fear for new investors is timing the market. Should you invest now, or wait for a “dip”? A simple solution is dollar-cost averaging. This passive investing strategy means you invest a fixed amount on a regular schedule—say, $100 on the first of every month into VTSAX. It automates your habit and removes the stressful guesswork.

This approach changes your perspective on market downturns. Instead of panicking when prices fall, you know your fixed $100 is automatically buying more shares of VTSAX at a discount. When the market recovers, owning these extra shares can significantly boost your long-term growth. Your money simply works harder for you during the dips.

You can set this up in any brokerage account via automatic investments. For true “set it and forget it” power, also enable a dividend reinvestment plan (DRIP). This uses the fund’s small cash payments to buy even more shares, creating a snowball effect. With this system, you can focus on life, not market swings. But is VTSAX the only fund you’ll ever need?

Is VTSAX the Only Fund You Need?

Just a short while ago, the world of investing likely felt like an exclusive club with a secret language. Now, you understand the simple power behind VTSAX: owning a tiny piece of the entire U.S. economy, without the high fees or the need to guess which companies will succeed.

This naturally leads to the big question: for many people starting out, is VTSAX the only fund you need? For many beginners, the answer can be a confident yes. It provides an excellent foundation for building wealth with index funds and can absolutely serve as a complete portfolio for many years.

Knowing that VTSAX is a solid choice for long-term investing is only the beginning. The most important step isn’t finding the perfect investment; it’s simply getting started. Taking the first tangible action, like opening a brokerage account, is how you turn this new knowledge into real progress.

You no longer have to see yourself as just a saver watching from the sidelines. By investing, you become an owner, betting on the long-term growth of the entire economy. You are taking powerful and direct control of your financial future.