VTI or VINIX/VIEIX for US Stock Allocation?

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Topic Author
dmbosstone
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Joined: Tue Jun 22, 2021 7:33 pm

VTI or VINIX/VIEIX for US Stock Allocation?

Post by dmbosstone »

Hello Bogleheads!

I've been a big fan of the Boglehead way of investing, I've been going back and forth on some allocation ideas and I thought what better way to get some other viewpoints than to ask some Bogleheads on the forum.

For the US Stock allocation of my portfolio should I stick with my current combination of VINIX/VIEIX or move it into shares of VTI?

VTI (Vanguard Total Stock Market Index Fund ETF) - ER 0.03%
VINIX (Vanguard Institutional Index Fund) - ER 0.035%
VIEIX (Vanguard Extended Market Index Fund Institutional) - ER 0.05%

Backstory: My employer just switched to a new 401k provider that allows me to allocate up to 95% of my contributions to a Schwab PCRA, a retirement brokerage account where I can invest in any ETF or Mutual Fund! I'm really excited about all these choices.

My current 401k didn't have the best selection of funds, so but I did have VINIX/VIEIX available so I've been investing in both funds for my US Stock allocation to simulate a total index fund.

I have been going back and forth if I should stick with this approach and move all my US Stock allocation into the PCRA and invest it in VTI or keep it in the 401k and maintain the current combo I have going.

Thoughts brewing in my head:
  • Investing in VINIX/VIEIX is a bit more passive since I can invest my entire allocation with every paycheck vs. me having to wait til I have enough cash to buy entire shares of VTI
  • It's only a few basis points difference but an entire allocation to VTI is cheaper than the current mutual fund combo
  • The current VINIX/VIEIX combo isn't really the entire US Stock market like VTI is
  • What about VTSAX? Do I just invest in that through my PCRA instead?
  • It feels intimidating to make a drastic change to my allocation and move a lot of money around- but it's for the best right?
lakpr
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Re: VTI or VINIX/VIEIX for US Stock Allocation?

Post by lakpr »

What is the annual cost for PCRA? My plan calls it SDBA (Self Directed Brokerage Access) and charges $200 per year regardless of the balance. So if I must choose the SDBA option, I better commit to something like $200k at once, or the fees would eat up a large part of the returns. But then again, my plan has wonderful choices with expense ratios much better than what I can get through SDBA (Vanguard Institutional Index shares for 0.02%, for example, half that of retail VFIAX; target retirement funds at 0.08%, again half that of retail equivalents), so I really have no need to even consider SDBA.

If Schwab PCRA is completely free for you through your plan, I would suggest you invest in VTSAX, to seek that "last-dollar" investing. But in general, I am on the side of "don't fix it if it isn't broken". Stick to your VINIX/VIEIX in a 80:20 ratio within the plan, and it would serve you well until retirement.

Simplicity is the key!
ruud
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Re: VTI or VINIX/VIEIX for US Stock Allocation?

Post by ruud »

dmbosstone wrote: Tue Jun 22, 2021 8:05 pm
  • The current VINIX/VIEIX combo isn't really the entire US Stock market like VTI is
80% S&P 500 (VINIX) + 20% extended market (VIEIX) should be indistinguishable from total stock market (VTI).

I personally wouldn't bother with the hassle of the brokerage option to get the same exposure that's only a hair cheaper.
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okwriter
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Re: VTI or VINIX/VIEIX for US Stock Allocation?

Post by okwriter »

I'd go with the brokerage option if there's no extra fee. An 80/20 ratio of S&P 500/extended market will work now, but that ratio will change a bit every year, so you'll need to adjust it for new contributions. It's less hassle to use just a single fund.

If the brokerage is through Schwab, you might want to consider SWTSX (Schwab Total Stock Market Index Fund) if you prefer mutual funds to ETFs. I doubt you'd be able to buy VTSAX without transaction fees.
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ruralavalon
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Re: VTI or VINIX/VIEIX for US Stock Allocation?

Post by ruralavalon »

Either way is good, it's hardly worth thinking about any difference.

I suggest staying with the VINIX/VIEIX combination to be "a bit more passive", investing everything automatically every pay period.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Topic Author
dmbosstone
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Re: VTI or VINIX/VIEIX for US Stock Allocation?

Post by dmbosstone »

lakpr wrote: Tue Jun 22, 2021 8:21 pm What is the annual cost for PCRA? ...
If Schwab PCRA is completely free for you through your plan, I would suggest you invest in VTSAX, to seek that "last-dollar" investing. But in general, I am on the side of "don't fix it if it isn't broken". Stick to your VINIX/VIEIX in a 80:20 ratio within the plan, and it would serve you well until retirement.

Simplicity is the key!
This was a great question! I wasn't aware there may be a fee for a brokerage account inside my 401k. I just got off the phone and found out there is an annual fee (albeit only $100/year so not as bad as yours.)
Topic Author
dmbosstone
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Joined: Tue Jun 22, 2021 7:33 pm

Re: VTI or VINIX/VIEIX for US Stock Allocation?

Post by dmbosstone »

I knew this was the right place to ask- I appreciate all of the replies and insight!
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ruralavalon
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Re: VTI or VINIX/VIEIX for US Stock Allocation?

Post by ruralavalon »

dmbosstone wrote: Thu Jun 24, 2021 10:07 am
lakpr wrote: Tue Jun 22, 2021 8:21 pm What is the annual cost for PCRA? ...
If Schwab PCRA is completely free for you through your plan, I would suggest you invest in VTSAX, to seek that "last-dollar" investing. But in general, I am on the side of "don't fix it if it isn't broken". Stick to your VINIX/VIEIX in a 80:20 ratio within the plan, and it would serve you well until retirement.

Simplicity is the key!
This was a great question! I wasn't aware there may be a fee for a brokerage account inside my 401k. I just got off the phone and found out there is an annual fee (albeit only $100/year so not as bad as yours.)
I would not bother with the Personal Choice Retirement Account, given the annual fee and the availability of VINIX/VIEIX in your employer's 401k plan.

"Why bother?" is a question I often ask myself when trying to keep life simple.
Last edited by ruralavalon on Thu Jun 24, 2021 10:34 am, edited 3 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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retiredjg
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Re: VTI or VINIX/VIEIX for US Stock Allocation?

Post by retiredjg »

ABout 80% 500 index plus about 20% Extended Market Index is essentially the same thing at total stock index. There should be very little (if any) difference in performance. Just do whatever you want. Easiest? Cheapest? Most convenient?
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