Is VOO or VTI more tax efficient? (2024)

Is VOO or VTI more tax efficient?

Generally, ETFs will have a slight edge from a tax efficiency perspective. ETFs tend to distribute comparatively fewer capital gains to shareholders – these same gains are simply more challenging to manage efficiently from a mutual fund. Overall, VOO and VTI are considered to have the same level of tax efficiency.

Is it better to invest in VTI or VOO?

Or, you could also invest in both, for example, by putting half in VOO and half in VTI. Here's a summary of which one to choose: If you want to own only the biggest and safest stocks, choose VOO. If you want more diversification and exposure to mid-caps and small-caps, choose VTI.

Is VTI tax-efficient?

If you don't have at least $3,000 to invest, then VTI is a better option. Vanguard's patented structure has nearly eliminated any tax efficiency difference between their ETFs and mutual funds so there is no need to consider tax efficiency when deciding between between VTI and VTSAX.

Which ETF is best for taxable account?

Which funds are usually most tax-efficient?

ETFs. Like index funds, exchange-traded funds (ETFs) are passively managed, which makes them more tax efficient than actively managed mutual funds. Also, ETFs are structured in a way that doesn't generate capital gains taxes when securities are bought and sold. Investors do pay capital gains tax when they sell shares.

Is VOO or VTI better for long term?

The VTI and VOO dividend yields are similar. The expense ratios are identical. VTI is older, but VOO is a larger ETF. VOO's performance edges VTI's over a 10-year investment horizon.

What is the 10 year return on VOO vs VTI?

Average Return

Over the past 10 years, VOO has had annualized average returns of 12.45% , compared to 11.81% for VTI. These numbers are adjusted for stock splits and include dividends.

Is VTI a good long-term hold?

VTI has established a venerable track record over the years, proving itself to be a long-term winner for investors over a variety of time horizons. Over the past year, the fund has had a total return of 18.9%.

Why pick VTSAX over VTI?

VTI vs VTSAX: Who Should Invest

Investors who prefer to trade during the day to take advantage of price fluctuations may prefer an ETF like VTI, whereas a more passive buy-and-hold investor may prefer a mutual fund like VTSAX.

Do you pay taxes on ETF if you don't sell?

At least once a year, funds must pass on any net gains they've realized. As a fund shareholder, you could be on the hook for taxes on gains even if you haven't sold any of your shares.

How do I avoid taxes on my ETF?

One common strategy is to close out positions that have losses before their one-year anniversary. You then keep positions that have gains for more than one year. This way, your gains receive long-term capital gains treatment, lowering your tax liability.

Do you pay taxes on ETFs every year?

For ETFs held more than a year, you'll owe long-term capital gains taxes at a rate up to 23.8%, once you include the 3.8% Net Investment Income Tax (NIIT) on high earners. If you hold the ETF for less than a year, you'll be taxed at the ordinary income rate.

What is the downside of ETFs?

For instance, some ETFs may come with fees, others might stray from the value of the underlying asset, ETFs are not always optimized for taxes, and of course — like any investment — ETFs also come with risk.

Which is the best investment for tax saving?

Which investment is best for tax?

Is an ETF better than an index fund in a taxable account?

If you're investing in a taxable brokerage account, you may be able to squeeze out a bit more tax efficiency from an ETF than an index fund. However, index funds are still very tax-efficient, so the difference is negligible. Don't sell an index fund just to buy the equivalent ETF.

Should I buy both VTI and VOO?

Does it make sense to have both VTI and VOO? For most investors, it probably doesn't make sense to own both. VTI and VOO both provide great diversification at a low cost. However, you may find that your retirement plan at work doesn't offer a total stock market index fund like VTI.

Is it wise to invest in VOO?

Vanguard S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is a great option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.

Does VOO or VTI pay more dividends?

Dividend Yield

VTI and VOO offer almost the same dividend yields—1.42% and 1.45% respectively as of July 31, 2023. Expressed as a percentage, dividend yield tells an investor how much they will earn in dividends each year for every $1 they invest in an ETF.

What is the average return of VOO vs VTI?

VTI - Performance Comparison. In the year-to-date period, VOO achieves a 9.62% return, which is significantly higher than VTI's 9.08% return. Both investments have delivered pretty close results over the past 10 years, with VOO having a 13.21% annualized return and VTI not far behind at 12.59%.

Where will VTI be in 5 years?

According to the latest long-term forecast, Vanguard Total Fund VTI price will hit $250 by the middle of 2024 and then $300 by the middle of 2025. Vanguard Total Fund VTI will rise to $350 within the year of 2027, $450 in 2028, $500 in 2029 and $600 in 2033.

How many times a year does VTI pay dividends?

VTI Dividend Information

VTI has a dividend yield of 1.42% and paid $3.54 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 22, 2024.

Is VTI good for Roth IRA?

Roth IRAs allow you to avoid paying taxes on investment returns by investing after-tax income now. VTI and SPAB are good options for your starting stock and bond funds, and are likely to be representative of the kinds of funds offered by Edward Jones.

What is VTI 30 year average?

In the last 30 Years, the Vanguard Total Stock Market (VTI) ETF obtained a 10.49% compound annual return, with a 15.52% standard deviation.

Why is VTI so popular?

Benefits of Vanguard Total Stock Market ETF (VTI)

VTI is an extremely diversified fund. Its large amount of holdings reflect the entire universe of investable U.S. securities. The fund has exposure to small-cap stocks which can be more volatile than mid- or large-cap holdings.