Vanguard Total Stock Market Index etf - VTI

Vanguard Total Stock Market Index etf (VTI) is ETF based on CRSP Total stock market model developed by top UChicago economists. It is a combined index of top 2500 stocks (based on market cap) representing almost 95% of the market cap of total stock market.

Vanguard Total Stock Mkt Idx Adm (VTSAX) is underlying mutual fund for this ETF. If one wants to do automatic periodic monthly investment, one should buy VTSAX instead (as most of brokerage allow periodic investment in mutual fund only).

Money invested in a given company is proportional to their market cap weightage and so giant and large cap ones get most of money (70%) and rest goes to mid caps and small caps.

S&P 500 based large cap stocks represent approx 70-75% of total domestic stock market capitalization and so investing into a mutual fund/etf based on this index provides a broad large cap coverage for sure.

However remaining 25-30% domestic stocks fall into mid cap (15-20%) and small cap (10-15%) market cap. Note that some of present top performing small caps are the ones who, in due course, are going to grow to mid cap and eventually to large cap category. So, it's good idea to get into them too and preferably early to benefit from their Initial growth.

When it comes to domestic stocks, sticking with time-tested market-cap-weighted Total Stock index is likely to be safest approach for long haul. It covers all the market leaders of all the sectors and allocates money based on how successful (as measured by market cap) they have been. It starts scaling back on those stocks who's success starts receding. It's self calibrating index purely based on only one thing, success.

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