Vanguard’s Total Stock Market Admiral Shares Fund (VTSAX) is one of the most popular funds on the market. And for good reasons. It offers exposure to the entire stock market at very little fees. Now, if you already have a brokerage account with TD Ameritrade you might wonder if you can buy VTSAX through them. I did a little research and here is what I found.
Can I Buy VTSAX Through TD Ameritrade? You can’t buy VTSAX through TD Ameritrade. None of Vanguard’s Admiral Shares mutual funds are available on TD Ameritrade. The only way to buy VTSAX is directly from Vanguard.
At first glance, this seems kind of odd. Usually, mutual funds are publicly available and can be traded through any brokerage. So, why is VTSAX the exception?
What is VTSAX?
First of all, we need to understand what VTSAX really is. Although it is classified as a mutual fund, it functions more like an exchange-traded fund (ETF). It is managed entirely passively; this means there is no active manager deciding with stock to buy or sell.
VTSAX is the mutual fund counterpart to Vanguard’s Total Stock Market ETF (VTI). It requires a minimum investment of $3,000 but has several advantages. For one, after the $3,000 minimum is reached you can invest in VTSAX starting at $1. You will also be able to easily set up an auto-investing schedule directly from your bank account.
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
Why can’t I buy VTSAX through TD Ameritrade?
The reason you can’t buy VTSAX through TD Ameritrade is simple: Vanguard has reserved the right to sell their Admiral Shares mutual funds.
Given the above, it is rather odd that you can still research VTSAX on TD Ameritrade as if it was available:
There is no official reason as to why Vanguard has chosen to do this but it likely has to do with the administrative benefits VTSAX offers which aren’t easy to transfer to other brokers. For instance, the option to invest just over $1 would cause a lot of fees if done through a third-party broker.
Another reason why VTSAX is not available through TD Ameritrade is that Vanguard wanted to keep in control of the user experience of their mutual funds. It would have been difficult to replicate the frictionless buying of VTSAX through Vanguard directly with the attached benefits through another broker.
This way Vanguard their user on their platform.
Can I buy Vanguard index funds on TD Ameritrade?
You can buy Vanguard index funds on TD Ameritrade. All index funds such as VTI, VXUS or even BND are available on TD Ameritrade’s platform.
You will be able to buy these funds at exactly the same price as through Vanguard directly. The expense ratio won’t change either. There is absolutely no downside to buying Vanguard’s index funds through TD Ameritrade.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
So, since you can’t buy VTSAX through TD Ameritrade, what can you do? Well, if you really want to buy VTSAX your only option will be to transfer your brokerage account to Vanguard. You can do this through the Vanguard’s ACATS transfer system which is available here.
But before you do that, let me highlight some alternatives that I think might be even easier (and better).
Buy the ETF
One alternative you have is to simply buy the ETF equivalent of VTSAX which is VTI. It’s doubtful anyway that VTSAX is really that much better than VTI. I recently wrote about a similar problem comparing VTIAX and VXUS and the result might surprise you.
Sure, there still are some benefits that VTSAX offers which VTI simply does not. There is the auto-invest feature only available through Vanguard plus the ability to buy fractional shares of the fund starting at only $1 once you surpassed the $3,000 minimum.
But what if I told you there was another way to have your cake and eat it too? To buy the ETF and still get all the benefits that VTSAX offers?
Choose your broker wisely
There are traditional brokers like TD Ameritrade or Fidelity which follow the same simple model. You pick a fund you want to buy, you pay the price of one share, you may or may not pay a commission, and then you hold that fund in your brokerage account.
And then, there are modern brokers like M1 Finance. These brokers pool investors’ funds to allow for fractional share investing. In addition to that, you will also be able to set up a fixed amount you’d like to invest on a monthly, bi-weekly, or weekly basis. And to top it all off, M1 Finance offers auto-rebalancing of your portfolio so that you never have to worry about becoming over-exposed to one asset class.
With a modern broker like that, you can simply buy the VTI and yet get all the same benefits you’d get with VTSAX and more!
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
As we have seen you can’t buy VTSAX through TD Ameritrade since Vanguard has reserved the right to sell their Admiral Shares mutual funds. However, you can buy Vanguard’s index funds through TD Ameritrade.
To circumvent this issue and buy VTSAX you basically have 2 options:
Both options have their up- and downsides as discussed above. But one way to make option 2 even more appealing is to use an innovative broker that offers commission-free trades, fractional and auto-investing. My favorite here is M1 Finance, but any other broker that offers the above features will work fine as well.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.