You Can Be Lazy And Still Become a Millionaire

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Laziness has gone rampant in this country. With an obesity rate of over 30%, I think it’s safe to say Americans are becoming less and less active. Advances in technology can definitely be a good thing but humans are becoming lazier as a result. As Mr. Money Mustache likes to point out, using your body to get things done will make you look better, help the environment, and save money. This article isn’t a sermon on being more active though. Today we get to be lazy and still become millionaires.

There is an area in finance where you can be lazy and still reap massive rewards. It’s called the Vanguard Total Stock Market Index Fund “VTSMX” for short. This is probably the most popular index fund in the financial independence world and for good reason.

History on Vanguard

Founded in 1975, John Bogle developed Vanguard to be an investment company built around serving its customers. Instead of keeping the profits of the shares, vanguard redirects the profits to lower the costs to its customers. Soon after opening for business, Vanguard opened the first index fund. People started sharing their experience with Vanguard and the company continued to grow. The company is currently managing over 5 trillion dollars in assets.

Although there are other competitors in the market these days, Vanguard is still on top and provides low rates for customers. Vanguard has basically made it to where anybody can be a successful investor. There’s still a whole world of day traders out there but very few actually “beat the market.” Index funds are my favorite way to invest and you get to be lazy with it.

Due to funds like the VTSMX, you don’t have to be an expert in finance to do really well investing. I currently have all of my investments in the VTSMX and will probably keep it that way for years to come. One fund to rule them all, sounds good right? I don’t know why anyone who has heard of the VTSMX still tries to day trade, but I guess that’s what makes the world go around.

So what exactly is the VTSMX? Shouldn’t you be worried about putting all your money in one fund? The beauty of the VTSMX is that it’s one fund that’s invested in the entire market. You get it all – small, mid, large-cap growth and value stocks. While it can be a bit volatile, the VTSMX has performed at an average of 8.27% since its inception in 1992. Your investments are split over everything so that means you’re invested in all the big tech companies as well as smaller companies that might grow to be huge over the years.

Can you outperform the market?

People (like Dave Ramsey) like to say that you can outperform the market if you go with actively managed funds. While you might be able to in some situations, the fees associated with actively managed funds are astronomical compared to Vanguard index funds. The fee for VTSMX is currently 0.14% and just 0.01% could cost you thousands of dollars over the years. Actively managed funds are usually over 1% at least.

If you’ve got a ton of money to invest then you might look into putting a portion of your portfolio into international funds. VTSMX only invests in American funds so you’ll have to look elsewhere to go international. Pretty cool that you can do all of your investing in one fund though right?

There may be funds out there that are better than the VTSMX, but I haven’t come across them. You can probably outperform VTSMX with real estate investing, but you don’t get to be lazy with that. Upkeep and dealing with tenants makes real estate investing a lot less passive than index funds.

So there you go, all of your investing stress taken away in one blog post. But wait there’s more! VTSMX is a great fund but only if you’ve got less than $10,000 to invest. Once you have over $10,000 you can upgrade to the Vanguard Total Stock Market Index Fund Admiral Shares “VTSAX” for short. With VTSAX you get an even lower fee rate of just 0.04%! That’s about as low a fee as you’re going to find.

What if the market crashes?

The market is going to crash, and it won’t really matter what funds you’re in. The risk of the market is one you will have to be comfortable with. Sure, it will be hard if you’re about to retire and your funds drop to half of what they were overnight. The market always goes back up though so you just have to stick it out and stay in for the long run.

I don’t usually enjoy being lazy but when it comes to investing, it’s nice to be able to sit back and throw all of my money into one fund. It’s obviously going to take a lot of savings to get to one million but I’m confident VTSAX is where I want my money. You can’t be lazy when it comes to building income but at least you can with investing.

How long to become a millionaire?

I’m 24 now, and I’m calculating the rate of interest at 8% (the average VTSAX has earned). If I put in $1,000 a month, I’ll be a millionaire by age 49. I’ve been investing more than $1,000 a month though and I’m currently earning a below-average income. I’m working hard to boost my income and if I can double my savings to about $2,400 a month, I’ll be a millionaire at age 41. This is just a rough calculation so don’t hound me for not being accurate. I did factor in inflation at 3% though.

If I can double my income, I’ll be sitting on $1,000,000 at age 42. That should be enough to live on for the rest of my life especially if I continue to make a little money through various ways. What are you currently invested in? If you’re not investing in VTSAX, I would seriously consider it. If your employer doesn’t have an option to invest in VTSAX, figure out the best option you have. It might be better to start an individual IRA outside of your 401k and use it to invest in VTSAX. I get the match that my employer contributes and also invest in my own individual ROTH IRA.

If you'd like a slightly less lazy way to invest, you can also try the 3 fund portfolio.

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