Which is better, VFIAX, or VFINX? Vanguard 500 Index Fund Admiral Shares—VFIAX, and Vanguard 500 Index Fund Investor Shares—VFINX has their own differences.
The biggest difference between the two is the expense ratio, and perhaps the main difference. But what is the expense ratio? It’s the amount you pay for the management of the funds.
At the time of writing, the VFINX expense ratio is 0.14 percent which is considerably low. On the other hand, VFIAX’s expense ratio is 0.04%. This expense ratio is way lower than VFINX but also lower than the standard expense ratio.
Note: VFIAX is now close to new investors and it’s up to Vanguard to decide when the new investors can enroll in. So regardless of how much you want to invest, you can’t buy VFIAX although it’s a good buy.
The reasoning behind this is the VFIAX shares are preferred shares or known as Admiral. Vanguard offers Admiral shares for most of its index funds. The minimum total balance in the fund must be at least $10,000 if it’s an Admiral share whereas the minimum investment into VFINX is $3,000.
This is pretty much the only difference between VFIAX and VFINX. While you would need to have at least $10,000 to invest in VFIAX index funds, $3,000 is simply enough for VFINX. If the minimum investment requirement is something that you want to avoid, you may want to check out Vanguard 500 EFT which has a low expense ratio of 0.05% but without restrictions on the initial investment amount.
