What is the average return on VTSAX

If you’ve ever looked at the tiny amount of interest your savings account earns and thought, “There has to be a better way,” you’re not alone. In searching for a solution, many people stumble upon recommendations for something called ‘VTSAX’ and wonder, what is VTSAX, exactly?

That jumble of letters sounds complicated, but the idea behind it is surprisingly simple. Imagine trying to bet on which single company will be the next big thing—like picking just Apple or just Tesla. In practice, that’s a huge gamble. What if you pick the wrong one? An index fund is the complete opposite of that high-stakes approach.

Instead of buying one stock, an index fund is like buying a pre-made fruit basket that contains a little bit of every fruit in the supermarket. VTSAX is a total stock market index fund, which is essentially the ultimate ‘fruit basket’ for the entire U.S. stock market. When you own it, you own a tiny piece of thousands of companies, from giants like Amazon and Google to smaller businesses you’ve never even heard of.

This strategy changes the game entirely. You’re no longer betting on a single company’s success but on the overall health of the U.S. economy as a whole. This simple difference is what determines if VTSAX is a good investment for your long-term goals. Now, let’s talk about what kind of growth that ‘fruit basket’ has historically delivered.

The Famous 10% Figure: What Is VTSAX’s Historical Average Return?

You’ve likely heard the famous figure: the U.S. stock market’s historical average return is around 10% per year. Since VTSAX is designed to be the market, its long-term performance is in that same ballpark. But if you invest expecting to see a neat 10% gain every December, you’re in for a surprise. The reality of investing is much more interesting—and much more volatile.

The best way to understand this is to think of the “average return” like the “average temperature” for a city. An annual average of 65 degrees sounds pleasant, but it hides the scorching 95-degree summer days and the freezing 20-degree winter nights. You almost never experience an “average” day. VTSAX’s performance is the same; the long-term average simply smooths out the market’s financial heat waves and cold snaps.

To see this in action, just look at VTSAX’s actual performance in a few recent, contrasting years. The annual returns aren’t a smooth line; they’re a rollercoaster:

• 2019: +30.8% (A fantastic year)
• 2021: +25.7% (Another great year)
• 2022: -19.5% (A difficult year)

As you can see, no year was anywhere near the “average.” This is what a realistic return for VTSAX actually looks like—a mix of incredible growth and significant downturns. The key is that, over decades, the ups have historically outweighed the downs.

So, what does this all mean for your money? It means that investing in VTSAX is a long-term game, where the goal is to stay invested through the chilly years to benefit from the sunny ones that follow. These returns aren’t just from the fund’s price going up; another component contributes to your final number.

It’s More Than Just Price: How Your VTSAX Total Return Is Calculated

When you look at a return like +25.7%, it’s natural to assume it all comes from the fund’s price going up. But there’s a hidden engine working for you, too. Think of owning VTSAX like owning a small rental house. You can make money in two distinct ways: the house’s value can increase, and you can collect rent checks along the way. Your investment in VTSAX works in a very similar fashion.

First, the price of the fund itself can rise as the thousands of companies inside it become more valuable. This is known as capital appreciation. But many of those companies also share a portion of their profits with their owners, and since you own a piece of them through VTSAX, you get a piece of that profit. These payments are called dividends, and they’re like the rent checks from your property—a steady stream of income in addition to any price growth.

This powerful duo—price growth plus dividends—creates what’s known as your total return. The historical return figures you see, like that +25.7% or even the -19.5%, already account for both. This combination is what truly drives long-term growth and explains the investment’s ups and downs.

The Rollercoaster Ride: Understanding VTSAX Risk and the Power of Time

Of course, those double-digit returns don’t happen in a straight line. The flip side of earning a potential +25% in a great year is the risk of losing money in a bad one. Investing in the stock market through VTSAX is less like a savings account’s gentle slope and more like a rollercoaster; there are thrilling climbs, but also stomach-lurching drops. This unavoidable cycle of ups and downs is the fundamental risk of investing.

This is where your most powerful tool comes into play: your time horizon. How long you plan to keep your money invested is the single most important factor in managing the VTSAX risk vs reward trade-off. If you need your cash back next year for a house down payment, a sudden market dip could be a disaster. But if you’re investing for a goal 20 or 30 years away, like retirement, you have decades to recover from any downturns.

Looking at history shows this clearly. While a single year can be scary, the longer you stay invested, the more the ups have historically smoothed out the downs. For example, the average VTSAX 10-year return has consistently been positive, even when those periods included significant downturns. Time allows the overall growth of the economy to overpower the short-term noise and fear.

This is why VTSAX is considered a powerful tool for long-term goals, not a place to park your emergency fund. While time is your biggest ally against market volatility, one other detail directly affects what you keep: the cost of the fund itself.

The Tiny Fee That Matters: How the VTSAX Expense Ratio Boosts Your Net Return

Think of that fund cost as a small annual fee for keeping the entire “fruit basket” of stocks organized and running smoothly. In the world of investing, this is called the expense ratio. It’s a percentage of your investment that goes to the fund manager each year. For many managed funds, this fee can be 1% or even higher. However, VTSAX is famous for its incredibly low expense ratio, which is just 0.04% as of late 2023.

While that percentage sounds almost insignificant, the impact of the VTSAX expense ratio on your returns is huge over the long run. Imagine you have $10,000 invested. A more expensive fund with a 1% expense ratio would cost you $100 every year. With VTSAX’s 0.04% fee, your cost is a mere $4. That’s an extra $96 that stays invested and working for you, year after year.

This rock-bottom cost is one of the most powerful, yet overlooked, features of VTSAX. It ensures that the lion’s share of any market gains ends up in your pocket, not paying for hefty management fees. This low-cost structure is a critical factor in performance, especially when you start comparing VTSAX to other popular index funds like VOO or Fidelity’s FSKAX.

The Sibling Rivalry: How VTSAX Compares to VOO and FSKAX

As you explore VTSAX, you’ll quickly run into a few other popular fund names, namely VOO and FSKAX. This can feel like trying to pick between three nearly identical cars. The good news is that for most long-term investors, their performance and goals are remarkably similar, but they do have one key difference worth knowing.

The main distinction lies between VTSAX and VOO. Think of VTSAX as owning a tiny slice of the entire U.S. stock market—over 3,500 companies, both large and small. In contrast, VOO tracks an index called the S&P 500, which means it only holds stock in the 500 largest and most established U.S. companies. While VTSAX gives you broader exposure, the performance of both funds is often nearly identical because those 500 giant companies make up the vast majority of the total market’s value.

So where does FSKAX fit in? FSKAX is Fidelity’s version of a total stock market fund, making it a direct competitor to Vanguard’s VTSAX. They essentially do the same job: buy the whole market at a very low cost. It’s like choosing between Coke and Pepsi—they are different brands offering a very similar product.

While analysts love to debate the VTSAX vs. VOO returns, their long-term performance charts are practically twins. The decision between VTSAX and its look-alikes is far less important than the decision to simply start investing in a low-cost, diversified index fund for the long haul.

How to Track Your Investment: Simple Ways to Monitor VTSAX Performance

Once you’ve invested, it’s natural to want to see how your money is doing. For official data on tracking VTSAX performance, the best place to look is directly on Vanguard’s website for the fund. There, you’ll find charts showing its growth over the last month, year, and even since it started, giving you a transparent look at its history.

Instead of getting caught up in the daily ups and downs, which are just market noise, try to focus your attention on the long-term trends. The most meaningful figure isn’t what happened today, but its performance over many years. Looking at the VTSAX 10 year return, for example, gives you a much clearer picture of its potential by smoothing out the dramatic spikes and dips along the way.

This leads to a simple but powerful strategy: check it less often. Obsessively watching your balance can cause anxiety and tempt you into making emotional decisions, like selling during a dip. For most people, maximizing returns is less about complex analysis and more about the discipline of leaving it alone. Think of it like planting a tree—the meaningful growth happens over seasons, not seconds.

Your Next Step: Is VTSAX a Good Long-Term Investment for You?

VTSAX is a simple tool designed to give you a piece of the entire U.S. stock market. You now understand that its growth potential is balanced by the market’s natural ups and downs and that its average performance smooths out years that are stormy and brilliant.

This approach is built for patience. Maximizing VTSAX returns means trusting in the long-term climate of economic growth rather than predicting the daily forecast. The strength of this strategy comes from staying invested through all the seasons.

With this knowledge, your real next step isn’t opening an account, but opening a notebook. Ask yourself: “Is my financial goal more than ten years away? Am I comfortable with market volatility in exchange for potentially higher growth?” Only you can determine if VTSAX is a good long term investment for your unique financial journey.

This empowers you to build a plan that fits your life, rather than chasing someone else’s “hot tip.” While this article is for educational purposes and not financial advice, this clarity is your first and most important asset. You’re no longer just following instructions; you’re beginning to write your own financial story.