Ok, sideline to this thread

I have some money I would like to invest to make it grow more than sitting in my account. I would like to diversify to 2-4 moderate-high risk funds. Is the lower ER for Vanguard Admiral shares worth it?

Admiral Shares for Index funds have a $10k min investment but the ER drops down a bit (from .29% to .09% in one of the funds I was looking at); I can invest in 2 funds at the Admiral level for the lower ER and a couple more funds at the regular Investor level at the normal ER (min $3k investment). Of course that will leave me with 2 funds holding nearly 80% of my personal portfolio and 2 funds holding just over 20% (don't currently have any portfolio outside of TSP, wife's 403b, and Roth IRAs).

Bad decision on the diversification end? Or worth the slight risk for the marginally larger returns?

FWIW, if I "lose" this money it's not going to kill me, my life will go on, I just won't accomplish my financial goals as soon as I had hoped. If I do "lose" I will let it sit until it rebounds so a little risk isn't going to be financially devastating, it will just be a roadblock to my mid-term financial goals.

I say yes, admiral shares are worth it.

Let's pretend you put $10k into Investor class shares of a VG fund with a TER of 0.29% and another $10k into Admiral class shares of the same fund with a TER of 0.09%.

Let's pretend the fund returns 5% per year for 15 years and you never added another dollar.

At the end of that 15 year period, the Admiral class $10k would be worth $20,523.59 and the Investor class $10k would be worth $19,944.47 for a difference of $579.12.  Makese sense to me.

I recommend visiting bogleheads.org - lots of useful info there.

Investor shares automatically convert Admiral shares once your balance in that fund reaches the threshold for Admiral shares.

Correct

My question was more-so centered around "Is it worth giving up a proper diversification of funds in order to invest in the lower ER Admiral shares?" Of course, as funds allowed I would balance the diversification back out but I doubt I would hit what I consider a decent diversification within a year...

I think you are looking at a "tilt" asset allocation - investing heavier in certain sectors (small cap value for example) with higher risk to achieve higher reward.

Perfectly fine if that's what you want, but I might disagree a bit on diversification.

I use VG total stock market index as one of my choices.  It has something like 3,600 stocks in it.  Can't get much more diversified than that, unless you want to add international.  I do, and use an international index fund for that.

Sector tilts have less diversification than a broader index like VTSMX or even S&P 500 funds.  The small cap growth sector only has so many options.

Sectors also have more volatility, typically measured by the standard deviation of the sector's performance over time.

There's a pretty good theory on "tilting" called the Fama-French study.  You can find info on it in the net or a good explanation on it in a book called All About Asset Allocation by Rick Ferri,

If it's a lump sum investment and you aren't planning on adding money regularly I would go with the singe fund Admiral shares.  If you are regularly contributing then the balance will eventually get up to what's required for Admiral so I wouldn't worry too much about the difference in expense ratios.

If the two funds you have are total stock market and total international then I see nothing wrong with just two and you are well diversified owning just those two. In fact those two funds make up 80% of my portfolio.

Admiral is the way to go but the savings are not that significant in real dollars on small accounts. 0.2% is $10 a year on a $5,000 account. You are worrying about nothing. Once you get to ten k it will go to admiral so no worries. Buy the funds you want.