Vanguard is an industry pioneer of low-cost index funds. Long-term investors and retirement savers can easily build a cost-effective, diversified portfolio with Vanguard exchange-traded funds (ETFs) and mutual funds, and these offerings have helped the company earn a spot as one of Money's best online stock trading platforms.
Yet short-term traders may be disappointed, since the brokerage lacks the robust research tools that active traders use to evaluate stocks and develop trading strategies, and it also doesn't offer direct access to cryptocurrencies like bitcoin.
Vanguard at a glance
- Account minimum investment: $0 to open an account, but many Vanguard mutual funds require a minimum investment of at least $3,000.
- Fees: $0 trading commissions for stocks and ETFs
- Tradable securities: Stocks, ETFs, mutual funds, bonds, CDs
- Account types: Taxable brokerage account, IRA, Roth IRA, managed accounts, 529 college savings plans
Vanguard pros and cons
|Low-fee ETFs and mutual funds||Lacks advanced research tools comparable with other leading brokerages|
|$0 commissions for trading stocks and ETFs||High minimum for robo-advisor compared to similar services|
Where Vanguard stands out
Since 1975, Vanguard has been helping investors meet their long-term goals. Today, it continues offering investors access to a variety of funds and investment services. Here are some of its strong points.
Low-cost funds: Vanguard leads the industry when it comes to funds with low expense ratios. These are management fees charged by fund companies, so high expense ratios can really eat into your returns. But the average expense ratio for a Vanguard fund is 0.10%, compared to the industry average of 0.60%, according to research by Morningstar, a leading investment analysis and management firm. So investors can easily build a portfolio with low-cost mutual funds and exchange-traded funds (ETFs) to meet their long-term goals.
Wide selection of funds: Vanguard gives investors access to thousands of commission-free ETFs and more than 160 no-transaction-fee mutual funds, including ones from other fund companies.
Access to fiduciary financial advisors: If you have complex financial goals, you can work directly with a financial advisor at Vanguard. As fiduciaries, Vanguard’s financial advisors are required to give advice solely in your best interest. This means they can’t recommend investments just because these will provide them with commissions or some sort of kickback. However, you’d need a minimum of $50,000 in investable assets for Vanguard personal advisor services.
Where Vanguard falls behind
While Vanguard has a lot to offer, it may not satisfy all types of investors. Here are some of its drawbacks.
No cryptocurrency: Vanguard doesn’t let investors directly invest in crypto such as bitcoin, ethereum and dogecoin. But you can trade a variety of crypto through investing apps such as Robinhood, SoFi and Webull.
High investment minimums: The minimum investment for some Vanguard mutual funds can range from $3,000 to $5,000. Those new to investing may not have that amount in investable assets. But online brokers like Fidelity offer a selection of funds that don’t require a minimum investment.
Vanguard product offerings
|Stocks||$0 trading commission|
|ETFs||$0 trading commission|
|Options||$0 commissions and $1-per-contract fee (May vary depending on assets invested)|
|Mutual funds||Access to more than 160 no-transaction-fee funds. $3,000 minimum investment for most index funds.|
|Bonds||Corporate, municipal and Treasury bonds available.|
|Robo advisor||Vanguard Digital Advisor: $3,000 minimum investment and an annual advisory fee of up to 0.20%.|
Research and tools
Vanguard has some user-friendly research tools such as mutual fund and ETF screeners. You can use these to find funds based on your preferences. Moreover, Vanguard offers various calculators and tools that can help you figure out how much you should save for retirement and also to determine your income in retirement. You can also use a tool that presents you with some simple questions about your financial goals and risk tolerance before recommending an asset allocation for your portfolio. Asset allocation defines how you break down your portfolio across different asset types such as stocks and bonds.
Its Vanguard Portfolio-Watch feature helps you visualize your asset allocation through a sleek interface. You can see how it breaks down by asset class and how it's diversified across a specific asset class such as stocks. For example, you can see how much of your portfolio is invested in domestic and international stocks. You can also see how your investment costs differ across industry averages. Its Portfolio-Tester feature helps you predict how your portfolio balance may change if you make tweaks to your asset mix. For example, you can visualize what may happen if you shift your stock mix from 50% to 65%.
But the brokerage lacks advanced research tools that help you analyze individual stocks and come up with trading ideas. Vanguard is more focused on investors who want access to long-term investing strategies. Active day traders may want to consider trading platforms like TD Ameritrade, Fidelity and Schwab.
Vanguard mobile app
The Vanguard mobile app offers an easy-to-use interface. You can use it to check your account balance, trade fund shares and monitor your portfolio. According to the Vanguard website, the company is working on incorporating more research capabilities.
The Vanguard app currently has a rating of 4.7/5 on the Apple store. It has a less favorable rating of 2/5 on the Google Play Store.
Vanguard customer service
You can reach Vanguard customer support by dialing 877-662-7447 on business days from 8 a.m. to 8 p.m., ET.
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