Vanguard at a glance
*per trade for first 25 trades per year, $20 thereafter for accounts with less than $50k in Vanguard funds; Sliding scale thereafter; $0 fees for Vanguard ETFs.
Feature you’ll love
Vanguard Portfolio Watch: Vanguard Portfolio Watch is a tool that automatically examines your portfolio to see how it compares to criteria that you and Vanguard have set. The goal is to make sure your assets are diversified and minimize risks where possible. You can include not only your Vanguard assets, but all holdings, so that you can get a comprehensive picture of your financial life and where you might have unidentified risk.
Once you’ve loaded your holdings into the tool, Portfolio Watch will give you a breakdown of what kinds of funds you own by a number of factors, for example, company size or investing style (value vs. growth). Then if there’s a place where you need more exposure – say you own too many funds invested in small companies – it can recommend the funds you need to purchase to even out your portfolio. It’s a neat tool to get a broad perspective on what you own and what you might like to own.
Where Vanguard rocks
Education: Vanguard was created on the vision and positive ethos of founder Jack Bogle to help individual investors build wealth, and that’s most obvious in the broker’s education and planning tools. The broker offers articles, videos and podcasts that inform clients on the state of the market and help investors make smart financial decisions with a long-term mindset.
The broker’s site includes tons of retirement-planning tools, calculators and resources for investors of all ages. Investors can set up plans for various goals, compare funds side-by-side, screen for funds, as well as project college and retirement costs so that you can meet them.
Commission-free ETFs: Vanguard offers a huge number of commission-free ETFs – more than 1,800. Vanguard’s offering also includes its own funds, which total more than 75. While commission-free ETFs used to be more of a competitive edge, the industry has shifted its pricing to $0 commissions for these funds, so ETFs offered at most brokerages are commission-free from the start. Vanguard just isn't the standout in this area that it used to be, but it's still one of the things that Vanguard does best.
A nice perk that could be overlooked is that Vanguard does not charge you to place an order of its own funds by phone, unlike many other brokers. However, it does charge you $25 to order ETFs from other fund companies via phone.
Low-cost funds: Vanguard has long been synonymous with low-cost funds, and that tradition continues. In addition to its own ETFs, Vanguard’s mutual funds number more than 140.
Whether you choose one of its mutual funds or ETFs, you can be sure you’re getting a good deal. Besides not charging any sales load, Vanguard’s funds have among the lowest expense ratios in the industry, fees that could otherwise really eat into your returns over time.
Vanguard says that its average fund, including both mutual funds and ETFs, has an expense ratio of a razor-thin 0.11 percent. That compares to 0.62 percent across the industry.
No-transaction-fee mutual funds: Vanguard offers a truly astounding number of mutual funds on its platform: more than 15,000. So chances are that you can find what you’re looking for in a fund. Of these, more than 9,800 can be purchased without a sales load, while more than 3,000 can be traded without a transaction fee. That compares nicely to some of the top in the industry, such as Charles Schwab and TD Ameritrade, both of which have more than 4,000 such funds.
No account minimum: Vanguard has no account minimum, so you can open an account without immediately funding it. You’ll still need enough to buy at least one full share of any security you buy, because Vanguard doesn’t allow you to buy fractional shares.
Vanguard is a broker that fits a specific kind of investor just right, though it won’t appeal to some types:
- The copious amount of educational and planning resources help many investors set up an easy-to-manage investment plan.
- Vanguard offers a huge selection of low-cost funds – which customers can trade without a commission.
- However, trading commissions and the trading platform will probably not appeal to active investors.
Investors seeking alternative brokers offering commission-free ETFs could turn to almost any major broker with $0 stock and ETF trades, including TD Ameritrade and Fidelity Investments. Active investors who need a fully-featured, customizable trading platform should check out Interactive Brokers and Fidelity.
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