Index investing, aka putting your money in index funds, got its start thanks to Vanguard.
"Jack" Bogle, founder of the brokerage, created the first index fund, which offers the ability to invest in a basket of stocks and/or bonds with low fees and minimal risk.
It may not come as a surprise then that Vanguard is known for its low-cost investing options. Account holders don't pay commissions for trading stocks and ETFs, and they avoid paying transaction fees for over 3,000 mutual funds. Investors can get advice through the robo-advisor service Vanguard Digital Advisor®, which automatically manages your investment portfolio.
Below, Select reviews Vanguard's offerings to give you the details on the investment options, features and fees so you can decide if it's right for your needs.
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Vanguard review
Vanguard
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Vanguard account, but minimum $1,000 deposit to invest in many retirement funds; robo-advisor Vanguard Digital Advisor® requires minimum $100 to enroll.
Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock and ETF trades; zero transaction fees for over 3,000 mutual funds; $20 annual service fee for IRAs and brokerage accounts (waived with at least $50,000 in qualifying Vanguard assets or by opting into paperless statements); robo-advisor Vanguard Digital Advisor® charges approximately 0.15% net advisory fee annually (after fund revenue credits; 90-day fee waiver for new clients).
Bonus
None
Investment vehicles
Robo-advisor: Vanguard Digital Advisor® IRA: Vanguard Traditional, Roth, Rollover, Spousal and SEP IRAs Brokerage and trading: Vanguard Trading Other: Vanguard 529 Plan
Investment options
Stocks, bonds, mutual funds, CDs, ETFs and options
Educational resources
Retirement planning tools
Terms apply.
Pros
- No commission fees for stock and ETF trades
- No transaction fees for over 3,000 mutual funds
- One of the largest ETF and mutual fund offerings available, with an average expense ratio of 0.07%
- Robo-advisor Vanguard Digital Advisor® available with 90-day fee-free trial and approximately 0.15% net annual advisory fee after that
- Three portfolio strategies available through Digital Advisor: all-index, active/index, and ESG
- Vanguard Personal Advisor® offers access to a team of financial advisors starting at $50,000; dedicated CFP access available at $500,000 through Personal Advisor Select®
- Vanguard 529 Plan helps you save for college early on
- Excellent customer service with phone and email access Monday through Friday
Cons
- $20 annual service fee for IRAs and brokerage accounts (waived at $50,000 in qualifying assets or with paperless statements)
- Vanguard Digital Advisor® requires $100 minimum to enroll and charges approximately 0.15% net advisory fee after 90-day trial
- Digital Advisor portfolios invest only in Vanguard funds (no access to third-party ETFs)
- Basic trading platform compared to competitors; limited research and data tools
- No cash management account
Investment options
Vanguard charges no commissions for trading stocks and ETFs. Vanguard also offers the ability to buy CDs, bonds and options (although you will pay a fee to trade options and buy CDs or bonds on the secondary market). There are no transaction fees for over 3,000 mutual funds (this includes index funds), which is one of the largest mutual fund offerings around.
Parents can use Vanguard to save for their child's college education through its Vanguard 529 Plan. Meanwhile, retirement savers can open a Vanguard traditional, Roth, Rollover, Spousal or SEP IRA. And for those wanting to be more hands off with their investing, consider the automated robo-advisor platform known as Vanguard Digital Advisor.
Features
Vanguard is a solid choice for its commission-free stock and ETF trades, as well as for its thousands of mutual funds with no transaction fees.
Vanguard doesn't have many tools for those who are more active traders or interested in short-term trading, therefore leaving it a stable option aimed at investors who want to buy and hold funds, stocks or bonds for the long term. A platform like Robinhood* may be better for those looking to day trade or purchase options (which charges no fees for options trading).
User reviews make it seem that it's easier to manage your Vanguard investments on the go if you're an Apple user. The Vanguard app is available to download for free in both the App Store (for iOS), where it has 4.7/5 stars, and on Google Play (for Android), where it has a low 1.9/5 stars at the time this article was written.
Fees
Minimum deposit and balance requirements vary depending on the Vanguard account you select.
While there is no minimum to open a Vanguard account, investors must make a minimum $1,000 deposit to invest in many retirement funds. Zero-commission trades can be made with stocks and ETFs, and there are no transaction fees for over 3,000 mutual funds. Expense ratios for the ETFs and mutual funds are some of the lowest around, with an average of 0.10%, much lower than the industry average.
The robo-advisor service Vanguard Digital Advisor requires a minimum deposit of $100 to enroll. There's also up to a 0.20% annual advisory fee to use the automated investing platform (although there is a fee waiver for the first 90 days after account opening).
And, lastly, though there is a $20 annual service fee for Vanguard IRAs and brokerage accounts, this can be easily waived if you opt into paperless statements.
Bottom line
Vanguard stands out as a rather low-cost option for those looking for a brokerage account. It has a large selection of ETFs and mutual funds which appeals to long-term investors who want to see their money grow.
If you're interested in the robo-advisor element of Vanguard, you may want to first check out alternatives such as SoFi Invest®*, whose automated investing platform has zero account management fees and no minimum requirements. It offers a broad range of low-cost ETFs and will automatically rebalance your portfolio on a quarterly basis. Read our full SoFi Invest® review.
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*INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
*(Review Robinhood disclosures here.)
