Investing > Vanguard Brokerage Review

Vanguard Brokerage Review

Vanguard's low fees and large variety of mutual funds are very popular among long-term investors.

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When you think of investing, do you think of long-term financial planning?

If so, Vanguard could be just what you’re looking for. The firm has a reputation for maintaining low-cost investing with a long-term perspective.

To help investors better allocate their hard-earned cash, Vanguard recently announced commission-free online transactions on about 1,800 ETFs, a variety of proprietary, low-cost ETFs and lower investment minimums for almost 40 of the lowest-costing index funds.

If you day trade or actively trade, Vanguard might not be for you. Their business model isn’t ideal beyond the buy-and-hold strategy.

At Vanguard, you’ll have access to a large selection of low-fee mutual funds, financial planning, lessons in investment and stock broker services. The broker are a best suited to passive, retirement investors.

Fast Facts

  • Account Minimum: $0
  • Mutual Funds: $0
  • Stock Trades: $0
  • Best for: Long-term, passive traders
  • Highlight: Vanguard Portfolio watch to assess your portfolio

Rating

  • Portfolio Analysis: 6/10
  • Tools & Resources: 6/10
  • Commissions & Fees: 6/10
  • Usability: 6/10
  • Education & Insights: 6/10
  • Customer experience: 5.5/10
  • Overall: 6/10
Open Account on Vanguard’s website

Investor Warning: You could lose money by investing in Vanguard’s fund. Although the funds seek to preserve the value of your investment, they cannot make a guarantee. Any investment in the funds are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The funds’ sponsor has no legal obligation to provide financial support to the funds, and you should not expect that the sponsor will provide financial support to the funds at any time.

What is Vanguard?

The Vanguard Group was founded in 1975 by the late Jack C. Bogle to disrupt the investment space by focusing on low-cost investing. It is now the second largest mutual fund company in the world, and holds about $6.2 trillion in assets under management (AUM), as of January 31, 2020.

Bogle wanted to create a more accessible industry and believed that the less investors pay in fees, the more money you stand to make. Today, the broker offers of a large selection of mutual funds with zero transaction fees and around 1,800 fee-free ETFs.

You can also avail of Vanguard’s financial planning, lessons in investing, brokerage services, asset management and trust services.

Vanguard Overview and Summary

  1. Jack Bogle helped the average American save for retirement more than any other broker.
  2. Vanguard is best suited to passive traders who are interested in long-term, fee-free investing.
  3. Vanguard charges a yearly fee of $20 for a brokerage account, with a few reasonable options to eliminate the fee.
  4. Vanguard provides practical educational resources, posing real-life situations and providing solutions.
  5. Nearly all trades with Vanguard are commission-free.

Jack C. Bogle and The Vanguard Brand

John (nicknamed, Jack) C. Bogle helped the average American save for retirement more than any other broker in investing. After Bogle’s passing in January 2019, The Vanguard Group was contributing about $21.1 billion annually into retirement accounts that would otherwise be used as fee income for Wall Street.

An image showing John C Bogle Memorial
John C. Bogle founded Vanguard with a focus on looking past hype and investing for the long-term.

However, this is a modest estimate based on Morningstar data, that takes into account how much investors saved on its low-cost mutual funds, money market funds and exchange traded funds, compared to competitors. It does not take into consideration, however, the lower fees that customers of other firms have to pay.

Jack’s revolution resided around investing in low-cost, passive index funds that tracked markets, instead of trying to beat them.

Jack Bogle’s Investment Philosophies to Help You Succeed

Interestingly, The Vanguard Group was created after Jack got fired for making an “unwise decision” in a previous company. Jack said:

When I was 38, I became head of Wellington Management, and I did an extremely unwise merger. I got wrapped up in the excitement of the go-go era, and the go-go era ended. As a result of that stupid decision, I got fired. The great thing about that mistake, which was shameful and inexcusable and a reflection of immaturity and confidence beyond what the facts justified, was that I learned a lot. And if I had not been fired then, there would not have been a Vanguard.

Here are some of Jacks investment philosophies to help you on your way to success:

  • Don’t over complicate things, keep things simple.
  • Don’t get caught up in the hype.
  • Keep those fees to a minimum.
  • Stop making impulse buys.
  • Be realistic.

An Insight Into the Vanguard Brand

Our core purpose…is to take a stand for all investors, to treat them fairly, and to give them the best chance for investment success.

In 2018, Vanguard was named and ranked as one of the strongest brands in nearly 100 categories and remains the only financial services company in the “Top 13 Brands of the Year with the Largest Equity Increase.” The company also ranked as the top financial services brand in the investment category. What makes the Vanguard brand stand out over others financial services?

Vanguard is owned by its mutual funds and as a result, the investors of those funds. So, the success or failure of the company, directly affects investors; The more the company grows and becomes successful, the more success investors have, too.

Revenue, after expenses is returned in two ways. Firstly, through reinvestments in the business, and secondly, through lower-fund expense ratios. Nutter-Wiersbitzky believes that this allows Vanguard to maintain its low costs with high quality investment success.

How Does Vanguard Work?

You can sign up to Vanguard in 4 easy steps but first, here’s what you’ll need to get started:

  • Social Security number
  • Email address
  • Your U.S. address
  • Employer’s name and address, if applicable

Vanguard charges a yearly fee of $20 for a brokerage account. Unless, You have a premium account with at least $10,000 in Vanguard funds and ETFs, or you signed up to receive electronic statements and paperwork.

Four Steps to Getting Your Vanguard account:

Step 1: Fill in your personal information

Step 2: Fund your account

Step 3: Review and sign

Step 4: Create an online account.

Who is Vanguard Best For?

Vanguard is best for you if you consider yourself one of the following:

  • Long-term investing
  • Fee-free investing
  • Index fund & ETF investing
  • Passive Investor

Vanguard manage trillions of dollars in assets, making them a powerful broker when it comes to funds. Vanguard is the perfect fit for customers looking to invest in the company’s funds, and their exchange-traded funds are commission free, too.

Vanguard is best suited to passive traders who are interested in long-term, fee-free investing.

Vanguard Review: The Best Features

Vanguard Portfolio Watch

Vanguard offers an impressive suite of tools, including its popular Portfolio Builder.

Vanguard Portfolio Watch is a tool on Vanguard’s website that assesses your portfolio and cautions you if you have strayed too far from the criteria you set with the help of Vanguard, including non-vanguard funds, if you have listed them.

The tool can alert you to the fact that your action is off the mark so that you don’t do anything unintentionally. Once you have included all your assets, Portfolio Watch will give you a full, detailed story of your finances and where any potential risks may lie.

Portfolio Watch will then break down your assets into a number of categories, such as the size of your company or your investing interests, too much tax-inefficient funds in taxable accounts, an abnormally high weight to international stocks, and assess if there’s a way to improve things before recommending some options to you.

Overall, it’s a good tool for giving you a broader perspective of your finances, averting any potential risks and helping you stay on track of your plan.

Where Vanguard Portfolio Watch Could Improve

Vanguard’s Portfolio Watch may not always break down your funds correctly. Instead of breaking funds down into component sub-classes it assesses most funds as being in their primary stock category.

For example, if your fund is 65% mid-cap and 35% large-cap, it may define your fund as 100% mid-cap and give a false alert to too many mid-caps.

Education: Vanguard’s Lessons in Investing

  • I left my job, what happens to my plan?
  • What are the key dates to my retirement?
  • How do I turn savings into income?

Vanguards lessons section is practical in the realist of ways. It poses real life situations and provides solutions to help you determine the best path to take. You can also get access to videos and podcasts analysing the current market so you’re always informed and up to date.

Their retirement-planning tools, resources and calculators are useful for any age. Investors can create a strategy to meet your goals and look at your funds all in one place, as well as helping you to get rid of college debt or hit your retirement savings plan.

You’ll learn how to turn your savings into income, and how to handle any financial emergencies. With so many resources dedicated to long-term financial planning, Vanguard makes the number one spot in our list of the top brokers for Roth IRAs.

A Vanguard Lesson: How Much Should I Be Saving?

Vanguard Website's Lessons section with perk up your savings page selected
Vanguard offers a number of educational resources to inform you of how much you should be saving.

Vanguard suggests saving 12% to 15% of your pay each year for retirement, including any contributions by your employer.

One of the brokers most popular lessons helps you figure out how much you should be saving. The average investor, they state, saves 10% in their retirement plan, including their employers contributions. That’s two percentage points lower than the range they suggest.

Vanguard’s simple solution to help you reach your goal

  1.  Increase your savings by just a little, everything helps, even if it’s just a percentage point.
  2.  Boost your savings rate by a little more year on year until you’re at the suggested range

Does your plan offer an annual savings increase feature? If so, then the company suggest signing up for it. Once you do, Vanguard will increase your savings rate annually. And it’s all automatic, so you won’t need to remember a thing.

Are Vanguard ETFs Commission-Free?

Vanguard provides its users with a big selection of commission-free ETFs

Vanguard want to do right by their customers and give them access to the vast majority of ETFs. That’s why they offer over 1,800 ETFs, commission free. Vanguard also offer 75 of its own funds, 20 of which were named “best” by Money Magazine.

The brokers goal is to “lead the way on behalf of investors who think and feel differently about investing.”

While commission-free ETF brokers were once a stand-out offer among competitors, the recent industry shift towards zero-fee commissions for these funds has meant that it’s becoming the norm. This means that although it’s one of Vanguard’s highlights, it doesn’t make them a top broker for ETFs.

If you’re interested in their ETFs, Vanguard will provide the tools you need to help you get started, including; helping you examine mutual fund and ETFs similarities and differences and finding stock and bond ETFs from the US and around the world.

How do Vanguard’s fees compare to the competition? See our Vanguard vs Merrill Edge comparison.

Low-Cost Funds: A Vanguard Tradition

Vanguard are probably most known for their low-cost funds. In addition to 75 ETFs, the company offers more than 140 mutual funds. Both their ETFs and mutual funds will give investors a fair deal. Vanguard don’t charge any sales load and have one of the lowest expense ratios in the industry.

Vanguard states that its average fund, including both mutual funds and ETFs, has an expense ratio of 0.10% as of December 31, 2019.

If you’d like to create your own portfolio, Vanguard invite you to choose from their list of funds. Their goal, they say, is “to help [customers] get the most for [their] money by combining low costs, diligent fund management, and exceptional service.

Simply choose a fund name to see after-tax and standardized returns. Then compare up to 5 funds by ticking the boxes next to the fund and selecting the “Buy” button below.

Vanguard’s Impressive Mutual Fund Selection

Vanguard offer a wonderful selection of over 15,000 mutual funds, giving you a good chance of finding what you need. More than 9,800 of these can be purchased without a sales load, and you can trade more than 3,000 without a transaction fee.

Note: This is just below the industry leads, such as TD Ameritrade and Charles Schwab, who offer more than 4,000 funds.

Does Vanguard Have an Account Minimum?

With Vanguard, the account minimum is $0. However, with a recent industry transition toward lower fees, this isn’t a stand-out feature, although it is a Vanguard highlight.

That said, Vanguard doesn’t allow customers to buy fractional shares, so you’ll need to have enough to buy a minimum of one share of any security.

Vanguard Personal Advisor Services

We’ve already discussed the pillars of Vanguard’s investing philosophy. If simple, low-fee, long-term and goal-oriented investing in mutual funds and ETFs appeals to you, Vanguard’s Personal Advisor Services (PAS) should also be considered.

Vanguard’s PAS is part robo advisor – but it is far from a typical one. This hybrid service offers a combination of software-based solutions, such as automatic rebalancing, and professional advice from Vanguard’s financial advisors – who are fiduciaries, and quite often certified financial planners.

When it comes to the better option, there is much debate surrounding the difference between a human and robo advisor. Vanguard circumvents this debate and combines the best of both worlds with its PAS.

The minimum investment requirement is a hefty $50,000. If you can afford it, you’ll get access to a team of financial advisors that are available from 8AM to 8PM eastern time via phone, email, and videoconferencing.

If your account balance reaches $500,000, a dedicated financial advisor will be assigned to your account. The annual fee, which is billed quarterly, begins at 0.30%, which is already quite attractive – but it is gradually reduced for assets above a certain value..

The service entails a lengthy sign-up process in which you’ll be asked to give a thorough account of your assets, both those that are managed by Vanguard and those that aren’t, as well as your goals and risk tolerance.

Once the online questionnaire is filled in, the next step is a conversation with an advisor, after which Vanguard will begin to formulate a custom, tailor-made approach for meeting your goals. Your input matters, and you have the final say before anything is put into motion.

You’ll be able to monitor the performance of your investments via web platform and mobile app, and Vanguard’s dedicated employees will always be on call to provide you with advice. If your goals or circumstances change, your portfolio can be adjusted to reflect those changes.

The PAS will also formulate a tax-friendly distribution plan and minimize your tax burden. If you want an automated investing experience that can be as hassle-free or hands-on as you’d like, check out our in-depth review of Vanguard’s PAS to find out more.

Where Vanguard Falls Short

Trading Platform

As Vanguards focus is on long-term investments, they only offer a standard order interface. This isn’t a crucial downfall, however. If you’re a long-term financial investor with a low trading volume, Vanguard might be just what you’re looking for.

Trading Commissions

Stock trading is commisson-free with Vanguard. The only time you’ll have to pay fees is if you make trades by phone.

Still, much of the investing technology and trading technology do not make Vanguard ideal for active day traders. As a result, Vanguard does not make our list of the best platforms for day trading.

Vanguard Fees

Vanguard charges a $20 annual account fee, unless you have $10,000 or more in Vanguards ETFs or mutual funds. However, you can simply sign up to receive electronic statements to avoid this fee, which may actually be a good incentive to encourage more customers to go paper-free.

Final Thoughts: Vanguard Review

The Vanguard Group company began with the belief that long-term investing, such as retirement funds, were the most beneficial, and so, Vanguard’s structure encourages this kind of investing.

Due to its focus on long-term financial planning, Vanguard isn’t one of the best online stock trading platforms you’ll find. But it still has plenty of world-class features. Vanguard offers a wonderful selection of lessons and planning tools to help investors understand and manage investment plans — with a reputation of focusing on the long-term.

Vanguard are most notable for their low-cost funds that allow customers to trade with zero-commissions. For investors looking for zero-fee ETFs or high frequency trading, there are plenty of other options to check out. We recommend a review of Fidelity Investments or a quick look at the pros and cons of TD Ameritrade.

Compare Vanguard

Find out how Vanguard stacks up against the competition.

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on TheTokenist.io. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.

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