Fidelity vs Charles Schwab vs Vanguard

Charles Schwab vs Fidelity vs Vanguard



Charles Schwab vs Vanguard vs Fidelity: Comparison Chart For 2014


Broker Stocks/ETFs
Commissions
Mutual Funds
Commissions
Options
Commissions
Maintenance
Fees
IRA Setup
and Annual Fees
Fidelity $7.95 $75 $7.95 + $0.75 per contract $0 $0
Charles Schwab $8.95 $76 ($0 to sell) $8.95 + $0.75 per contract $0 $0
Vanguard $7-$20 $8-$35 $30 + $1.50 per contract $20** see

** Vanguard is charging $20 annual maintenance fee (waived if user chooses to receive statements and other information electronically).


Broker Investment Products Trading Tools Customer Service Research Overall Rating
Fidelity
Charles Schwab
Vanguard


Vanguard vs Charles Schwab vs Fidelity Investments


The three firms in this comparison are among the seven largest brokerage houses in the United States. Fidelity Investments and Vanguard are known mostly for their own families of mutual funds and ETFs. But they also offer brokerage services: through them you could buy and sell stocks, options, bonds and other investments.

With Charles Schwab the situation is the opposite: the company is well-known for its brokerage services but few people know that it also offers its own extensive selection of bond, equity, and asset allocation mutual funds advised by Charles Schwab Investment Management. All these funds are no-load and "no-transaction-fee" (NTF).

In 2011 Charles Schwab bought one of the top online brokers - OptionsXpress (see review) - that will be fully integrated into the parent company in 2014. OptionsXpress offers a superior set of trading tools, a suit of valuable yet free services, a simulated trading environment, $100 bonus for opening a new non-IRA account and 50 free trades bonus for opening an IRA account. Mutual funds are $9.95 per buy transaction at OptionsXpress versus $76 at Charles Schwab!


Pricing

Fidelity Investments priced stocks and ETFs at $7.95 per trade. Charles Schwab's cost is $8.95. Vanguard's rate depends on a customer's account balance:

  • $7 for the first 25 trades, $20 for subsequent trades for account with less than $50,000 (Standard Services)
  • $7 for account with $50,000–$500,000 invested in Vanguard products (Voyager Services)
  • $2 for account with $500,000–$1,000,000 invested in Vanguard products (Voyager Select Services)
  • Free for first 25 trades, $2 for subsequent trades for account with $1 million (Flagship Services)

Fidelity Investments is the most expensive company for transaction-fee, no-load mutual fund investors: $75 per transaction. Charles Schwab priced these funds at $76 to buy and $0 to sell. Vanguard, again, has tiered cost structure: Standard members pay $35 per transaction; Voyager and Voyager Select - $20; Flagship - $8.

While Charles Schwab and Fidelity Investments do not charge account maintenance and inactivity fees, Vanguard imposes $20 annual maintenance fee (waived if user chooses to receive statements and other information electronically).


Services

Charles Schwab and Fidelity Investments are the best ranking firms in customer service. These two companies also created very easy-to-use trading tools that will satisfy everyone but day-traders. Fidelity Investments is also one of the best in the industry in providing clients with independent investment research. Vanguard lags behind the competitors in all these three categories.

Fidelity Investments and Charles Schwab do not charge IRA accounts (ROTH, Traditional, and self-employed IRAs) setup and custodial fees (sometimes called annual or maintenance fees). There is, however, a fee if you decide to move your IRA or non-IRA account to a different firm. The links to full lists of fees charged by the companies is available in their reviews (links to reviews provided at the bottom of the article).


Recommendations

Vanguard brokerage is a good fit to those clients who mostly want to invest in Vanguard-family mutual funds and ETFs.

Fidelity Investments is great for customers who are looking for the best independent investment research (top company in this category) or plan to invest in Fidelity-family mutual funds and ETFs.

Charles Schwab is recommended for clients new to investing, though the firm is not as good in this area as some of the companies in our Best brokers for beginner investors article.

For everyone else, especially for those looking for an IRA account, mutual fund investors, options traders, and long-term investors, we recommend Charles Schwab's OptionsXpress.

Much more information is available in detailed brokerage reviews, including firms' pros and cons, all commissions and important fees, and trading tools overview:

OptionsXpress review,

Charles Schwab review,

Fidelity Investments review,

Vanguard Brokerage review.

This article was updated on 9/2/2014.



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