Vanguard vs Fidelity



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Fidelity vs Vanguard 2014: Account Pricing, Commissions, Fees



Fidelity Investments


Vanguard Brokerage Services

  • Stocks and ETFs: $7.95
  • Stocks and ETFs broker assisted: $32.95
  • Stocks and ETFs FAST (automated service phone): $12.95
  • Options: $7.95 + $0.75 per contract
  • Mutual funds: $75
  • Bonds (U.S. Treasury Auctions, including TIPS Auctions, U.S. Treasury Bills, Notes), primary market CDs: on a net yield basis
  • GSE (Agency Securities), secondary CDs, Municipals, Corporates (BBB- or higher), CATS/TIGRS, Corporates (BB+ or lower): $1 per bond ($250 max.; $50 max if maturing in one year)
  • Commercial Paper: $50 per transaction
  • Investment products: stocks, bonds, mutual funds, options, commercial paper, forex, foreign stocks, UITs, precious metals, ETFs
  • Fidelity minimum deposit to open account: $2,500
  • All Fidelity fees

  • Stocks and ETFs: $7 for the first 25 trades, $20 for subsequent trades for account with less than $50,000
  • $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™)
  • Options: $30 + $1.50 per contract
  • Options for accounts with over $1 million: $8 + $1.50 per contract
  • Mutual funds: Vanguard mutual funds - free. All others - Standard: $35; Voyager® and Voyager Select®: $20; Flagship®, $8
  • Certificates of deposit (CDs): Purchase: $5 per $1,000, Minimum: $50. Sale: $35 per transaction
  • Commercial paper: $50 per transaction; minimum purchase: $100,000
  • U.S. Treasury: $0.75 per $1,000 face amount, $40 minimum, $75 maximum
  • Mortgage-backed securities: $50 per transaction; GNMA minimum purchase: $25,000
  • Investment products: stocks, options, mutual funds, bonds, CDs, foreign securities, insurance, commercial paper, ETFs
  • Vanguard minimum deposit to open account: $3,000
  • All Vanguard fees



Fidelity vs Vanguard Brokerage Services: Pros



Fidelity Investments


Vanguard Brokerage Services

  • Great research tools with large selection of independent research from 12 firms
  • Low-cost Fidelity mutual funds
  • Free DRIPs (dividend reinvestment plans)
  • Rich selection of investment products
  • Good banking services
  • No surcharges, except for $0.0192 per $1,000 of principal in addition to commission that is added to sell orders

  • Low cost and good performance Vanguard mutual funds
  • Commission-free Vanguard ETFs
  • Free dollar-cost-averaging transactions for no-fee mutual funds. $3 per transaction, minimum purchase $100, minimum two transactions, for transaction fee mutual funds
  • Free DRIPs (dividend reinvestment plans)
  • No ACAT fee



Fidelity vs Vanguard Brokerage Services: Cons



Fidelity Investments


Vanguard Brokerage Services

  • Extremely high commissions ($75 per transaction) on non-Fidelity mutual funds
  • $12 annual Low Balance Fee for each noncore Fidelity mutual fund if balance is under $2,000
  • $75 (minimum) mutual fund Short Term Redemption Fee (if a mutual fund is sold less than 180 days after purchase)
  • High margin rates
  • Foreign currency wires cost up to 3% of principal
  • No free streaming quotes (these are available only to active traders, which requires 120+ trades per year via the Active Trader Pro platform)

  • High commissions for majority of investors
  • If account is not signed up for electronic statements, $20 annual account service fee is charged for each Vanguard fund with a balance of less than $50,000 in an account
  • Annual IRA fees: $25 for SIMPLE IRA, $15 for 403(b)(7), $20 for Individual 401(k)/Roth 401(k) plans, $20 for 529 plan
  • Poor trading and research tools
  • $3,000 minimum to open account is somewhat high
  • No pre-market trading and shorter after-hours trading: 4:15 pm - 6:00 pm EST, instead of 4:00 pm - 8:00 pm EST



Vanguard vs Fidelity Investments: Comparison Summary


Vanguard Brokerage Services (Vanguard Review) and Fidelity Investments (Fidelity Review) are known primarily for their own families of mutual funds rather than their brokerage services. As ETFs (thanks to their lower costs and ease of trading) are increasingly replacing mutual funds in investor portfolios, the importance of both firms is steadily diminishing.

Outside of mutual funds, Vanguard has little to offer: its commissions are higher than at many other online brokerage houses, and it doesn't seem to be able to keep up with competition in richness of services and in trading technology.

Fidelity Investments provides its customers with rich selection of investment products, access to great independent third-party investment research from 12 companies, and many low cost Fidelity-family mutual funds.

There is a general consensus that Vanguard's mutual funds are lower cost and better performers than their counterparts at Fidelity Investments. Vanguard also offers dollar-cost-averaging transactions for mutual funds for those clients who choose to accumulate positions over time. Free dividend reinvestment is always a great plus too.

When comparing retirement accounts (Roth, Traditional, and Simple IRA), Vanguard comes ahead: Fidelity disappoints by charging low balance fee and short term redemption fee which many other brokerages don't charge. Neither of these companies was included in our Best IRA Firms in 2014 list.

There are better brokerages for beginner investors, offering vibrant online communities where users can ask questions, learn from more experienced members, and even get investment ideas. Some discount brokers also offer a virtual trading environment that allows users to practice trading and test different trading strategies without risking real money. If you are new to investing, check out our Best Brokers for Beginner Investors recommendations.

We are recommending Fidelity Investments and Vanguard only to clients looking to invest mostly in these firms mutual funds and ETFs. Vanguard Brokerage is a better option for "buy-and-hold" mutual fund investor. Fidelity is great for anyone who likes to research investments extensively before buying, and to have more options of investment products. For everyone else there are better brokerage firms to choose from.
This article was updated on 8/12/2014.


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Review discount online brokerage firms comparison: Vanguard or Fidelity Investments? Differences between investment companies. Recommendation for stocks, options, ETFs, mutual funds, bonds investors. Fidelity versus Vanguard for beginner investors, long term, individual retirement accounts, active/day traders. See what stock broker service is better, cheaper, offers lower fees, cost, rated higher and easier to use. Which you should choose?


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