Vanguard Review 2015: Commissions, Fees, and Minimum Deposit
|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 $1,000,000-$10,000,000 (Flagship Services)|
|Free for first 500 trades, $2 for subsequent trades for account with $10,000,000+ (Flagship Select Services)|
|Options|| $20 + $1 per contract (Voyager: $7 + $1 per contract; Voyager Select and Flagship: $2 + $1 per contract)|
|Options for accounts + 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 is $50. Sale - $35 per transaction|
|Commercial paper|| $50 per transaction; minimum purchase is $100,000|
|U.S. Treasury|| Commission-free|
|Mortgage-backed securities|| $50 per transaction; GNMA minimum purchase is $25,000|
|Investments|| stocks, options, mutual funds, bonds, CDs, foreign securities, insurance,
commercial paper, ETFs|
|Vanguard minimum deposit to open account|| $3,000|
Opening an account with Vanguard is undoubtedly one of the weakest areas of their product. The actual informational part of the account creation
process is somewhat standard: they ask about things like name, home address, social security number, etc. Unfortunately, this is broken up into 6 or so
different pages new clients have to click through. The lack of simplicity here has left more than one prospective member to think, “How much longer does
this need to go on?”
This account creation process complaint is somewhat minor. The main reason for the low score in this category is the wait. Once a user has successfully
given all of their information and chosen a username, Vanguard takes almost three weeks to finish setting up the account and withdraw the funds. That means
three weeks of $1,000 (the minimum amount) sitting in a checking account, not knowing when it’s going to be deducted. This is, by far, one of the longest
account creation waiting times in the industry.
Vanguard.com Website/Trading Platform/Tools Review
Vanguard Brokerage Services trading tools are not keeping up with the industry. You can't modify your order: you have to cancel it then
resubmit it (!). The charts are poor with no possibility of saving your indicators.
Vanguard provides research tools that can help you find stocks, ETFs, CDs, or bonds that meet your criteria. For example, the Stock Screener
tool enables you to sort through over 8,700 securities to identify investment options according to your performance goals, risk tolerance,
and sector or industry of interest. Lists of stocks or other instruments can be saved for future investing, or you can move directly to the
online trading interface. But comparing to competition the research tools are terrible and Stock Screener is really disappointing.
The tools for setting orders will be familiar to any investor with online trading experience, allowing you to enter orders to execute at market
price or at specified limit price. Advanced investment tools allow you to perform options trading, trade on margin, or set up CD or bond ladders,
with additional educational materials that cover these instruments.
Vanguard’s website maintains consistent branding with the rest of their products. While the home page (pictured above) looks slightly outdated,
it contains a wealth of information. The home page allows users to easily view account balances, allocation ratios, and performance.
Users can expect the road to get a little bumpier once they try to venture away from the main page. The menus up top don’t offer the best
descriptions of their intended function and once a link is clicked, the page it brings the user to is still somewhat confusing. This is mainly
because the majority of pages on Vanguard’s site are excessively wordy.
Fortunately, once a user finds their way around the Vanguard website they are able to discover lots of helpful tips. Foremost among these is
their “Insights” section. This section acts as a blog for some of the top minds over at Vanguard. Investors can find information explaining
fund fees, Vanguard’s investment outlook, global market news, domestic market news, and more. Needless to say, all of the information on the
site can keep investors very well informed.
Vanguard Review: Pros
- 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 DRIP (dividend reinvestment plan)
- No ACAT fee
Vanguard Review: Cons
- 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 Brokerage Review Summary
Vanguard is a juggernaut in the world of personal finance. They have been making waves in the financial services industry ever since their
founding in 1975 by John Bogle. Bogle founded Vanguard on the premise that well-diversified low-fee funds would outperform most other investment choices.
Since then, Vanguard has offered their signature ETFs and other funds with some of the lowest fees on market. The company has grown, and now offers IRAs
and investment brokerage accounts to investors who want to setup an account with them.
There is a reason Vanguard Group is known for its mutual funds and not for its brokerage services. High trading commissions for active investors
(unless you are rich), terrible trading tools make it hard for the firm to get any recognition in the extremely competitive industry of online investing and trading.
Vanguard offers several tiers of service: depending on the total amount of assets you invest with Vanguard, your transaction
fees and other costs can vary quite substantially. For example, several of Vanguard’s mutual funds offer different “share classes,”
with decreasing share cost and expense ratios available to those who can make a larger initial investment. The lowest initial investment
is $1,000, and applies to, among others, all of Vanguard’s “Target Retirement” funds. These are a good option for IRA investing,
claiming to maintain an appropriate balance of assets based on the indicated retirement date. Also, once an IRA is established and the
initial investment is made in one or more funds, recurring automatic investments of as low as $1 can be made and are never subject to
any transaction fees. Keep in mind, however, that each fund owned will incur an annual fee of $20. Fortunately, this expense is easily
avoided simply by signing up for account access on Vanguard.com and agreeing to receive your statements and other information electronically.
Vanguard’s tiers of service make a difference here as well: individuals with assets totaling more than $50,000 are never subject to these fees.
The company charges annual fees for IRA accounts: $25 for SIMPLE IRA, $15 for 403(b)(7), $20 for Individual 401(k)/Roth 401(k) plans,
and $20 for 529 plan. Because of that and the high investing commissions the firm did not make it into our
Best Brokerages for IRA list.
One of the main advantages Vanguard Brokerage offers, is their own ETFs that clients could get commission-free (of course, there is expense fee
charged by the ETF). We also like free dividend reinvestment and an ability to dollar-cost-average mutual funds investing.
The time of mutual funds is slowly but surely coming to the end. They are being replaced in investor portfolios by low-cost and easy to
buy/sell Exchange Traded Funds (or ETFs). Even though Vanguard Brokerage Services created its own ETFs, there are similar, better-known
and more widely used analogs available to everyone in every brokerage firm. We believe that the company will have hard time attracting
new customers in this new environment.
Because of all the above reasons, we recommend Vanguard Brokerage only to customers looking to invest almost exclusively in
Vanguard-family mutual funds and ETFs. For everybody else there are better Online Brokerage Firms
None right now.
Reviewed by Brokerage Review on
Reviewed by Editor and Vanguard customers.