Vanguard Review: 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|| $1,000|
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. 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. This is, by far, one of the longest account creation waiting times in the industry.
Vanguard Mutual Funds Review
Vanguard Group is one of the largest providers of mutual funds in the world. Vanguard family mutual funds include a collection of 117 actively managed
mutual funds, and over 150 U.S., exchange traded and international funds and financial portfolios. These funds focus on a number of financial goals,
risk levels, sectors and returns.
So which mutual fund should users choose for their portfolio? They all differ in performance, portfolio composition and expenses. We did
the research and below list the best Vanguard mutual funds in popular categories:
Vanguard.com Website/Trading Platform/Tools Review
Vanguard Brokerage trading tools are not keeping up with the industry. Users can't modify their orders: they have to cancel and then
resubmit them (!). The charts are poor with no possibility of saving user indicators.
Vanguard provides research tools that can help users find stocks, ETFs, CDs, or bonds that meet their criteria. For example, the Stock Screener
tool enables users to sort through over 8,700 securities to identify investment options according to performance goals, risk tolerance,
and sector or industry of interest. Lists of stocks or other instruments can be saved for future investing, or can moved directly to the
online trading interface. But, comparing to competition, the research tools are weak and Stock Screener is really disappointing.
The tools for entering orders will be familiar to any investor with online trading experience. Advanced investment tools allow users to
perform options trading, trade on margin, or set up CD or bond ladders. There are educational materials on their website that cover these instruments.
Vanguard’s user account home page (pictured above) looks outdated, but it contains a lot of information. It 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 on 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 that 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.
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; for transaction-fee mutual funds dollar-cost-averaging is $3 per transaction, with $100 minimum purchase
- Free DRIP (dividend reinvestment plan)
- No ACAT fee
Vanguard Review: Cons
- High commissions for many investors
- If account is not signed up for electronic statements and it's under $10,000, $20 annual account service fee is charged for each Vanguard fund
- Annual IRA fees: $25 for SIMPLE IRA, $15 for 403(b)(7), $20 for Individual 401(k)/Roth 401(k) plans (waived if you go paperless or have $10,000 in your account), $20 for 529 plan
- Poor trading and research tools
- No pre-market trading and short after-hours trading: 4:15 pm - 6:00 pm EST, instead of 4:00 pm - 8:00 pm EST
- Vanguard does not list all their fees on their website - they ask to call them for information on fees
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.
But there is a reason Vanguard Group is well known for its mutual funds and not for its brokerage services. High trading commissions for active investors
(unless they are rich), and terrible trading and research tools make it hard for the firm to compete effectively in the extremely dynamic industry
of online investing and trading.
Vanguard offers several tiers of service: depending on the total amount of assets users invest with Vanguard, their 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. Users should keep in mind, however, that each fund owned will incur an annual fee of $20 that can be easily
avoided simply by signing up for account access on Vanguard.com and agreeing to receive 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
(waived for paperless or $10,000+ accounts), 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.
The main advantage Vanguard offers, is their own ETFs that clients could get commission-free (of course, there is expense fee charged by the ETF) as well as
their low cost mutual funds. We also like free dividend reinvestment and an ability to dollar-cost-average mutual funds investing.
Because of all the above reasons, we recommend Vanguard Brokerage mostly to customers who want to invest almost exclusively in
Vanguard's own family of mutual funds and ETFs. For everybody else there are better Online Brokerage Firms
None right now.
Reviewed by Brokerage-Review.com on
Reviewed by Editor and 40+ Vanguard customers.