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Charles Schwab vs Vanguard (2024)
Compare Vanguard versus Charles Schwab: which is better in 2024? IRA/Roth accounts, online investing fees, stock broker mutual fund rates, and differences.
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Vanguard vs. Charles Schwab: Highlights
• Clients of Schwab and Vanguard can open both advisory and brokerage accounts.
• Schwab, but not Vanguard, has some really lucrative bank products.
• The best trading software will be found at Schwab.
Schwab vs. Vanguard Introduction
Vanguard and Schwab are two of the most popular investment firms out there. Before choosing one over the other, take a look at our research on these two powerhouses.
Commissions
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Options
Commission |
Maintenance
Fee |
Annual IRA
Fee |
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Charles Schwab
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$0
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$49.95 ($0 to sell)
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$0.65 per contract
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$0
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$0
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Vanguard
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$0
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$20
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$1.00 per contract
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$20*
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$20*
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Services
| Broker Review |
Cost |
Investment Products |
Trading Tools |
Customer Service |
Research |
Overall Rating |
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Charles Schwab
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Vanguard
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New Account Promotions
Charles Schwab: $0 commissions + satisfaction guarantee at Charles Schwab.
Vanguard: does not offer promotions.
Invest
Vanguard kicks off its investing service with a simple, automated program. Called Digital Advisor®, the service uses a software program to pick Vanguard ETFs for the enrolled account. The cost is either 0.20% or 0.25%, depending on the investment approach selected. The minimum is $3,000.
Schwab also has a robo program. Called Intelligent Portfolios®, the automated program is free with a $5,000 investment and uses exchange-traded funds from an assortment of families.
Both firms also have human-managed accounts that come with a variety of fees and minimums, depending on the setup chosen. Only Schwab has branch locations for in-person service.
Then there are the brokerage accounts. These come with a long list of tradable products, including stocks, bonds, funds, options, and fixed income. Only Schwab offers trading in futures, forex, OTC stocks, and foreign securities.
Winner: Schwab
Bank
Vanguard has a simple cash account called the Cash Plus Account. It is a brokerage account that can be used to invest in five (only five) money market funds. There is also an FDIC-sweep system that delivers insurance from Uncle Sam plus an APY of 4.7%.
Schwab operates its own bank with FDIC insurance, so there’s no sweep. Interest rates on its checking and savings accounts are much lower than what Vanguard customers earn, although there are seventeen money market funds, some of which pay above 5.0%. Only Schwab offers checkbooks and Visa debit cards.
Winner: Schwab
Margin
Brokerage customers at both firms can sign up for margin trading. The cost of this service is based on
the amount of money borrowed. Vanguard’s stepped schedule starts at 13.25% and ends at 11.25%.
Schwab’s tiered system ranges from 13.075% to 11.325%. Only Schwab displays margin requirements for entered ticker symbols on its software, and only Schwab offers trading in option spreads. Short selling is possible at either firm.
Winner: Small advantage to Schwab
Mobile Apps
For trading and security research, there are mobile apps from both firms. Schwab manages to deliver two of them. Its main app has tons of resources on it, including an Artificial Intelligence, mobile check deposit, and live video news. The platform has horizontal charting and integrated option strategies. All of this is before we get to the thinkorswim app, which brings trading and charting to a higher level with advanced charting and a sophisticated order ticket.
Vanguard has just one app, and it is very simple. For example, there is no horizontal charting, and we didn’t find integrated option spreads. In fact, there are no chains at all. And just forget about an AI or streaming video news. Mutual funds from non-Vanguard families can’t be traded, either.
Winner: Schwab
Websites
Vanguard’s software improves quite a bit when we get to its website. Now, there are horizontal charts and chains for options (calls and puts only). Non-Vanguard funds can be traded here, too. The order ticket on the site is the same one we found on the mobile app. Available trade choices include:
- Limit
- Market
- Stop
- Stop Limit
Schwab goes quite a bit further in the trading category by delivering OCO, OTOCO, and contingent orders. Schwab’s site is also easier to navigate thanks to an intuitive top menu. Plus, the site has a trade bar at the bottom and a web-browser platform, both of which are missing on the Vanguard site. The trade bar doesn’t deliver actual trade capability, although a trade link produces the web-based ticket.
Schwab’s trading platform creates a new tab in the browsing window. It continues with the thinkorswim moniker and has some really nice features, like a price ladder, time & sales data, and Level II quotes. Simulated trading is icing on the cake.
Winner: Schwab
Desktop Programs
Schwab, but not Vanguard, goes one step further with a very sophisticated desktop program that advanced traders will absolutely love. Schwab keeps the name thinkorswim but brings trading to a higher level with all sorts of bells and whistles. Examples include on-demand videos from CNBC and more than 400 indicators for the technical traders out there.
Winner: Schwab
Additional Services
DRIP Service: Dividend reinvesting can be turned on at either broker-dealer free of charge.
Autopilot Mutual Fund Purchases: Vanguard clients can set up systematic purchases of Vanguard mutual funds. Schwab customers can do the same for any fund family.
Fully-Paid Securities Lending Program: Available at both Vanguard and Schwab.
Extended Hours: Post-market trading is available at both firms in this comparison. Only Schwab has pre-market trading (and overnight trading in some ETFs).
Fractional Shares: Vanguard customers can buy Vanguard exchange-traded funds using whole dollars. And Schwab clients can do the same with the S&P 500 stocks.
IPO Access: Schwab investors, but not Vanguard traders, can buy shares of stocks before they hit the secondary market.
Individual Retirement Accounts: Available at both firms (including both personal and small-business accounts).
Winner: Schwab
New Account Promotions
Charles Schwab: $0 commissions + satisfaction guarantee at Charles Schwab.
Vanguard: does not offer promotions.
Our Recommendations
Beginning Investors: We suggest a managed account at either firm (preferably with a human advisor in some capacity).
Stock and ETF Trading: Schwab will provide the best experience, both in terms of software and in terms of research.
Small Accounts: Vanguard for robo investing, and either firm for self-directed trading. Business IRAs should choose Schwab due to some fees on such accounts at Vanguard.
Retirement Planning & Long-Term Investing: Schwab has better education on its website and more branch locations.
Mutual Funds: Vanguard has more funds, but Schwab has better fund resources on its site. Toss up.
Charles Schwab vs Vanguard Outcome
Although Vanguard does offer a lot, it is no match for the behemoth Charles Schwab.
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Updated on 10/7/2024.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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