Vanguard rating

Vanguard Review


Vanguard Pricing and Minimum Deposit


InvestmentsCommissions
Stocks and ETFs $7 for the first 25 trades, $20 for subsequent trades for account with less than $50,000 invested in Vanguard products
$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)
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 $0; most Vanguard mutual funds have a minimum investment of $3,000
FeesVanguard fees


Overview of Vanguard


Investors often choose Vanguard (member of SIPC) for the brokerage firm's large selection of mutual and exchange-traded funds with low expense ratios. But other fund families now have very low costs, while Vanguard offers investment services in other areas. Let's analyze how Vanguard performs today in important categories and see where it shines and where it fails to deliver.


Customer Support


Vanguard Customer Support Rating

Vanguard has representatives on the phone from 8 o’clock in the morning until 10 o’clock in the evening, EST, Monday through Friday. The broker is closed on the weekend. There are different phone numbers for different departments. For example, insurance services has a separate number from education accounts. There is also a phone number that can be used by clients who are travelling outside the U.S.

While the broker’s website doesn’t have an on-line chat function, internal messaging is available after logging in. Languages besides English are not available at Vanguard, and the brokerage firm does not have any branch locations.

Compared to some of its rivals, Vanguard falls short in this category. WellsTrade, for example, provides customer support 24/7, while E*Trade has an on-line chat function and several branch locations.


Vanguard Commissions, Fees, and Account Requirements


Vanguard Fees Rating

Vanguard has a complicated commission schedule with several pricing tiers, depending on an account’s balance. Stock and ETF trades can cost anywhere between $0 and $20.

Accounts with less than $50,000 pay $7 for the first 25 trades in a year, then the price increases to $20. Accounts above $50,000 but below $500,000 pay $7 for all trades. At half a million dollars, the equity commission drops to $2. At one million dollars, the commission goes down to $0 for the first 25 trades, then back up to $2 for the rest of the year. Flagship Select customers (defined as more than $5 million in assets) get 100 trades free, at which point the trading fee goes back to $2. Clients with less than $1 million in assets pay an additional $18 for phone orders.

Option contracts at Vanguard cost $1 each for all customers, plus a base charge of either $2 or $7. Accounts with more than $500,000 get the lower base commission.

An investment account can be opened at Vanguard with any deposit or no deposit at all. The broker does not charge a low-balance, maintenance, or inactivity fee. There is an annual fee of $20, but it can be avoided by signing up for e-delivery of account documents. The brokerage house will also waive the fee for accounts that have at least $10,000 invested in Vanguard funds, or at least $50,000 in total assets.

Large accounts obviously have generous policies here, but most investors will probably be under $50,000. Thus, Vanguard’s commission schedule isn’t competitive for most customers and they will be better off with other brokers, such as Firstrade ($2.95 per trade) or Ally Invest ($3.95-$4.95 per trade).


Trading Tools


Vanguard Trading Tools Rating

Vanguard doesn’t have a desktop platform, and that subtracts one star immediately. Moreover, the brokerage firm doesn’t even offer an elementary browser-based trading system. Many of Vanguard’s rivals have at least one of these tools.

Trading at Vanguard takes place on the broker’s website, and it’s fairly rudimentary. There is no trade bar available, and the site is a little difficult at times to navigate. Trades are placed on simple web pages.

A stock’s profile page doesn’t have buy and sell buttons, which is somewhat of an inconvenience. Instead, the site has a link in the right-hand column that says ‘Trade this stock.’ Clicking on this link generates a new page. Here, there is an appropriate order ticket with balance information. There are also links to pages that discuss how to submit an order and how to use different types of orders. Stop and stop limit orders are available, but there are no trailing orders.


Vanguard Review: Website


Mobile App


Vanguard App Rating

Vanguard traders who don’t want to use the website can use the broker’s mobile app, which can be downloaded free of charge. It is compatible with Apple and Android phones and tablets. There is also a platform for Amazon Kindle.

The app has several useful features. For instance, there is a portfolio analysis tool that looks at an account’s asset allocation and displays a pie chart with a breakdown among investments, such as bonds, stocks, and short-term reserves.


Vanguard Mobile App Review


Also not to be missed on the broker’s app is the Vanguard news section. Here, the company presents many articles covering a wide range of investment topics, such as the recent change in U.S. tax law and delaying IRA contributions.

The app has a watch list, although it is not synched with the website. Statements and trade confirmations in pdf format can be accessed on the platform. Mobile check deposit is available as is transaction history.

Market indexes are shown on the app. Besides the American exchanges, there are also indexes from Europe and Asia. Rates for bonds and currencies are also shown, but there is no data for commodities. Graphs for the indexes are displayed, and two or more can be compared to each other.

Security research is available for ETF’s, stocks, and mutual funds, although the information presented is rather limited. While Vanguard mutual funds can be traded on the app, non-Vanguard mutual funds can only be traded on the broker’s website, a disappointing feature.


ETF's


Vanguard ETFs Rating

In the past, Vanguard managed exchange-traded funds with the industry’s lowest expense ratios. But several investment companies in recent years have challenged Vanguard on this issue, and some of them are now actually lower than Vanguard. For example, Fidelity’s Consumer Staples ETF (FSTA) charges 0.084%, while VDC, Vanguard’s equivalent fund, charges a slightly higher 0.10%.

All of Vanguard’s ETF’s are free to trade on Vanguard.com. Currently, there are 71 Vanguard ETF’s available for purchase. Amazingly, the broker doesn’t have a short-term redemption fee for them, although the broker does not permit trading the same ETF more than 25 times per year.


Vanguard Investments Review


The ETF screener on Vanguard’s site has both basic and advanced modes. Criteria that can be selected include fund size, minimum investment, number of holdings, and active or passive management. A fund’s profile page offers limited information, such as volume and bid-ask spread. There is also a basic chart available.

Although not all brokerage firms offer commission-free ETF’s, some actually provide more than Vanguard does. TD Ameritrade, for example, offers over 250 ETF’s commission-free and Firstrade offers 700 (!).


Mutual Funds


Vanguard Mutual Funds Rating

Vanguard also has a large selection of mutual funds, both from the company itself and other fund families. There are currently 311 Vanguard mutual funds available for purchase. In total, the broker offers 6,518 investments that are open to new investors. Of this amount, 3,337 funds have no transaction fee. The option to search for no-load funds did not work in our testing, nor did the sorting feature for load status in the screener’s results.

A mutual fund’s profile page at Vanguard comes with some important data, such as portfolio composition, number of holdings, short-term redemption fee, minimum investment, and historical performance.


Vanguard Investing Review


A mutual fund can be added to a watchlist or compared against other funds. The comparison tool looks at issues such as expense ratio and SEC yield side-by-side.

All Vanguard mutual funds have no load and no transaction fee when traded on the Vanguard website, and most of them have a $3,000 minimum. Mutual funds that do have a transaction fee cost $20 for accounts below $500,000 ($8 above this level). Customers with less than $1 million in assets pay $30 or $32, depending on account balance, for trades placed over the phone. Vanguard also charges a $50 short-term redemption fee for mutual fund sales that occur less than two months after purchase.

So which mutual funds should investors choose for their portfolio? They all differ in performance, portfolio composition and expenses. We did the research and below list top Vanguard mutual funds in the most popular categories:



Vanguard Promotion


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IRAs


Vanguard IRA Rating

Besides taxable accounts, Vanguard also provides a large selection of IRA’s. These include Roth, Traditional, SEP, and SIMPLE varieties. The broker-dealer also offers an individual 401(k) plan. The SIMPLE IRA and solo 401(k) must be opened through snail mail, while the other accounts can be opened on-line.

Vanguard does not charge a fee to close a retirement account, which is more generous than some of its rivals. Fidelity, by comparison, charges a $50 IRA closeout fee. However, some Vanguard non-taxable accounts do have fees when they hold Vanguard funds. For example, a SEP IRA is charged $20 for each Vanguard fund with a balance under $10,000. This fee is assessed once per year. The fee can be avoided by reaching Flagship status, which requires an account value of $1 million or more. Signing up for electronic statements will also waive the charge.

Vanguard charges $20 annually for each Vanguard fund held in a self-employed 401(k), regardless of the fund’s balance. The fee is waived if at least one plan participant has $1 million or more in Vanguard assets.

The SIMPLE IRA is charged $25 for each Vanguard fund, although having at least $50,000 deposited with the broker will avoid it.


Financial Advice and Managed Accounts


Vanguard Managed Accounts Rating

More brokers today are offering managed account services, and Vanguard hasn’t failed to deliver here. However, the broker doesn’t have a robo-advisory service, which many of its competitors do offer today. The major player in this area, M1 Finance, provides robo-advisory investing completely free.

Vanguard charges 0.30% for its traditional portfolio management. It does require a very steep $50,000 to start. Besides the high minimum, another disadvantage of financial advice through Vanguard is the fact that the broker-dealer doesn’t have a large network of branch locations, like a Raymond James or Edward Jones. This means that investors don’t get to sit down with a financial advisor personally. Clients work with a Vanguard advisor over the phone, through the web, a videoconferencing platform, and via snail mail.

On the positive side, Vanguard’s low fee includes a personalized financial plan, which a lot of services either don’t offer or charge more for.


Cash Management Options


Vanguard Cash Management Rating

Besides investment services, Vanguard also provides its customers with some cash management tools. The VanguardAdvantage account is a hybrid securities-bank account that comes with checks and a Visa Gold debit card. Using the Vanguard debit card at a PNC cash machine incurs no fee. Vanguard does not reimburse ATM charges at other banks.

A variety of assets can be traded in the VanguardAdvantage account. These products include bonds, stocks, and brokered CD’s. Strangely, Vanguard mutual funds cannot be traded in the account.

The broker’s hybrid account is only available to Voyager Select customers, and this status requires half a million dollars in assets. Thus, small and even medium-sized investors are not eligible for cash management tools. Even worse, Voyager Select customers must pay $30 per year for the account. Vanguard even charges them $4.95 per month for bill pay. This service is free for all account sizes at many of Vanguard’s rivals.

Flagship customers ($1 million and above) receive bill pay for free. They also get free reorders of checks. Smaller accounts pay $9.95 for 120 checks.


Research and Education


Vanguard Research Rating

As already mentioned, the Vanguard mobile app provides limited research capability. The website provides more in-depth information for more securities. For example, a blog discusses many financial topics, such as retirement and charitable donations. These articles are written by Vanguard investment advisors.

A market summary page shows a U.S. economic calendar. There are important upcoming economic events on the calendar, such as the release of jobless numbers and home sales.

The market summary page also shows the performance of various economic sectors in chart format. Links to articles that pertain to the sector are also presented. Information on global and U.S. markets along with index performance can be accessed here as well.

Vanguard offers third-party equity research for free from MarketGrader and Argus. Several Vanguard rivals offer more than two reports. Schwab, for instance, offers no less than eight for widely-followed companies.

The Vanguard website has a good bond screener that can look for different kinds of fixed-income investments, such as Treasury debt or corporate bonds on the secondary or primary market.

Short articles are available on the broker’s website that cover various investment topics, such as the taxation of dividends and how to use bonds for income.


Vanguard 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)
  • Low commissions for clients with $500,000+ invested in Vanguard products


Vanguard Cons


  • High commissions for most investors
  • Poorly designed, difficult to navigate website
  • If account is not signed up for electronic statements, $20 annual account service fee is charged for each Vanguard fund under $10,000 (waived for accounts over $50,000)
  • Annual IRA fees: $25 for SIMPLE IRA, $15 for 403(b)(7), $20 for Individual 401(k)/Roth 401(k) plans (waived if account is paperless or has $10,000+), $20 for 529 plan
  • Basic trading tools
  • No advanced trading platform
  • 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 Review Summary


As you see from the above brokerage review, Vanguard provides a wide range of investment services, but these usually underperform other brokers. Vanguard obviously caters to large investors, so the broker can only be recommended for accounts above $1 million. For everybody else there are other Online Brokerage Firms to consider.


Vanguard Promotion


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Vanguard Questions and Answers


What investments can clients make through Vanguard?


Vanguard customers can trade the following asset types: stocks, options, mutual funds, bonds, CDs, foreign securities, insurance, commercial paper, and ETFs.


How much are Vanguard's fees?


List of all the fees Vanguard brokerage is charging is under this link.


What interest does Vanguard pay on cash not in stocks?


Vanguard pays no interest on uninvested cash in brokerage or IRA account unless you invest in money market funds.


What are Vanguard margin interest rates?


Current Vanguard margin interest rates could be found here.


What is Vanguard account minimum?


Vanguard does not have minimum requirements for brokerage accounts.


What minimum deposit is required to open Vanguard account?


Vanguard does not have a minimum deposit requirement to open taxable or IRA account. However, most Vanguard mutual funds have a minimum investment of $3,000.


Who is Vanguard's clearing company?


Vanguard is self clearing.


How to close Vanguard account?


You could learn how to close or transfer your Vanguard account under this link.







Vanguard Margin Rates


Debit Balance Margin Rate
under $19,999 9.00%
$20,000 – $49,999 8.50%
$50,000 – $99,999 8.00%
$100,000–$249,999 7.50%
$250,000–$499,999 7.25%
$500,000–$999,999 5.75%
above $1,000,000 5.25%



Vanguard IRA Fees


Fee Amount
Vanguard IRA setup fee $0
Vanguard annual IRA fee $25 for SIMPLE IRA, $15 for 403(b)(7), $20 for Individual 401(k)/Roth 401(k) plans, $20 for 529 plan
Vanguard IRA termination fee $0
Vanguard account maintenance fee $0
Vanguard account inactivity fee $0
Vanguard outbound full account transfer (ACAT) fee $0
Vanguard outbound partial account transfer fee $0



Vanguard reviewed by Brokerage-Review.com. Rating: 3.5