How to Buy Vanguard Index Funds

If you're not investing though a company-sponsored 401(k), the best way to invest in Vanguard's offerings is to invest directly though Vanguard's site.

Choose the type of account you're interested in (Vanguard currently supports multiple types of retirement accounts, ranging from traditional and Roth IRAs to SEP IRAs) and open an account.

You'll need your personal and banking information handy, and you can open an account in as little as half an hour. There are no account minimums required to open a Vanguard account, though many of Vanguard’s index funds add a minimum investment amount.

After you've opened an account, you'll need to link your bank account to your Vanguard profile. Enter your bank account number, your bank's unique routing number and select whether the account is a checking or other bank account.

Over the course of the next week, Vanguard will have you verify your bank information. Vanguard will make two small deposits to the linked account (both less than $1) and then immediately withdraw them.

Before you can purchase Vanguard equities, you'll need to confirm that you've linked the correct account by entering the amount in cents that Vanguard deposited to your account. This process can take a few days, so don't panic and assume that you've entered the information incorrectly if you don't immediately see the micro-deposits in your account.

After you've confirmed your banking information, you're ready to buy! To get started, click on the link titled "Buy and Sell" and click "Buy Vanguard Funds" to be redirected to Vanguard's buying page.

If you’ve never purchased a Vanguard index fund holding before, you’ll need to search for the fund you’re looking for.

Click the tab titled “Add another Vanguard mutual fund” and enter the ticker, name or symbol of the fund you’re looking to invest in. If you choose to invest in this fund again, it will appear automatically on the buy page (like the “500 Index” seen on the example) and you won’t have to search. Enter the amount of money you'd like to invest in dollars, and click "continue."

Next, click on the dropdown funding selection and choose the banking information that you confirmed in step 2. You can also add a new bank account from this page. Click “continue,” double-check that the information shown is correct, and initiate the buy.

Though the holdings will appear almost instantly in your Vanguard account, it may take up to 3 days to see the contribution withdrawn from your bank account.
 

Vanguard deals largely in individual retirement accounts, which have an annual contribution limit of either $5,500 or $6,500, depending on your age. After you've maxed out your contribution, make sure to check back in on your money at least annually.

The most hands-off investors can also set regular contributions through Vanguard's site to max out their accounts without lifting a finger. Decide if you would rather manually invest your money each year (through fund diversification) or if you'd like to invest largely in 1 or 2 funds and let Vanguard take care of the heavy lifting. Either way, monitor your investments regularly and make sure everything looks correct on your bank's end.