The process of opening a brokerage account used to involve heavy amounts of mail and weeks to months of waiting. Now, it's relatively easy to open a Vanguard account.
Brokerage accounts with licensed brokerage firms allow you to place orders through the broker. Some firms only provide a secure interface to place orders, while some are full-service institutions that offer a suite of options including wealth management and investment advice.
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Vanguard is a registered investment advisor brokerage firm that exploded on the scene years after CEO John Bogle created the first index fund. Based on Bogle’s analysis that most funds fail to outperform the market, the index fund was the first of many that the company successfully launched over the next several decades.
Today, Vanguard is known for offering low-cost funds as well as brokerage services and other financial products. Its funds typically have some of the lowest expense ratios (as low as 0.04%) compared to its peers. Vanguard offers two different classes of funds, including Admiral Shares, which require more initial investment. (Index funds and tax-managed funds for Vanguard Admiral Shares funds have a minimum initial purchase amount of $10,000. The minimum is $50,000 for actively-managed funds and the minimum is $100,000 for some sector funds.)
Steps to open a Vanguard account
Opening a Vanguard account is a straightforward process:
- Decide on the type of account you’ll need: Since Vanguard is a full-service brokerage and investing firm, you’ll need to specify which type of account you want to open, whether it’s an IRA account or a general investing account. Be prepared to provide information such as name, social security numbers or tax IDs, birth dates, addresses, and employer information.
- Select your investments: As you open your Vanguard account, you’ll be asked to select the investments you want. If you aren’t sure, you can discuss your options with a Vanguard professional or choose a general index fund. Vanguard has a wide variety of funds and ETFs available to choose from. If you have enough assets, you may qualify for Admiral Shares, which have a lower expense ratio than the regular shares.
- Fund the account: When you fill out your application, you’ll need to show how you’ll fund your account. This can be done through a transfer of assets from a current brokerage, bank account, or any other location that you can wire in funds. Keep in mind it may take several days to verify the accounts and then to transfer funds.
- Review your account choices: Once you’ve completed the application, you can sign electronically or print, sign and mail the form. Make sure that any investment selections you’ve made to this point correspond with what you expected to choose both in terms of risk and sectors.
One of the added benefits of a full-service brokerage like Vanguard is the additional services and insights you get beyond a traditional broker. Vanguard provides continuous proprietary research and industry insights both into the markets as well as general investing. Over the years, the company has added additional features to its online portals that allow you to research investments as well as manage your accounts.
Vanguard also partners with many independent investment advisors who utilize Vanguard’s services for clients. If you want a combination of self-directed investing and general consultation, you can take advantage of these paired offerings through local financial planners.
Vanguard doesn’t have the flashiest website or the best research resources. Over time, Vanguard’s competitors have also caught up by offering extremely low-cost products. Brokerages like Schwab have even come out with index funds that have 0.03% expense ratios.
However, Vanguard is unique in that it focuses on providing quality low-cost investment services and products to benefit you.