1 Minute Review
Vanguard was the first to offer low-commission trading on inexpensive index funds based on consumer-friendly investment principles. Day traders might not find Vanguard’s old-school style appealing, but retirement savers, buy-and-hold investors and companies that seek employer-sponsored programs might want to take a gander. Vanguard is a sensible choice for common-sense investment advice and efficient products. It’s a company that sticks to the morals of its hardy pioneer, Jack Bogle.
- Retirement savers
- Buy-and-hold investors
- Investors looking for a simple stock trading platform
- Large family of inexpensive ETFs and mutual funds
- Strong stock research selections
- Non-intimidating platform and mobile app
- Only 10 technical indicators available for charts
- No futures or forex trading
- Not ideal for day traders
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Why Vanguard Brokerage Over Others?
Most major brokerages have jumped headfirst into the no-commission, low-cost trading world we live in today, but Vanguard isn’t one of them. That’s because Vanguard has been trying to save money for its clients since its inception.
Vanguard isn’t for high-flying day traders with advanced math degrees and sophisticated computers. Instead, Vanguard appeals to everyday people who just want to save (on the cheap) for retirement. Here’s why you might want it on your radar:
- Easiest platform to use: Vanguard’s platform isn’t littered with bells and whistles. By keeping the noise to a minimum, Vanguard created a modest, yet appealing platform where even novice investors can learn about investing and reach goals in the market.
- Fantastic research sources: Despite its reputation as a no-frills, low-fee broker, Vanguard has a mountain of terrific research and education materials for you, no matter what your goals are. New investors can learn the basics of stocks, bonds, mutual funds and ETFs while professionals can read up on economic data, new investing theories and securities analysis from prominent research firms.
- Best retirement planning tools: Retirement planning is a Vanguard specialty, so it’s no surprise it’s loaded with high-quality information and tools that help everyday Americans reach retirement goals. You can research retirement planning by age range, asset class, account type or simply use calculators to make decisions on your own. When you want the best retirement planning tools, Vanguard is second to none.
Vanguard Quick Summary
Until the recent “Race to $0 Commissions” kicked off, Vanguard consistently had the lowest expense ratios on its ETFs and mutual funds. Bogle’s strategy was not to upsell clients on expensive investments but to recommend cheap index funds and advise against overtrading.
“Set it and forget it” was the mantra and Bogle became the 2nd most-famous resident of Valley Forge, Pennsylvania. (If you don’t know the first, just check your pocket for a $1 bill.)
|Asset Classes||Stocks, ETFs, IPOs, mutual funds, bonds, options, CDs|
|Platform||Standard desktop platform and mobile app|
|Mobile App||Mobile app is sleek and retains all functionality of the desktop platform|
|Account Minimum||$0 for standard accounts, $2,000 for margin/options, $3,000 for mutual fund-only, $50,000 for Personal Advisor Services|
|Available Account Types||Taxable, joint, custodial, IRA (traditional, Roth, SEP, SIMPLE), 529 plans, UDMA/UTMA plans, 401(k) and pension plans for businesses|
Like most brokerages, Vanguard has dropped commissions to $0 on all basic investment products. All stocks and ETFs are free to trade, along with most mutual funds. However, some mutual funds outside the Vanguard family have transaction fees and load charges. Transaction fees are $20 across the board, while load charges can vary. Vanguard margin rates are fair compared to competitors like TD Ameritrade and E*TRADE.
|ETFs (Vanguard and non-Vanguard)||Free|
|Vanguard mutual funds||Free|
|Non-Vanguard mutual funds||Some carry $20 transaction fee or load charge, depending on fund family.|
|Options||$0 commission + $1 per contract— 25 free trades if $1+ million in assets— 100 free trades if $5+ million in assets|
|Bonds (Treasuries, government, corporate)||Free if new issue, $1 per $1,000 on secondary market (max $250)|
|Bonds (Mortgage-backed securities)||$35|
|Margin rates||Up to $19,000 — 8.5%|
Up to $50,000 — 8%
Up to $100,000 — 7.5%
Up to $250,000 — 7%
Up to $500,000 — 6.5%
Up to $1 million — 5.25%
Over $1 million — 4.75%
Vanguard is the right place to be if investing is new and scary to you. The company offers a host of step-by-step guides to inform and educate clients about proper investment practices. Vanguard takes its fiduciary duty very seriously — you won’t be pushed into expensive investment products that benefit a salesperson more than you.
- No-frills platform: Many brokerages offer powerful stock trading platforms with a host of technical trading tools, chart studies and data points. But there’s a downside to all these bells and whistles. If you’re a new investor who wants to buy and sell a few simple ETFs, you’re immediately in the wilderness. What’s a retirement saver supposed to do with information on options chains and support or resistance levels?
Vanguard’s platform is streamlined for even tech-averse investors. Your account data, profit-and-loss stats and holdings are easily found and customer service numbers appear on almost every page if you get stuck. Both the desktop platform and mobile app make it easy to access the educational materials and market research.
- Jargon-free education materials: Vanguard’s education materials stick straight to the hard facts. You’ll get economic data, earnings reports and other fundamental stats to help pick the best long-term investments. Vanguard’s learning center can teach you the ins and outs of the market without overwhelming you with jargon.
- Simple onboarding process: You can create a login and fill out an application for a Vanguard brokerage account in a matter of minutes. Once again, Vanguard holds your hand through the process. Are you new to Vanguard? How will you fund the account? What are your investment goals? Answer a few short questions so you’re guided to the proper account type and investment products.
Vanguard offers a wealth of education and research materials, including some of the most in-depth reports on retirement planning you’ll find. Vanguard has the process down pat — an automated system asks about your retirement goals and makes suggestions pertinent to your situation. (In a way, Vanguard was the first robo-advisor.)
You’ll be able to experiment with savings rates and potential market returns using calculators (all 8 of them!) or learn about the pros and cons of traditional and Roth IRAs. Have a retirement plan with a former employer? Vanguard offers a simple questionnaire to guide you. Use the Vanguard Investor Education portal to learn about different asset classes, account types, trading costs and taxes.
You can punch in numbers for income savings goals to retirement loan numbers — it takes lots of the guesswork away. Vanguard educates retirement savers about taking RMDs, limiting tax burdens and maximizing Social Security benefits. The retirement education is broken down into three different age groups so you can better access relatable advice:
- Ages 20 to 49: Basics of investing, making savings a priority. Here’s where you’ll learn about different account types and which investments best suit your risk tolerance.
- Ages 50 to 64: Retirement planning, step-by-step. Vanguard takes you through the process, including what to expect for medical expenses, taxes and Social Security. You’ll also learn effective strategies to erase remaining debts and decrease your risk profile as retirement approaches.
- Age 65+: You’ve saved it, now use it! Vanguard helps you manage money responsibly and prepare for expenses in retirement. Here’s where you’ll find tools to help calculate how long your money will last at various spending rates, plus important tips on estate planning and post-work portfolio management.
Vanguard’s customer service reps are helpful and dedicated to serving clients. However, Vanguard’s contact methods are a bit outdated. Email support can only be reached with an active account and phone support is only available during the week, from 8 a.m. to 8 p.m. Text and chat support options are also unavailable. Vanguard’s ahead of the curve in so many ways — but its customer support structure could use a facelift.
|Contact form on client homepage|
|Phone||Toll free: 800-749-7273|
Client services: 877-662-7447
Brokerage services: 800-992-8327(M-F 8 a.m. to 8 p.m. EST, TTY/TDD)
|U.S. mail||Vanguard |
P.O. Box 1110
Valley Forge, PA 19482
Jack Bogle preached against overtrading, so Vanguard purposely tones down its investment offerings. No forex or futures contracts can be purchased. The closest thing you’ll find? Some triple-leveraged ETNs based on futures contracts. You’ll still find a wide variety of ETF and mutual fund offerings, plus options, bonds and CDs.
Vanguard Stocks, ETFs and Mutual Funds
Vanguard has access to all major American stock exchanges and ETFs trade free, whether they’re from the Vanguard family or not. The platform contains 5 different screeners to help you search for the right securities. The stock screener alone has 40 different criteria listed to help sort stocks into various categories.
Vanguard charges no commission on options trade, but each contract carries a $1 fee. This fee can be waived if you have enough capital in your account. Like most brokers, Vanguard requires an application and approval for options trading and there are 4 different levels you can be approved for. Buying calls and puts is Level 1 and writing naked calls and puts is at Level 4.
Vanguard options trading requires a margin account, so you’ll need at least $2,000 to get started. Most clients will only be approved for Level 1 and 2 options trading, but that’s still enough to hedge open positions or ramp up leverage. Vanguard offers a great resource page for options basics.
Some brokers have multiple mobile apps, each with its own learning curve and features to get used to. Much like its desktop platform, Vanguard’s app (available for both iOS and Android) is simple and sleek and gives you easy access to holdings and account information. You won’t have to repeatedly tap on different icons and tabs to get to what you’re looking for — it’s all right there on the left-hand menu bar.
You’ll see a personalized news feed when you open the app. This news feed shows your total assets, recent transactions, IRA contribution limits and of course, quotes from the Dow Jones, S&P 500 and NASDAQ. Customize the news feed however you prefer — you can even add the Vanguard Twitter account. The only thing Vanguard’s mobile app takes a hit for is its lack of screeners. You’ll need to be on a desktop if you want to use the stock, ETF and mutual fund screeners.
Vanguard isn’t optimal for you if you’re planning to make money day trading. You won’t find sophisticated charting tools or exotic securities like futures and currencies.
Vanguard’s cornerstone is cheap ETFs and mutual funds in the proper retirement vehicles. Bogle’s dream of commission-free investing is now a reality everywhere, but his team at Vanguard continues his legacy with quality investment products, timeless advice and (best of all!) no pushy salespeople.