Vanguard Review 2020

Vanguard offers free ETF trading, besides some mutual funds and bonds are free too. The non-trading fees are low, no inactivity fee is charged and withdrawal is also free if you use ACH transfer. On the negative side, the fees for non-free mutual funds are high and financing rates are also high, especially in the lower volume tiers.

We ranked Vanguard's fee levels as low, average or high based on how they compare to those of all reviewed brokers.

To get things rolling, let's go over some lingo related to broker fees. What you need to keep an eye on are trading fees, and non-trading fees.

• Trading fees occur when you trade. These can be commissions, spreads, financing rates and conversion fees.
• Non-trading fees include charges not directly related to trading, like withdrawal fees or inactivity fees.

Below you will find the most relevant fees of Vanguard for each asset class. For example, in the case of stock investing commissions are the most important fees.

We also compared Vanguard's fees with those of two similar brokers we selected, Fidelity and Firstrade. This selection is based on objective factors such as products offered, client profile, fee structure, etc. See a more detailed rundown of Vanguard alternatives.

To have a clear overview of Vanguard, let's start with the trading fees.

Vanguard trading fees

Vanguard trading fees are average. The fee structure is transparent but a bit complex as the fees are tiered based on your account balance.

Vanguard offers different services based on your investment account balance. If you have a higher investment account balance, you will get discounts:

In this review, we calculated with the fees for Vanguard's basic service, called Standard.

Stock fees and ETF fees

Vanguard has generally average stock fees, but the ETFs are free.

The commission for stocks is $7 per trade for the first 25 trades per year and $20 per trade thereafter.

The commission for all ETFs is free which is superb.

If you prefer stock trading on margin or short sale, check Vanguard financing rates.

Financing rates or margin rate is charged when you trade on margin or short a stock. This basically means that you borrow money or stocks from your broker to trade. For this borrowed money/stock you have to pay interest. This is the financing rate. It can be a significant proportion of your trading costs.

Vanguard financing rates are generally high. For stocks, the financing rates or also known as margin rates vary based on the base currency of your margin account.

Vanguard's financing rate is volume-tiered as well. It applies a base rate plus a premium depending on the financed amount. The base rate is set by its discretion, at the time of the Vanguard review the base rate was 6.0%.

The financing rates above are also applied for options trading.

Fund fees

Vanguard's mutual fund fees are high.

We calculated with a non-free mutual fund commission which is $20 per trade.

Vanguard does not charge a commission for its own Vanguard mutual funds and more than 3,000 non-Vanguard funds. However, if you sell the no-transaction-fee funds within 60 days after the purchase, a $50 fee is charged for the sale.

There is also a required initial investment and there is a required minimum for each additional investment.

Bond fees

Vanguard has generally low bond fees. The bond fees vary among the different bond types. We calculated the fees for Treasury bonds.

Treasury bonds are free of charge. New issues, except for municipal bonds, are also free.

If you trade non-treasury bonds on the secondary market, there is a trading fee of $2 per $1,000 face value with a $250 maximum if you invest less than $500k. If you invest more than $500k the commission is $1per $1,000 with a $250 maximum.

Options fees

Vanguard's options fees are average.

The options fees comprise a flat and a volume-based fee: $7 per trade plus $1 per contract.

Non-trading fees

Vanguard has low non-trading fees. It charges no inactivity and account fees.

There is no withdrawal fee if you use ACH transfer. The withdrawals to other banks using wire transfer cost $10. This fee isn't charged to Flagship and Flagship Select clients. We tested ACH, so we had no withdrawal fee.

The account opening is fully digital and user-friendly. There is also no minimum account balance. However, the account opening and verification takes a bit longer, 2-3 business days.

Can you open an account?

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Vanguard is a US stockbroker and targets primarily US clients. In this review, we tested Vanguard's services provided within the USA.

Vanguard has a global presence through the group's other subsidiaries and partners. The available product range and the form of business vary widely country-by-country. For example, in Germany, only institutional clients are served, while in the UK retail clients can open an account as well.

What is the minimum deposit at Vanguard?

The required Vanguard minimum deposit is $0. The minimum deposit can be more if you trade on margin or prefer using Vanguard's robo-advisor.

*You trade with money borrowed from the broker, also called trading on margin.

Account types

Vanguard offers several account types.

In this review, we tested the Individual Brokerage Account.

How to open your account

The account opening is user-friendly and fully digital. The online application takes roughly 15 minutes, but the verification is a bit slower. It took 3 business days until our account was verified.

Steps at Vanguard to open an account:

1. Choose your funding method (bank transfer, rollover, other)
2. Choose the account type
3. Add your investment goals and preferences
4. Add personal information, like Social Security Number, residency, phone number, etc.
5. State your employment status and financial profile
6. Fund your account
7. Review your information
8. Acknowledge the terms and conditions
9. Sign up for web access

It's great that Vanguard charges no deposit fee and transferring money is easy and user-friendly. The deposit and withdrawal could be improved though. You can use only bank transfer, and a fee is charged for wire transfer withdrawals.

Deposit fees and options

Vanguard charges no deposit fees. US clients can use checks, ACH, and wire transfers for the deposit. Credit/debit cards and electronic wallets are not provided.

We tested ACH transfer for deposit and it took 2 business days. You can only deposit money from accounts that are previously linked to your brokerage account and are in your name.

Vanguard withdrawal fees and options

Vanguard charges no withdrawal fees if you use ACH withdrawal, but US domestic wire transfers cost $10. If you have more than $1 million account balance, there is no fee for wire transfers.

How long does it take to withdraw money from Vanguard? We tested the ACH withdrawal and it took 2 business days.

You can only withdraw money to accounts in your name.

How do you withdraw money from Vanguard?

• Log into the account
• Go to the "My accounts"
• Select the "Buy&sell" menu, select "Transfer money to/from your Vanguard settlement fund"
• Choose the transfer type (one time or regular), your Vanguard account, and your previously connected external account
• Add the amount you wish to withdraw
• Preview and initiate the withdrawal

Compare to other brokers

Vanguard has an average web trading platform. It offers two-step login and there is a clear fee report. The trading platform's structure is a bit confusing and some features are hard to find. Search functions could be better too and we missed customizability.

Vanguard has an in-house developed web trading platform that is available in English.

Look and feel

Vanguard's web trading platform is well-designed, but the structure could be improved. Sometimes it is rather hard to find features. For example, it took a quite long time until we found how we could place an order for stocks or set price alerts.

Unfortunately, the platform does not offer any customizability.

Login and security

Vanguard provides a two-step login. You can turn on and off the two-step authentication in your account under "My Account \ Account maintenance". If you do not want to receive text or voice codes, you can declare your computer as a trusted device and log in with your regular ID and password combo.

Search functions

The search functions are not fully seamless. You need to navigate under the "Buy & Sell" menu, select "Trade an ETF or stock" option to access the search field. You can search by typing both a company's name or asset's ticker. The search results are not always relevant or have lower relevancy.

Placing orders

You can use basic order types, the more sophisticated ones are missing:

• Market
• Limit
• Stop
• Stop limit

If you are not familiar with the basic order types, read this overview.

There are also order time limits you can use:

• Day
• Good 'till cancel (60 days)

Alerts and notifications

You can set price alerts for stocks, ETFs, and mutual funds. However, only email alerts are available and setting alerts is not a piece of cake.

You have to click on "Stocks and other ETFs"  under the "Investing" menu. On the right side of the page, you can sign up for alerts. Then, you can set alerts if you go to the "Enroll now" button. It would be much easier if you could set alerts when you search for an asset.

Portfolio and fee reports

Vanguard has a clear portfolio and fee reports. You can find them under the "My accounts" menu in "Transaction History". It is a handy table, but you can't download it.

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Vanguard offers a user-friendly and well-designed mobile trading platform. However, it lacks price alerts and you can't trade with options and bonds on it.

Similarly to the web trading platform, Vanguard has an in-house developed mobile trading platform which is called Vanguard Investors. The app is available both on iOS and Android. We tested it on iOS.

The mobile trading platform is available only in English.

Look and feel

The Vanguard mobile trading platform is user-friendly and easy to use. The app has a modern design and its structure is not confusing, contrary to the web trading platform.

Login and security

Vanguard provides a safe login. Similarly to the web platform, you can declare that you have a safe device and use user ID & password combo. 

You can use TouchID and FaceID as well. It's a convenient feature

Search functions

The search functions are good. You can search both by typing the asset's name or ticker and the search results are relevant.

Placing orders

You can use the same order types and order time limits as on the web trading platform.

Alerts and notifications

You cannot set price alerts and notifications on Vanguard's mobile platform.

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Vanguard does not offer a desktop trading platform.

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Vanguard gives access to different asset classes, from stocks to options. However, the offered products cover only the US market and you can't trade with forex and futures.

Vanguard has an average ETF and mutual fund selection. Stock, bond, and options offers are worse than the average.

Stock and ETF

Vanguard gives access only to the US market. It is similar to Firstrade's offer but less than Fidelity's which gives access to international stock exchanges as well.

Funds

The mutual fund coverage is average. It's less than the available mutual funds at Firstrade or Fidelity.

Besides Vanguard's own mutual fund offer, you will find funds from other big fund providers, like Blackrock.

Bonds

Vanguard's bond selection is low.

Vanguard's bonds offer covers both government and corporate bonds.

Options

CBOE and other US options exchanges are covered, but Vanguard doesn't disclose which ones exactly.

Vanguard Personal Advisor Services

You can also use a managed account service which is great if you need help to manage your investments. You'll get a recommendation combining the help of an expert and Vanguard's robo-advisor technology.

After you add your financial goals, the advisor recommends a portfolio that is rebalanced regularly.

The minimum investment is $50,000 and has an annual 0.30% fee.

Vanguard research tools are easy to use but a bit limited. You can use fundamental data and a few trading ideas. However, a sophisticated charting tool and other analytical tools are missing.

Vanguard research tools can be found on the website when you search for a product. Similarly to the web trading platform, the tools are available only in English.

Trading ideas

Vanguard provides trading ideas, focusing mainly on stocks. The ideas come from Argus and Market Garder, third-party providers.

Fundamental data

Vanguard offers fundamental data. You will find basic historical financial data for 4 years if you are initiating a search in the "Investing"/"Stocks & other ETFs" menu. We missed the peer comparison and financial metrics.

Charting

Vanguard has a very limited charting tool. You can't use trend lines and other editor tools. There are only 15 technical indicators.

News feed

The news supply on Vanguard is OK. You can read it easily, but it lacks visual elements, charts or pictures. It is provided by third-parties, like Associated Press or MT Newswires.

Compare research pros and cons

Vanguard has great customer service. It provides fast and relevant answers on all available channels. On the flip side, it's not 24/7 and live chat is missing.

You can contact Vanguard via:

• telephone
• email

Vanguard's telephone support gave relevant and helpful answers, the speed was OK.

On email, we got relevant answers too and it took 1-1,5 days to get an answer.

We missed 24/7 availability and live chat.

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Vanguard offers fair quality educational articles and videos. There are also high-quality and interactive webinars. On the flip side, the demo account and trading platform tutorial videos are missing.

At Vanguard you can learn in the following ways:

• General educational videos
• Webinars
• Quality educational articles

The general educational videos and the archive webinars have good content quality, mostly targeting beginners or general topics such as yield curve, what is a bond, how to approach your investments, etc.. There is a good amount of content targeting retirement and tax issues.

We liked the interactive webinars, however, you can not download the materials and these are held once per month on average.

Besides videos, you can listen to podcasts and read downloadable PDFs. Most of these features are accessible from your account under the News&Perspectives menu. Vanguard has a well-structured info base called Vanguard blog as well.

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Vanguard is regulated by top-tier financial authorities, such as SEC and FINRA. You are also protected by a high investor protection amount, $500,000 which includes $250,000 for cash. On the other hand, negative balance protection is not provided.

Is Vanguard regulated?

Yes, it is regulated by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA).

Is Vanguard safe?

To be certain, we highly advise to check two facts:

• how you are protected if something goes wrong
• and what the background of the broker is.

How you are protected

With Vanguard all customers are covered by the US investor protection scheme called SIPC.

The SIPC investor protection scheme protects against the loss of cash and securities in case the broker goes bust. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. This amount is substantially higher than the amount most investor protection schemes provide. 

Not all investments are protected by SIPC. In general, SIPC covers notes, stocks, bonds, mutual fund and other investment company shares, and other registered securities. It does not cover instruments such as unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver, or other commodity futures contracts or commodity options.

Vanguard does not provide negative balance protection.

Background

Vanguard was established in 1975. The longer track record a broker has, the more proof we have that it has successfully survived previous financial crises.

Being in operation for a long time and regulated by top-tier regulators are all great signs for Vanguard's safety.

Find your safe broker

Vanguard is one of the biggest US stockbrokers regulated by top-tier regulators.

Vanguard offers free ETF and mutual fund trading for some products, such as its own ETFs. It doesn't charge inactivity and account fees and the account opening is easy and fully digital. The mobile trading platform is user-friendly and has a great design.

It has some drawbacks though. The product portfolio covers only the US market and the research tools are very basic. Financing rates are also high when you trade on margin.

As there are low non-trading fees and no inactivity fee is charged, feel free to try Vanguard.

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