Is Vanguard free?
Vanguard is in fact a zero-commission broker when it comes to buying and selling stocks. Zero commission is especially useful if you trade relatively low volumes, like buying stocks for less than $500 per trade, because you won't be hit with any minimum fees the broker might charge.
We should note that the payment-for-order-flow model, which is used by some zero-commission brokers to generate income (rather than relying on commissions), could potentially create a conflict of interest between you and your broker. This could result in trade execution (like routing your orders to specific market makers) that might be unfavorable for you under certain market conditions, especially when using market orders (as opposed to limit orders, which seem to be less affected).
Keep in mind that at some brokers, you could incur non-trading charges like withdrawal or inactivity fees. Also, if you trade on margin, the margin rate charged by brokers can differ wildly. In the next chapter, we'll find out what these charges are at Vanguard and how they compare with fees charged by its closest competitors.
If you want to read our full review, including fees, deposit options and other platforms (like web and desktop) then skip to the Vanguard review.
Vanguard fees
Overview of Vanguard fees and charges
It's safe to say that Vanguard's fees are low in general. They either don't charge a brokerage fee for things that other brokers do, or they only charge a small amount.
Here's a high-level overview of Vanguard's fees
| Assets | Fee level | Fee terms |
|---|---|---|
| US stock fee | Low | Commission-free |
| EURUSD fee | - | Not available |
| US mutual fund fees | High | $20 per trade if investment is less than $500k, but Vanguard funds and 3000 other funds are free |
| Inactivity fee | Low | No inactivity fee |
Vanguard fees
Vanguard fees explained
Online brokerages in general charge much lower brokerage fees than traditional brokerages do - this is largely because online brokerages' businesses can be much better scaled: from a purely technical standpoint, it doesn't make that much of a difference for them if they have 100 or 5,000 clients.
This is not to say, however, that they don't charge any fees at all. They make money by charging you various rates for various actions or events. Usually you need to keep an eye on the following three types of fees:
- Trading fees - these are brokerage fees that you pay when you actually carry out a trade, like buying an Apple share or an ETF. What you pay is either a commission, a spread or a financing rate. Some brokers apply all of these.
- A commission is either fixed or based on the traded volume.
- A spread is the difference between the buy price and the sell price.
- A financing rate or overnight rate is charged when you hold your leveraged positions for more than one day.
- Non-trading fees. These are usually related to some operations you carry out in your account, such as depositing money, withdrawing money, or not trading for an extended period.
We compare Vanguard fees with its closest competitors, J.P. Morgan Self-Directed Investing and Ally Invest.
Vanguard fees
Vanguard trading fees
Vanguard's trading fees are low, which makes it suitable for you even if you trade often (i.e. several times a week).
Let's break down trading fees according to the different asset classes available at Vanguard.
Trading fees
Vanguard's trading fees are low.
Stock fees and ETF fees
Vanguard has low stock trading fees.
| Vanguard | J.P. Morgan Self-Directed Investing | Ally Invest | |
|---|---|---|---|
| US stock | $0.0 | $0.0 | $0.0 |
| UK stock | - | - | - |
| German stock | - | - | - |
Fund fees
Vanguard fund fees are high.
| Vanguard | J.P. Morgan Self-Directed Investing | Ally Invest | |
|---|---|---|---|
| Mutual fund | $20.0 | $0.0 | $10.0 |
| EU mutual fund | - | - | - |
Bond fees
Vanguard has low bond fees.
| Vanguard | J.P. Morgan Self-Directed Investing | Ally Invest | |
|---|---|---|---|
| US Treasury bond | $0.0 | $0.0 | $10.0 |
| EU government bond | - | - | - |
Options fees
Vanguard's options fees are low.
| Vanguard | J.P. Morgan Self-Directed Investing | Ally Invest | |
|---|---|---|---|
| US stock options | $10.0 | $0.7 | $5.0 |
| US stock index options | $10.0 | $6.5 | $5.0 |
| UK stock index options | - | - | - |
| German stock index options | - | - | - |
Margin rates
Vanguard margin rates are high.
| Vanguard | J.P. Morgan Self-Directed Investing | Ally Invest | |
|---|---|---|---|
| USD margin rate | 12.3% | - | 11.5% |
| EUR margin rate | - | - | - |
Vanguard fees
Vanguard non-trading fees
When it comes to non-trading fees, Vanguard is a rather cheap broker.
Non-trading fees include various brokerage fees and charges at Vanguard that are not related to buying or selling assets. This can be a withdrawal fee, deposit fee, inactivity fee or account fee.
| Vanguard | J.P. Morgan Self-Directed Investing | Ally Invest | |
|---|---|---|---|
| Withdrawal fee | $0 | $0 | $0 |
| Deposit fee | $0 | $0 | $0 |
| Inactivity fee | No | No | No |
| Account fee | No | No | No |
Vanguard fees
Vanguard deposit fee
Usually, brokers don't charge anything for deposits, and Vanguard is no different.
| Vanguard | J.P. Morgan Self-Directed Investing | Ally Invest | |
|---|---|---|---|
| Bank transfer | Yes | Yes | Yes |
| Credit/debit card | No | No | No |
| Electronic wallets | No | No | No |
| Deposit fee | $0 | $0 | $0 |
Vanguard fees
Vanguard withdrawal fee
Vanguard generally doesn't charge a withdrawal fee.
| Vanguard | J.P. Morgan Self-Directed Investing | Ally Invest | |
|---|---|---|---|
| Bank transfer | Yes | Yes | Yes |
| Credit/debit card | No | No | No |
| Electronic wallets | No | No | No |
| Withdrawal fee for bank transfer | $0 | $0 | $0 |
Vanguard fees
Vanguard inactivity fee
Vanguard does not apply an inactivity fee, which is great because your account won't be charged even if you do not trade for an extended period (like several months or years).
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