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Vanguard fees explained

Jul 2019
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Overview of Vanguard fees and charges

Vanguard logo

When it comes to brokerage fees Vanguard shows a mixed picture: some fees are high but some are low. First you need to figure out your approach or you should use our questionnaire to be able to tell whether Vanguard fees are an advantage for you. Continue reading about Vanguard fees and charges to see if this is the right brokerage for you or a similar broker like Fidelity or Firstrade is better for you.

Here's a high level overview of Vanguard's fees

Vanguard Fees snapshot
Assets Fee level Fee terms
US stock fee Average Asset invested under $50k: $7 for first 25 trades per year, $20 thereafter
EURUSD fee - Not available
US tech fund fee 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 due to the fact that 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 5000 clients.

This is not to say however that they don't have any fees at all. They make money by charging you at various events for various rates. Usually you need to keep an eye on these 3 types of fees:

  • Trading fees - these are brokerage fees that you pay when you actually do a trade, i.e. buying an Apple stock or an ETF. What you pay is either a commission, a spread or financing rate. Some brokers apply all of these.
    • A commission is either based on the traded volume or it is fixed.
    • A spread is the difference between the buy price and the sell price
    • Financing rate or overnight rate is charged when you hold your leveraged positions for more than one day.
  • Non-trading fees. These occur related to some operations you make in your account, i.e. depositing money to your account, withdrawing money from it or not trading for an extended amount of time.

We compare Vanguard fees with its closest competitors, Fidelity and Firstrade.

Vanguard fees
Vanguard trading fees

Vanguard's trading fees are mid-tier which means you need to pay special attention to asset classes with high trading fees.

Let's break down the trading fees into the different asset classes available at Vanguard.

Trading fees

Vanguard's trading fees are average.

Stock fees and ETF fees

Vanguard has low stock trading fees.

Stock fees of a $2,000 trade
Vanguard Fidelity Firstrade
USA $7.0 $5.0 $0.0
UK - $13.1 -
Germany - $21.7 -

Fund fees

Vanguard fund fees are high.

A $2,000 fund buy fees
Vanguard Fidelity Firstrade
USA tech fund buy $20.0 $37.5 $0.0
Europe stock fund buy - - -

Bond fees

Vanguard has low bond fees.

Bond fees of a $10,000 trade
Vanguard Fidelity Firstrade
USA $0.0 $0.0 $40.0
Europe - - -

Options fees

Vanguard's options fees are high.

Stock index options fees of 10 contracts
Vanguard Fidelity Firstrade
USA $17.0 $11.5 $0.0
UK - - -
Germany - - -

Financing rates

Vanguard financing rates are high.

If you want to trade on margin and prefer to hold your positions long, financing costs can be significant.

Vanguard yearly financing rates
Vanguard Fidelity Firstrade
Apple financing rate 9.5% 9.8% 9.5%
Vodafone financing rate - 9.8% -
EURUSD financing rate - - -
EURGBP financing rate - - -

Vanguard fees
Vanguard non-trading fees

When it comes to looking at all the non-trading fees Vanguard is a cheap broker. This means that they don't charge you a lot for non-trading related activities on your trading account, like withdrawal fee.

Non-trading fees include various brokerage fees and charges at Vanguard that you pay not related to buying and selling assets. Among some others, typical non trading fees are withdrawal fee, deposit fee, inactivity fee and account fee.

A high level overview of how Vanguard stacks up in non-trading fees
Vanguard Fidelity Firstrade
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

Deposit fees are applied when you send money to your trading account from your bank account. Usually brokers don't charge money for that and Vanguard is not different: you will see the exact same amount on your brokerage account that you sent by any of the deposit methods Vanguard offers.

Vanguard deposit methods
Vanguard Fidelity Firstrade
Bank transfer Yes Yes Yes
Credit/Debit card No No No
Electronic wallets No Yes No
Deposit fee 0 0 0

Vanguard fees
Vanguard withdrawal fee

Unlike the majority of the online brokers we have reviewed Vanguard does not charge a withdrawal fee. This means that you'll see the same amount of money on your bank account that you transferred from your brokerage account.

Vanguard withdrawal fees and options compared
Vanguard Fidelity Firstrade
Bank transfer Yes Yes Yes
Credit/Debit card No No No
Electronic wallets No Yes No
Withdrawal fee with bank transfer $0 $0 $0

Vanguard fees
Vanguard inactivity fee

Vanguard does not apply an inactivity fee which is great because your account will not be charged even if you do not trade for a longer time period (months or years).

AUTHOR

Gergely Korpos
Gergely Korpos
Co-founder, CPO
Gergely's aim is to bring more clarity into personal investing. He has 10 years of experience in financial markets with GE Money, KPMG and MOL. He concluded thousands of trades as a commodity trader and financial portfolio manager
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