Vanguard Broker Review 2021

by Edith
Updated July 25, 2021

Vanguard ranks high in low cost investing, focusing on expense ratios that are well below the average. Find out more about the broker.

Vanguard Broker Review 2021

Often, long term investors desire a more comprehensive selection of funds, and sometimes, a low-cost model account makes it even better. This is exactly what makes Vanguard a great choice of a broker for long term investing. 

From early on, John C. Bogle structured the investment account as client-owned through fund shares. As a result, Vanguard aligns with its users. 

Vanguard ranks high in low cost investing, focusing on expense ratios that are well below the average. The broker was among those that drove the price revolution with nil costs on stock trading. But that’s not all. 

The company founded in 1975 is considered the pioneer of index funds. They have funded studies supporting index funds as superior and promoting the concept of passive investing. 

In addition, their account has various helpful features for long term investing, such as the more than 3000 no-transaction-fee mutual funds and ETF trades. But it isn’t all smooth sailing with this broker, and there’s still room for improvement.

Let’s dig deeper into what Vanguard has to offer to investors.

Vanguard Review 

Account Opening

Vanguard does not have a minimum balance to open an account. But you will still need a decent amount to invest. 

Most other companies will often give account opening bonuses as an incentive, but Vanguard is not the case. However, the lack of this incentive is not something to brood over if Vanguard effectively meets your long-term investment needs with its account offerings. 

As an account holder, you have access to various account views such as performance, activity, holdings, balances, asset mix and performance. 

Vanguard’s analysis will incorporate any account from the outside, but you will need to input it manually. There is no way around it. Unfortunately, this tool is not available to smaller investors. 

No doubt Vanguard has the best funds, but its brokerage account is not comparable to Fidelity and Schwab. It does not support cryptocurrency trading, and you cannot buy fractional shares. 

Low Costs and Commissions 

Veteran, long term investors know how much expenses can affect long term savings. A slight percentage difference can amount to significant amounts after, let’s say, 30 years. 

Vanguard excelled in low-cost offerings and was maybe why others such as Fidelity and Charles Schwab slashed their fees. The move was in an attempt to attract investors looking for low-cost brokers.

According to Morningstar, Vanguard’s expense ratio stands at 0.10%, with ETFs and mutual funds taking a 0.45% expense ratio. 

Even though the company was not among the first to join the commission-free bandwagon, getting rid of commissions was an excellent move for a firm best known for its investor-friendly pricing. The new pricing replaces the previous multi-tiered system that was too complex to understand for most people. 

In addition, investors have access to the company’s no-charge perk for placing its own orders by phone. Vanguard does, however, charge you for ETF orders from outside. 

The account has various automated features such as Robo-adviser to keep the costs down. In addition, Vanguard takes care of the cost-conscious long term investors by offering three ETFs and two mutual funds, both of which are significantly less expensive than the industry average.  

The broker does not engage in deceptive bonuses and promotions. Instead, they market as a low-cost leader and the best choice for long term investors. 

Other Charges

On the downside, the commission structure for options is somehow hard to understand, having a structure tiered based on your investments in mutual funds and ETFs. But options are at the high end of the industry and mainly attract experienced and wealthy investors. 

Vanguard also maintains annual account fees if they are below $10,000 in Vanguard assets. Such charges are not quite thoughtful, considering most of its peers have gotten rid of them entirely. 

But you can still get rid of this charge by accepting to receive all communications digitally. Alternatively, keep a balance of $50,000 in Vanguard, and you will not have to worry about the charge. 

Options Trading

Sophisticated investors will feel at home with Vanguard options trading and margin accounts. The available performance and screening tools are up to standard, and any average trader will find them helpful. 

Portfolio Watch

The portfolio watch is a standout feature that compares your portfolio with what Vanguard has or what you have. The primary goal is diversification and reducing risks as much as possible. 

Portfolio watch is not only for your Vanguard assets but others as well outside the platform, and that’s the beauty of it. It gives you an excellent image of your financial health so that you can take the necessary steps to remedy it. 

The tool provides a breakdown of the funds you own based on various factors. It then recommends where you need to invest more funds to even out the portfolio. Sometimes, you can have too many funds concentrated in one area, and such exposure is essential so that you can make the necessary changes. 

Education Resources 

Vanguard Reviews and Complaints: Is It Good?

The investment firm adopted Jack Bogle’s positive ethos and vision of helping investors build wealth through various ways. Bogle is the founder.

Towards this vision, Vanguard has a wide selection of investor education and resources. These include podcasts, videos, articles and others to help you make smart investment decisions. 

There are also numerous retirement planning tools and resources that various levels of investors will find helpful. 

You can learn about the various retirement options and choose one that effectively caters for your needs. The account has a high-quality calculator and tools to predict when you’ll be able to retire and enjoy the fruits of your hard work. 

Moreover, you can estimate the retirement costs and learn the benefits of converting IRA to better options. 

Mutual Funds and ETFs

Low-cost funds are a significant selling point for Vanguard. You can build a decent long term investment portfolio from a selection of more than 3100 no-transaction-fee mutual funds. 

Even though the figure is lower than other brokers such as TD Ameritrade, with more than 4200 funds, the number is still impressive, especially when combined with low costs. 

Admiral Shares are Vanguard’s very own mutual funds that take the concept of low investment costs to the next level. In fact, their expense ratios are a whopping 41% lower than the standard mutual funds by the same company. 

Furthermore, the investment firm reduced the minimum threshold for index funds from $10,000 to $3,000 in 2018. But higher minimums are still in place for higher net worth investments, such as $100,000 for particular industry-focused index funds. 

No doubt, Vanguard rides on the reputation for low-cost investments. But that does not mean they don’t have offerings for higher net-worth investors. 

For example, an investment minimum of $50,000 is necessary to access Vanguard Personal Advisor Services. The Robo-advisor service has a certified financial planner but with a graduated management fee. 

There are various Admiral Shares Funds with a minimum of $3,000 and $1,000, but these may still be out of reach for many beginners and lower net-worth investors. 

Platform

Vanguard’s platform is too basic without the analytical tool you would typically find in other platforms. That means active traders are pretty much not catered for by Vanguard. 

Not having a platform may not be very detrimental to the company, but it does not help matters in the eyes of active investors. Long term investors that are only looking to trade a handful of times annually will not feel any platform shortcomings. 

Customer Service

Good customer service is at the core of a successful investment broker. Vanguard does not excel in this area with its client phone services between 8 AM and 9 PM EST during working days. Not the best they can offer considering other competitors such as Fidelity have a 24/7 customer phone service. 

That means there are days or times of the day you cannot access Vanguard customer care. 

The long term investment broker does not have in-branch consultations or online chats, but owners of larger accounts have access to bond specialists. These are financial consultants to help investors at any time.

Conclusion

Vanguard has a particular target audience in mind, and you have to be sure you are part of this audience to benefit from their offerings. 

Do you have a somewhat high account balance such as $1000 or $3000, and you are looking for an excellent long term investment platform? Are you a buy and hold kind of investor and not so much into quick profits? 

If your answer is in the affirmative, then Vanguard is right for you.

No doubt, the account minimum is out of reach for beginners and those that have a low starting capital, but the firm’s selection of low-cost funds is alluring. Other benefits such as a wealth of planning and educational resources are quite helpful in creating a financial plan you can stick to. 

Besides, the company has numerous investment options you can choose from and grow. You don’t need a transaction fee or commission. Just make sure you are part of Vanguard’s target market, and the investing process will be fun. 

 

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