The two industry giants offer very different online investing approaches
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Jean Folger
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Jean Folger has 15+ years of experience as a financial writer covering real estate, investing, active trading, the economy, and retirement planning. She is the co-founder of PowerZone Trading, a company that has provided programming, consulting, and strategy development services to active traders and investors since 2004.
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Updated June 24, 2024
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Fact checked byMatthew M Klammer
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Charles Schwab and Vanguard are two of the largest investment companies in the world. Schwab has 35.4 million active brokerage accounts, 5.4 million corporate retirement plan participants, 1.9 million banking accounts, and $8.85 trillion in client assets. Vanguard is even larger, with more than 50 million investors and $8.6 trillion in global assets under management.
Founded in 1971, Charles Schwab helped revolutionize the brokerage industry just four years later when it became one of the first firms to offer discounted stock trades. Today, the company offers multiple trading platforms and an array of tools and services designed to appeal to all investing levels. The biggest change Schwab has seen in years is the integration of TD Ameritrade's thinkorswim trading platform and app into the Schwab offering. Vanguard was introduced in 1975 by its late founder, John C. Bogle, who is credited with creating the first index fund in 1976. Interestingly, the fund was ridiculed as "un-American" and "a sure path to mediocrity." Today, the fund (now Vanguard 500 Index Fund) is one of the industry's largest.
In our 2024 Best Online Brokers reviews, Charles Schwab earned higher scores than Vanguard in almost every category we ranked and was chosen as Best for Beginners. Still, that doesn't mean Charles Schwab is a better option for every investor. Overall, we found that Schwab is a great choice for self-directed investors and traders who want access to multiple platforms, plenty of tools, and full banking capabilities. Vanguard works well for buy-and-hold investors who may not be as tech-savvy and who want access to professional advice. We'll dig deeper into these two giant brokerages to see which is a better fit for your portfolio needs.
- Account Minimum: $0
- Fees: $0/stock and ETF trade, $0 plus $1 per contract for options
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- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0.65 per contract for options
Read full review
Usability
Charles Schwab offers two web-based platforms: Schwab.com and thinkorswim web (its premier trading platform), the latter of which is a slightly less customizable version of the thinkorswim downloadable desktop platform. Two mobile apps—Schwab Mobile and thinkorswim Mobile—round out its offerings. It's easy to open and fund an account, and you can do so online, via mobile app, by phone, or in person at one of its 300-plus branches.
You can open an account online with Vanguard, but there is a several-day wait before you can log in. And like most brokers, if you want to trade options or have access to margin, you have to fill out more paperwork. The website is a bit dated compared to many large brokers, though the company has modernized dashboards and trade flows in recent years. You can trade stocks, ETFs, funds, and some fixed-income products online, and you can call a broker to place orders with Vanguard's other available asset classes.
On the mobile side, Charles Schwab offers a choice of a straightforward, intuitive investing app in Schwab Mobile or a trading app in thinkorswim mobile. You can only trade futures and forex on the thinkorswim app, and mutual funds and fixed income are only available on Schwab mobile. With thinkorswim mobile, you can even place conditional orders and enjoy much more in terms of charting features. Vanguard's mobile app is simple to navigate, and it's easy to enter buy and sell orders. It's light in terms of features and seems to work best for buy-and-hold investors who want to check positions and enter simple trade orders.
Usability Verdict: Charles Schwab
Charles Schwab offers a wider user experience through multiple platforms. Vanguard is still easy to use, but its features and look and feel are a step behind Schwab.
Trade Experience
Desktop Experience
Schwab's trading experience has improved with the integration of thinkorswim web and desktop. There are now key indicators like a volume-weighted average price (VWAP) tool and excellent charting tools. The customization possible through thinkorswim is clearly aimed at trading, and you are able to trade directly from charts and stage orders for later entry. The Schwab.com experience is a more standard investor experience but still has key features like a real-time data stream and the ability to turn screens into watchlists.
Vanguard's platform is basic in comparison, but keep in mind that it's meant for buy-and-hold investors, not active traders. The data streams in real time and it is easy to create screens to select investments. There are no technical analysis-type screeners with Vanguard, as it skews to investing, not active trading. Overall, the trading platform works for buy-and-hold investors, but it falls predictably short for traders and investors who would want a robust, customizable experience.
Desktop Trading Experience Verdict: Charles Schwab
Charles Schwab has a robust, customizable trading platform that vastly outstrips Vanguard's capabilities. Traders will feel right at home with thinkorswim. Even for simple investing, Schwab's web platform is slicker in terms of trading than Vanguard's more stripped-down approach to online investing.
Mobile Experience
Schwab provides robust mobile apps that offer streaming real-time quotes, trade tickets, multiple order types (including conditional orders), in-app research, and charting—including indicators and drawing tools. You can trade the same asset classes on the mobile offerings, but there are gaps in that thinkorswim has forex and futures, while Schwab mobile is the only way to trade mutual funds and fixed income.
Vanguard offers a mobile app, too, but it's outdated and light in terms of features compared to Schwab's. You won't find any options for charting, but quotes stream in real time. The app is enough for buy-and-hold investors in that you can monitor your positions, analyze your portfolio, read the news, and place basic orders.
Mobile Trading Experience Verdict: Charles Schwab
Charles Schwab's mobile app covers more assets than Vanguard and works well, but the real edge in this category comes from the thinkorswim mobile app. Vanguard has no equivalent to offer for traders on the go to manage positions and enjoy top-notch charting tools.
Range of Offerings
Charles Schwab offers all the investments you'd expect from a large broker, including equities, bonds, futures, forex, options, and access to cryptocurrency (through Bitcoin futures and funds only). Vanguard's offerings are comparatively limited, but they should be adequate for most buy-and-hold investors.
Range of Offerings Verdict: Charles Schwab
Charles Schwab offers a wider range of assets than Vanguard does. We should note that we are looking at the broker's range of investments, not the quality of funds. Vanguard deservedly has a reputation for offering some of the best low-cost ETFs in the business, but you can access these same funds through Schwab's wide selection of assets.
Compare Range of Offerings
| Vanguard | Charles Schwab | |
|---|---|---|
| Short Sales | Yes | Yes |
| Number of No-Load Mutual Funds | 191 Vanguard, 9,951 third-party | 14,900 |
| Available Assets | Stocks, mutual funds, ETFs, bonds, CDs, options | Stocks, mutual funds, ETFs, bonds, CDs, options, forex, futures, futures options |
| Max. Number of Options Legs | 1 | 4 |
| Robo Advisory | Yes | Yes |
| Number of International Exchanges | None | 30 |
| Fractional Share Trading | Yes | Yes |
| Fractional Dividend Reinvestments | Yes | Yes |
Order Types
Schwab supports a wide variety of orders on the website, thinkorswim, and mobile, including conditional orders such as one-cancels-the-other and one-triggers-the-other. You can stage orders for later entry and select the tax lot when you close part of a position (e.g., average cost, FIFO, LIFO, etc.). Vanguard, predictably, only supports order types that buy-and-hold investors typically use: market, limit, and stop-limit orders. It doesn't support staging orders for later entry; however, you can select specific tax lots (including partial shares within a lot) to sell.
Order Types Verdict: Charles Schwab
Charles Schwab has a clear edge when it comes to order types. Again, this is by virtue of catering to a wide range of investors, including heavy traders using the thinkorswim platform.
Trading Technology
Charles Schwab uses a proprietary wheel-based router for order management purposes, such as handling exchange outages, performing real-time execution quality reviews, and handling volatile markets. Most stock and options orders are routed to third-party wholesalers (this balances execution quality with Schwab's cost savings). Quarterly information regarding execution quality is published on Schwab's website. Schwab reports that 97.5% of orders (500-1,999 shares) are filled at prices better than the National Best Bid and Offer (NBBO). Schwab calculates that an average order size of 882 shares of S&P 500 stocks sees $22.84 in price improvement and an execution speed of 0.03 seconds.
Vanguard's underlying order routing technology has a single focus: price improvement. The company reports price improvement on stock orders of $0.017 per share—a decent figure but below Schwab's reported price improvement by a few tenths of a cent. Only Schwab offers a trade simulator or supports backtesting capabilities.
Trading Technology Verdict: Charles Schwab
Charles Schwab has the edge when it comes to trading technology in terms of execution, price improvement, and capabilities.
Costs
Charles Schwab and Vanguard offer $0 commissions for online equity, options, and ETF trades for U.S.-based customers, with per-contract options fees of $0.65 and $1, respectively. You will pay more at Schwab to buy mutual funds outside the no-fee list (up to $74.95 versus Vanguard's $20). Broker-assisted trades are $25 with Schwab and between $0 and $25 (depending on your account balance) at Vanguard.
On the downside, Vanguard has added an account closure fee and will charge an account maintenance fee to investors under a certain balance who haven't yet opted in for the e-delivery of documents. When it comes to margin rates, Schwab is slightly cheaper at 13.575% for $10,000 to Vanguard's 13.75%.
Costs Verdict: Charles Schwab
This category was the closest. Schwab may have some high fees if you are purchasing from the outside of the no transaction fee list, but otherwise, it has the edge when it comes to costs.
Compare Costs
| Vanguard | Charles Schwab | |
|---|---|---|
| Volume-Based Options Discounts (Upon Meeting a Threshold) | No | No |
| Recurring Investment Fees | Yes | No |
| Options Price Cap (Upon Meeting a Threshold) | Yes | No |
| Option or No Base Commission for Trading Penny Stocks | Yes | No |
| Option for No Base Commission for Stocks and ETFs | Yes | Yes |
| Inactivity Fees | No | No |
| Cost Per Stock Trade | $0 | $0 |
| Cost Per Options Contract | $1 | $0.65 |
| Cost Per Futures Contract | N/A | $2.25 |
| Broker-Assisted Trade Fee | $25 | $25 |
| Base Commission for Options | No | No |
| Account Closure Fee | Yes | No |
Account and Research Amenities
Charles Schwab offers flexible screeners to help you research your next trade, including an ETF screener with more than 150 criteria, including asset class, fund performance, distribution yield, Morningstar category, regional exposure, and top 10 holdings. You'll also find calculators, idea generators, and a set of technical analysis charting tools. On top of this, thinkorswim includes a wide selection of research, technical studies, and a deep toolset.
Vanguard offers basic screeners for stocks, ETFs, and mutual funds, and you can view fixed-income products in a sortable list. All research is proprietary, and market news is provided by MT Newswires and the Associated Press. There are several tools focused on retirement planning. Charting is limited, and no technical analysis is available, which is expected for a broker that focuses primarily on buy-and-hold investing. With either broker, you can sweep your cash into a money market fund to get a higher interest rate, but Vanguard's stands out as being much higher.
Research and Research Amenities Verdict: Charles Schwab
The variety and depth of Charles Schwab's account and research amenities gives the broker a wide edge in this category.
Compare Account and Research Amenities
| Vanguard | Charles Schwab | |
|---|---|---|
| Portfolio Margin Available | No | Yes |
| Ability to Choose and Offer Shares Held Long to a Loan Program | No | Yes |
| Interest Earned on Uninvested Cash | Varies, currently over 5% | 0.45% |
| Uninvested Cash Automatically Swept Into a Money Market Fund | Yes | Yes |
| Screeners Offered | Stocks, preferred stocks, ETFs, mutual funds, fixed income (ETF and mutual fund screeners contain filters for ESG strategies) | Stocks, ETFs, options, mutual funds, fixed income, ESG |
| Ability to Build Custom Screen | Yes | Yes |
| Ability to Screen Based on Technical Indicators | No | Yes |
| Ability to Save Custom Screens | Yes | Yes |
| Access to Proprietary Research | Yes, no additional cost | Yes, no additional cost |
| Access to Third-Party Research | Yes, no additional cost | Yes, no additional cost |
| Ability to Turn Screen Results Into a Watchlist | No | Yes |
| Trading Idea Generator Offered | No | Yes |
| Daily Market Research Reports Offered | Yes | Yes |
Portfolio Analysis
Charles Schwab's portfolio analysis offerings include access to real-time buying power and margin information, plus real-time unrealized and realized gains. You can link holdings from outside your account to get a full picture of your finances, calculate the tax impact of future trades, and calculate the internal rate of return (IRR). One shortfall is that you can't view your expected income from dividends and interest (you can with Vanguard).
Vanguard has similar portfolio analysis tools. You can access real-time buying power and margin information, internal rate of return, unrealized and realized gains, and tax reports. You're able to combine holdings from outside your account to get an overall financial picture. One thing that's missing is that Vanguard doesn't let you calculate the tax impact of future trades.
Portfolio Analysis Verdict: Tie
Both Vanguard and Charles Schwab offer solid portfolio analysis with external account syncing. Both also offer similar sector allocation tools to flag over- or under-exposure. This category is a tie.
Education
Schwab offers extensive investor education with its Schwab Live Daily broadcasts, research from the Schwab Center for Financial Research, an array of articles on the Insights & Ideas page, as well as webinars and in-person events for investors and traders. The company offers thousands of live events, including many trader-focused ones. Vanguard's educational content is focused on helping you set and reach your financial goals. Most content is in the form of articles, and hundreds are added each year.
Education Verdict: Charles Schwab
The more expansive education section at Charles Schwab is one of the reasons it was our pick for beginners in 2024. Schwab has the edge over Vanguard here.
Customer Service
Charles Schwab offers 24/7 phone line support with access to live brokers, plus 24/7 online chat with a live agent. You can also visit one of its over 300 branch locations for in-person help.
At Vanguard, you can access phone support (customer service and brokers) from 8 a.m. to 8 p.m. Eastern Time, Monday through Friday. Live chat isn't supported, but you can send a secure message via the website after logging into your account. Vanguard also maintains a presence on X (formerly Twitter) and responds to queries within an hour or so there. Vanguard says its average wait time varies by client service group and trading desk.
Customer Service Verdict: Charles Schwab
Schwab's more extensive 24/7 customer service and branch network take this category handily.
Security
Security at both Charles Schwab and Vanguard is up to industry standards. You can log into any app using biometric (face or fingerprint) recognition, and both brokers protect against account losses due to unauthorized or fraudulent activity. Schwab carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London insurers with an aggregate limit of $600 million, limited to a combined return to any customer of $150 million, including cash of up to $1.15 million. Vanguard's excess SIPC coverage is not clearly disclosed. Neither brokerage reported any significant data breaches in the period we assessed.
Security Verdict: Tie
Both Vanguard and Schwab are up to industry standards when it comes to security.
The Bottom Line
Charles Schwab and Vanguard are two of the largest brokers in the business, but it's important to note that they cater to different types of investors. The addition of thinkorswim has put Schwab in competition for serious traders, which is a new development compared to years gone by. Due to its wide array of services and tools, Charles Schwab is a great choice for self-directed investors and traders who want a customizable trading platform. Vanguard is as far away from serving acting traders as ever with its purposefully limited offering and platform. There have been improvements and modernizations to the platform, but Vanguard really never intends to expand beyond buy-and-hold investors. Even though Schwab scored higher than Vanguard in almost every category, investors who value simplicity over bells and whistles may still prefer Vanguard.
How We Picked the Best Online Brokers and Trading Platforms
Providing readers with unbiased, comprehensive reviews of online brokers and trading platforms is a top priority for Investopedia. We combined our industry research, subject matter expertise, and investor survey data to guide the research and weightings for our 2024 online broker awards. To collect the data, we sent a digital survey with 110 questions to each of the 26 companies we included in our rubric. Additionally, our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process spanned from Feb. 19 to March 19, 2024.
We then developed a proprietary model that scored each company to rate its performance across 11 major categories and 89 criteria to find the best online brokers and trading platforms. The score for each company’s overall star rating is a weighted average of the criteria in the following categories:
Additionally, during our 2024 research, many of the companies we reviewed gave us live demonstrations of their platforms and services via video conferencing methods and also granted our team of expert writers and editors access to live accounts so they could perform hands-on testing.
Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top online brokers and trading platforms.
Learn more about how we review online brokers.
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