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Our Verdict
Our Verdict
Founded almost 50 years ago, Vanguard was a pioneer of the passive investing revolution. Today, Vanguard’s online brokerage remains a good option for slow-and-steady, buy-and-hold investing. That said, the Vanguard platform has quirks that set it apart from many competitors—and if you plan to pursue an active trading strategy, you might consider other options.
Pros
- Excellent educational resources
- Large number of ultra low-cost Vanguard mutual funds and ETFs
- Vanguard Admiral Shares offer even lower expense ratios for those who have at least $3,000 in many funds
- Cash sweep into a decent money market fund with a low expense ratio
Cons
- Relatively high minimum investment requirements for many fund options
- Higher-than-average per-contract options fee
- Slow process to open an account
- No trading platform for active traders
- No fractional shares of stocks or ETFs
3.1
Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.
Trading commissions
$0 for stocks, ETFs and options
Account Minimum:
$0
Table of Contents
- Who Should Choose Vanguard?
- Vanguard Commissions and Fees
- Vanguard Platform and Technology
- Vanguard Range of Offerings
- Vanguard Research and Education
- Vanguard Customer Service and Security
- About Vanguard
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FEATURED PARTNER OFFER
Vanguard Cash Plus Account
Annual Percentage Yield
4.50% APY
Rate as of 8/6/2024[ ]
Monthly Maintenance Fee
$0
On Vanguard's Website
4.50% APY
Rate as of 8/6/2024[ ]
$0
Details
- Brokerage account with a bank sweep program offering variable APY and FDIC coverage[ ]. See APY and coverage information on vanguard.com.
- Pay bills, set up direct deposit with your employer and make payments using apps like Paypal and Venmo
- No monthly, transfer, opening, or minimum balance fees. See commission and fee schedules on vanguard.com for fees that may apply
Who Should Choose Vanguard?
Vanguard’s online brokerage platform caters to buy-and-hold investors pursuing long-term goals. Vanguard’s approach embodies the investing principles of founder John C. Bogle: Active trading is a mug’s game, fees should be cut to the bone and new investors need plenty of guidance.
If all you’re looking for in an online brokerage platform is a way to supplement your workplace 401(k) plan by investing in an individual retirement account (IRA) or growing your funds in a taxable brokerage account—and you have no desire to pay close attention to day-to-day changes in the market—Vanguard could be a great choice.
But even for buy-and-hold investors, there are some aspects of Vanguard that may feel a bit behind the times. Consider the slow process to get an account: You can complete the application online in minutes, but it takes up to five days for Vanguard to review it before you can open your account.
Meanwhile, the platform isn’t at all optimized to enable rapid, fluid trading—given Vanguard’s attitude, that’s no accident. The firm appears uninterested in competing with shiny, modern brokerages designed to provide a full gamut of tools needed for frequent trading.
Vanguard may be well suited for an investor who knows what their long-term goals are and who wants a deeper understanding of how their money is likely to perform when put into one fund or another. This is a much slower-paced type of investing than active stock trading.
Vanguard Commissions and Fees
Vanguard was a bit of a latecomer to the commission-free stock trading revolution as it was one of the last major online brokerage platforms to cut equity trading commissions to $0. On the other hand, the company has long offered commission-free trading of its own Vanguard mutual funds and exchange-traded funds (ETFs).
When traded online, the Vanguard platform charges zero fees or commissions on more than 3,000 third-party mutual funds and nearly every third-party ETF in the industry.
The platform also offers third-party mutual funds that incur trading fees. These fees are as follows:
| Your AUM with Vanguard | Online Trade Fee | Phone Trade Fee |
|---|---|---|
Less than $1 million | $20 per trade | Online rate + $25 broker-assisted fee |
$1 million to $5 million | $0 for first 25 trades $8 per trade thereafter | $0 for first 25 trades $8 per trade thereafter |
$5 million+ | $0 for first 100 trades $8 per trade thereafter | $0 for first 100 trades $8 per trade thereafter |
Broker-assisted trades of Vanguard funds are always free, although there is a $25 fee per broker-assisted trade of third-party funds. Broker-assisted fees are waived if you have more than $1 million AUM with Vanguard.
The per contract fee for options trades is relatively high at $1.
Vanguard charges a $20 annual account service fee that can easily be waived by registering for secure website access and opting for electronic delivery of your account statements.
Margin Interest Rates
Users can borrow money from Vanguard for investing by opening a margin account. Just be warned that Vanguard’s margin interest rates are relatively expensive compared to the other brokerages we surveyed, offering an average rate of 6.78%.
Vanguard’s margin interest rates per account balance break down as follows:
| Vanguard Investment Range | Margin Interest Rate |
|---|---|
$0 to $19,999 | 8.50% |
$20,000 to $49,999 | 8.00% |
$50,000 to $99,999 | 7.50% |
$100,000 to $249,999 | 7.00% |
$250,000 to $499,999 | 6.50% |
$500,000 to $999,999 | 5.25% |
>$1,000,000 | 4.75% |
Payment for Order Flow (PFOF)
Unlike many other brokerages that offer commission-free stock and ETF trades, Vanguard does not receive payment for order flow (PFOF). The platform bases its order routing decisions solely upon execution quality, as measured by price improvement and level of service. This could give Vanguard users a leg up over other brokerages.
With PFOF, a brokerage routes orders to a third-party market maker. In exchange, it compensates the brokerage. PFOF can sometimes provide better prices or faster trades, but a better trade isn’t guaranteed.
Vanguard Platform and Technology
If you want a slick trading platform that offers a variety of charts, graphs and screeners; rewards engagement, or in any way fosters a social aspect to investing, then Vanguard is probably not for you. This attitude shows nowhere more than in Vanguard’s platform and technology.
Vanguard offers a single web-based trading platform that feels clunky and outdated. Like we’ve noted above, this is probably by design as the platform is geared to encourage long-term investing rather than short-term trading.
Even if you’re sold on the Vanguard buy-and-hold approach, the trading platform’s mid-2000s look and feel could be frustrating. The fact that you need to click repeatedly to navigate several screens from a news item about a specific investment before you reach an interface where you could purchase that investment may drive annoyance in any investor who’s accustomed to seamless connectivity.
The Vanguard platform offers two screener tools but lacks any watch list function or an options screener.
- Stock Screener: Vanguard’s screener offers three default screening options: small-cap growth, large-cap income and value stocks. In addition, it also lets you filter for stocks with preferred shares, and you also have the ability to create up to five personalized filters. Vanguard does not provide the ability to create a watch list, in keeping with their buy-and-hold philosophy.
- Fund Screener: Vanguard’s mutual fund and ETF screener provides different filters to create a list of funds to compare with each other. You can compare mutual funds and ETFs, both separately and with each other, by fund type, fund category, fund family, expense ratio and total return.
Trading Orders
The Vanguard platform does not make it easy to execute trades. You must click through a series of tabs to even find the trading orders entry fields, including a page that explains how trading works, how orders are fulfilled and how to avoid mistakes.
The actual trading platform is itself somewhat clunky and difficult to navigate as it requires you to enter in the specific stock’s or ETF’s name or symbol. You may place limit orders and stop-loss orders on your trades. But Vanguard price quotes are delayed by at least 20 minutes until you open a trading ticket for a specific security.
These choices may be by design to discourage excessive trading. But they will most likely frustrate savvy investors who simply want to add individual stocks or ETFs to their portfolio.
Vanguard Mobile App
Vanguard’s mobile app allows you to see an overview of your portfolio, which includes tracking your account balances as well as the performance, cost basis and day change information of each of your holdings. The app also allows investors to make trades and deposit checks directly into their accounts and provides customer support.
While you can make trades on the mobile app, Vanguard does not offer charting of stocks and ETFs, and if you want to make a trade, expect all quotes to be delayed by at least 20 minutes until you open a ticket to place an order, as with the online version.
Vanguard Range of Offerings
In line with Vanguard’s long-term investing ethos, there are some gaps in the range of offerings available on this brokerage platform. Foreign exchange (forex), futures and cryptocurrency are a few of the asset classes missing from the Vanguard lineup.
| Offering | Available? |
|---|---|
Stocks | Yes |
ETFs | Yes |
Mutual Funds | Yes |
Bonds | Yes |
Options | Yes |
Futures | No |
Forex | No |
International Markets | Yes |
Penny Stocks | Yes |
Advisory Services | Yes |
Cryptocurrency | No |
Fractional Shares | No |
Cash Management Services | No |
Cash Investment Options
Vanguard offers two options for holding cash in your account: a money market fund and certificates of deposit (CDs). The money market fund has a $3,000 minimum investment requirement and averages a 0.01% seven-day SEC yield, with expense ratios ranging from 0.09% to 0.15%.
CDs have a minimum investment requirement of $1,000 and are FDIC insured for up to $250,000. Vanguard currently offers yields ranging from 0.05% to 2.00% for terms ranging from three months to 10 years.
Vanguard Digital Advisor
Vanguard Digital Advisor is a robo-advisor with lower-than-average fees that invests money in one of four Vanguard ETFs, with expense ratios ranging from 0.03% to 0.08%. Though the Digital Advisor is a good fit for younger investors who want a basic investment portfolio and low fees, it lacks certain common features of other robos, like ESG funds or tax-loss harvesting.
To start investing with Vanguard Digital Advisor, you’ll take a quick questionnaire that helps pinpoint your retirement goals, your risk tolerance and your funding needs to meet your goals. This will help the robo-advisor get you invested in the best ETFs for your needs; the program will then automatically rebalance your account over time.
There is a $3,000 minimum enrollment balance for Vanguard Digital Advisor for taxable brokerage accounts, and a $5 minimum enrollment balance for 401(k) accounts.
Vanguard Personal Advisor Services
Investors with larger portfolios should check out Vanguard Personal Advisor Services. It requires a minimum enrollment balance of $50,000 and charges an annual management fee of 0.3% of your balance.
To get started with Vanguard Personal Advisor Services, you will fill out a questionnaire to determine your goals, risk tolerance and funding needs. Once you have completed this step, a financial advisor will contact you so you can work together to create an investment plan and portfolio that is designed for your needs.
If your portfolio is between $50,000 and $500,000, you get access to a team of financial advisors to help you plan. Investors with more than $500,000 invested will be partnered with a specific advisor who stays with them over the long term.
Personal Advisor Services invests your money in one of four Vanguard ETFs, with expense ratios ranging from 0.03% to 0.08%. While the program does not offer tax-loss harvesting, it does provide a service called “MinTax cost basis method,” which helps you identify which asset sales from your portfolio may be eligible for preferential tax treatment.
Vanguard Research and Education
Research and education resources are one area where Vanguard shines. Though the brokerage does not offer paper trading, in which investors can test out strategies with play money, it does have a comprehensive investor education site
The educational resources offered by Vanguard cover basic to intermediate topics, including getting started with investing, understanding how taxes will affect your investments, online trading and determining the best asset allocation for your needs and goals.
The educational resources also include some excellent calculators and tools that can help investors predict when they can afford to retire, help them estimate their future retirement expenses and determine if the benefits of converting a traditional IRA to a Roth IRA are worth the tax bite. Since the educational material is geared toward helping newer investors set their financial goals and create a plan to meet them, more experienced investors are less likely to find new information on this platform.
Vanguard also provides a robust investment research and commentary section on its platform. There, you can find research on topics ranging from markets and economy to investment philosophy and methodology, among countless others.
That said, investors who want advanced research tools or charting capabilities so they can make their own comparisons between securities will not find them at Vanguard. The platform is focused on helping the average investor make better decisions and does not offer research options for experienced investors to fine-tune their decisions.
Vanguard Customer Service and Security
The old-school approach of Vanguard’s website extends to its customer service. There’s only phone customer service, available 8 a.m. to 8 p.m. ET, Monday through Friday. There is no live chat or email customer support resources.
Both current and prospective customers may speak with Vanguard’s customer service representatives. For users who have an account, an automated phone response requires you to answer security questions before routing you to a service rep for account management issues. This does provide an added layer of security for customers who can rest assured that no one can impersonate them on the phone to Vanguard.
Vanguard uses two-factor authentication, 128-bit encryption, mobile security features and firewalls to protect its customers’ money and sensitive information. Vanguard is also a member of the Securities Investor Protection Corporation (SIPC), which insures customer security holdings of up to $500,000 ($250,000 of cash) per investor. An additional insurance policy covers up to $49,500,000 in assets and $1,900,000 in cash.
About Vanguard
Headquartered in Valley Forge, Penn., Vanguard oversees nearly $7.2 trillion in global assets under management as of Jan. 31, 2021, and serves more than 30 million investors globally.
Founded on the principles of goal-setting, cost-reduction, balance and discipline, Vanguard is known for its low-cost mutual funds and its focus on helping investors reach success over the long term. Many investors who embrace Vanguard’s principles style themselves as Bogleheads, after the founder John C. Bogle. These investors aim to mimic the market, keep investing simple and reduce the fees associated with investing.
| Vanguard Disclosures |
|---|
| Vanguard Personal Advisor Services Vanguard Personal Advisor Services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited purpose trust company. The services provided to clients who elect to receive ongoing advice will vary based upon the amount of assets in a portfolio. Please review the Form CRS and Vanguard Personal Advisor Services Brochure for important details about the service, including its asset based service levels and fee breakpoints. VAI is a subsidiary of VGI and an affiliate of VMC. Neither VAI nor its affiliates guarantee profits or protection from losses. Vanguard Digital Advisor All investing is subject to risk, including the possible loss of the money you invest.For more information about Vanguard funds and ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Vanguard Digital Advisor® services are provided by Vanguard Advisers, Inc. (“VAI”), a federally registered investment advisor. VAI is a subsidiary of VGI and an affiliate of VMC. Neither VAI nor its affiliates guarantee profits or protection from losses. Vanguard Digital Advisor is an all-digital service that targets an annual net advisory fee of 0.15% across your enrolled accounts, although your actual fee will vary depending on the specific holdings in each enrolled account. To reach this target, Vanguard Digital Advisor starts with a 0.20% annual gross advisory fee to manage Vanguard Brokerage Accounts. However, we’ll credit you for the revenues that The Vanguard Group, Inc. (“VGI”), or its affiliates receive from the securities in your managed portfolio by Digital Advisor (i.e., at least that portion of the expense ratios of the Vanguard funds held in your portfolio that VGI or its affiliates receive). Your net advisory fee can also vary by enrolled account type. The combined annual cost of Vanguard Digital Advisor’s annual net advisory fee plus the expense ratios charged by the Vanguard funds in your managed portfolio will be 0.20% for Vanguard Brokerage Accounts. For more information, please review Form CRS and the Vanguard Digital Advisor brochure. Vanguard Marketing Corporation, Distributor of the Vanguard Funds. |
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Disclosures
- [2] Bank Sweep program balances are held at one or more participating banks, earn a variable rate of interest, and are not covered by SIPC. See the list of participating Program Banks. Balances are eligible for FDIC insurance subject to applicable limits. https://personal.vanguard.com/pdf/Bank_Sweep_Participating_Banks.pdf
- [1] The Vanguard Cash Plus bank sweep offers a competitive annual percentage yield (APY) of 4.50% as of August 6, 2024. The APY will vary and may change at any time.
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