Vanguard Review 2024: Pros, Cons and How It Compares
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Our Take
4.4
The bottom line:
on Vanguard's website
Pros & Cons
Pros
Commission-free stock, options and ETF trades.
Leader in low-cost mutual, index and exchange-traded funds.
High interest rate on uninvested cash.
High order execution quality.
Cons
Basic trading platform only.
Limited research and data.
No fractional shares for stocks.
Compare to Similar Brokers
Current Product
NerdWallet rating 4.4 /5 | NerdWallet rating 4.8 /5 | NerdWallet rating 5.0 /5 | NerdWallet rating 4.6 /5 |
Fees $0 per trade | Fees $0 per online equity trade | Fees $0.005 per share; as low as $0.0005 with volume discounts | Fees $0 |
Account minimum $0 | Account minimum $0 | Account minimum $0 | Account minimum $0 |
Promotion None no promotion available at this time | Promotion None no promotion available at this time | Promotion Exclusive! U.S. residents who open a new IBKR Pro account will receive a 0.25% rate reduction on margin loans. Terms apply. | Promotion Earn up to $10,000 when you transfer your investment portfolio to Public. |
Learn more on Vanguard's website | Learn more on Charles Schwab's website | Learn more on Interactive Brokers' website | Learn more on Public's website |
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Full Review
In this review of Vanguard
Where Vanguard shines
Large mutual fund selection: Vanguard has more than 3,600 no-transaction-fee mutual funds, and an expanded lineup of proprietary, low-cost mutual funds and ETFs.
Leader in low-cost funds: The company has a solid reputation for the well-below-average expense ratios on its index funds and exchange-traded funds. For long-term investors looking to pair a buy-and-hold strategy with the lowest-cost offerings, it's hard to beat the service and selection found with Vanguard.
Where Vanguard falls short
Trading platform: Vanguard’s trading platform is basic, and lacks the analytical and educational tools typically offered by brokers that support stock trading.
Investment minimums: Most Vanguard retirement funds and the Vanguard STAR Fund have investment minimums of $1,000, and other Vanguard funds carry minimums of $3,000. That initial minimum purchase amount of $1,000 to $3,000 will be too high for many beginner investors. That being said, some index mutual funds have share classes, allowing you to invest for as low as $1.
Alternatives to consider:
For a better platform: Fidelity
For lower investment minimums: Charles Schwab
What type of investor should choose Vanguard?
Retirement investors: Vanguard's lineup of low-cost funds and trusted name is reassuring to any investors looking to park their retirement funds and forget about them.
High-net worth investors: Once you've built your nest egg, Vanguard can help you with a full-service financial advice offering. This includes financial planning, investment advisory, wealth and estate planning and more.
What the Nerds think 🤓
Chris Davis, investing editor and reviews lead
"Vanguard's mobile app, and even its website, to some extent, are not best-in-class, but in Vanguard's defense, they're not exactly trying to be. Vanguard caters to customers who are long-term, hands-off investors looking for minimal fees, and that's what they deliver. Vanguard makes it easy to set up automatic contributions, has a suite of low-expense-ratio ETFs that could make up the backbone of a diversified portfolio, and has several advisory service tiers to grow into as your balance increases over the decades.
"If you want to use a highly reputable and established institution where you can set and forget your retirement and taxable brokerage account contributions, you can't really go wrong with Vanguard. But if you're looking for a more advanced day trading platform, or are tempted to check in on your stock performance daily, there are plenty of others that better fit that bill."
Vanguard at a glance
Account minimum | $0; however some fund minimums are as high as $1,000 |
Stock trading costs | $0 |
Options trades | $1 per contract |
Account fees (annual, transfer, closing, inactivity) | Annual fee: $25 Inactivity fee: $0 Outgoing transfer fee (partial): $0 Outgoing transfer fee (full): $100 |
Interest rate on uninvested cash | Over 4% |
Number of no-transaction-fee mutual funds | Over 3,600 |
Tradable securities | Stocks, mutual funds, ETFs, options, bonds, CDs |
Trading platform | Two: Website and mobile app |
Mobile app | Available for iOS and Android |
Research and data | Two: Argus and Market Grader |
Customer support options (includes how easy it is to find key details on the website) | Phone support Monday to Friday, 8:00 a.m. to 8:00 p.m. Eastern; email support |
» Looking to switch brokers? View the best broker promotions right now
How to sign up for a Vanguard account
To open an account with Vanguard, you'll need to choose an account type to match your investment goal, whether that's retirement, general investing or saving for education. You'll have to initiate a bank transfer to your new account and wait three to seven days for the money to become available. Once your money has transferred you can start investing. To open an account, you'll need your bank account and routing numbers, your Social Security number and your employer's name and address.
We found that setting up an account can be a heavier lift on Vanguard than with some competing brokers. For instance, our attempts to fund an account with a transfer from our small credit union led to a dead end that could only be resolved by sending Vanguard a check — not ideal for new customers who want to start trading right away. That said, if you're investing on a years-long time horizon, a few days might not make that much of a difference.
What to know about Vanguard fees
Vanguard's account minimum is $0, but keep in mind many Vanguard mutual funds may require a minimum initial investment. Vanguard funds have minimums that start at $1,000.
Following on the heels of the rest of the stock brokerage industry, Vanguard has eliminated all stock trading commissions. Options trades are commission-free, but they still carry a contract charge, which is $1 — higher than many other brokerages. That said, account holders with $1 million to $5 million in Vanguard assets get 25 free option trades per year; customers with $5 million or more get 100 free trades per year.
» See our list of the best brokers for trading options
Vanguard charges no closing or inactivity fees, but the broker may charge a $100 fee for each account closure and full transfer of assets. There is a $25 annual account service fee for all brokerage accounts and IRAs that is easily waived for clients who sign up for statement e-delivery.
Vanguard trading platforms and apps
Vanguard is designed for long-term retirement investors, rather than active traders, as evidenced by Vanguard's no-frills trading platform. You'll have to look elsewhere for bells and whistles such as access to IPOs and over-the-counter stock trades.
Vanguard has apps available for iOS and Android, which allow users to trade mutual funds, ETFs and stocks, as well as monitor account activity and analyze performance.
How we nerd out testing trading platforms
Our reviewers — who are writers and editors on NerdWallet’s content team — test every online broker platform in our analysis hands-on. That way, we can report on every aspect of the user experience, from funding a new account to placing trades.
We score each broker against criteria that factor in the capabilities offered and the actual user experience of trading with those capabilities. This includes how easy it was to sign up for and fund a new account. Note that a broker may score very highly for the platforms it offers but low for the experience of actually using that platform. Our analysis scores these criteria separately and weighs them evenly when factored into the broker’s overall score. As a result, a broker can offer an advanced trading platform. Still, if it is clunky to use or the process of opening an account is unnecessarily arduous, their score will reflect that.
Vanguard investment selection
Vanguard allows investors to trade stocks, mutual funds, ETFs and options. Bond investors have a solid selection on Vanguard, including Treasurys, U.S. government securities, municipal bonds, corporate bonds, CDs, preferred bonds and bond ETFs.
Vanguard pioneered low-cost funds — founder Jack Bogle actually invented the index fund — so if those are your game, you’re in excellent hands with this brokerage.
For investors who want to be truly hands-off and have their portfolios managed for them, Vanguard also offers a robo-advisor, Vanguard Digital Advisor, and a financial planning service, Vanguard Personal Advisor.
Vanguard offers more than 3,400 non-Vanguard funds and 260 Vanguard funds. Vanguard’s mutual funds and ETFs aren’t just low cost; they’re significantly less expensive than the industry average. Vanguard’s average expense ratio is 0.09%. According to a July 2024 report from investment research firm Morningstar, the average expense ratio across all mutual funds and ETFs was 0.36% in 2023.
What do you do when you're already low? Go lower. Admiral Shares are a class of Vanguard mutual funds that boast super low expense ratios — as in 29% lower than the company's standard fund share class — and used to be the broker's way of passing along savings to larger account holders. But in 2018, Vanguard lowered the minimum investment threshold for many of those index funds to $3,000 from $100,000.
Overall, Vanguard has a good selection for retirement investors, but active traders may want more options such as forex, crypto and futures trading.
The platform also has a limited offering of fractional shares, which allow investors to start off on higher-priced equities with a low buy-in. Fractional shares are only available for Vanguard ETFs.
Other key Vanguard features
Customer support
Vanguard's customer service is available over phone and email support. Phone representatives are available Monday through Friday, 8:00 a.m. to 8:00 p.m. Eastern.
Execution quality
Vanguard's execution quality is among the best in the business at 99.3%, and the company is among the rare brokers that don't accept payment for order flow. This means Vanguard doesn't receive compensation from market makers, who sometimes pay brokers to route investors' orders through them. The company touts this as their "client-first philosophy."
The average execution quality of all brokers we review was 96.95% as of Oct. 16, 2024. That means 96.95% of orders sold for at a price that was at or better than the National Best Bid and Offer. Executing at or above the NBBO means you may receive a price improvement or a better share price than you were originally quoted.
IRA account
Vanguard offers traditional and Roth IRAs for no extra charge. Some Vanguard competitors offer more IRA options, like SEP or SIMPLE IRAs.
High interest rate on uninvested cash
The interest rate you'll get on uninvested cash in your account will vary based on your account settings, but the default settlement fund is Vanguard's federal money market fund, which pays one of the highest rates of any broker we review. Currently, the rate is over 4%.
Good to know about Vanguard
Lean research and data offering
Vanguard offers research from Argus, MarketGrader and Vanguard's own bespoke team of analysts. It's a decent free offering, but it falls short of the more robust research programs put forward by top-tier competitors.
Like other retirement-oriented brokers, Vanguard offers a wealth of retirement planning tools and resources on its website. Investors can learn about investment options and prioritizing their goals, predict when they'll be able to retire with high-quality calculators and tools, estimate their retirement expenses and weigh the benefits of converting a traditional IRA to a Roth.
Is Vanguard safe?
All investing comes with the risk of loss, but Vanguard is covered by insurance and is registered with all the appropriate governing bodies.
Is an investment at Vanguard FDIC insured?
Vanguard has FDIC insurance to protect cash deposits in checking and savings accounts for up to $250,000. Vanguard is also covered by SIPC insurance, which protects brokerage accounts up to $500,000. SIPC insurance doesn't apply to investment losses or price fluctuations. Vanguard is also regulated by the Securities and Exchange Commission to ensure compliance with securities regulations, and by FINRA, which regulates broker-dealers.
Is Vanguard right for you?
Ask yourself this question: Are you part of Vanguard’s target audience of retirement investors with a relatively high account balance? If so, you’ll likely find no better home. You really can’t beat the company’s robust array of low-cost funds.
Investors who fall outside of that audience — those who can’t meet the fund minimums or want a powerful platform to regularly trade stocks — should look for a broker that better caters to those needs. (Need help figuring out what you want in a broker?s.)
on Vanguard's website
