Vanguard Review 2024: Pros, Cons and How It Compares

Vanguard's low-cost model and large fund selection make the broker a good choice for long-term investors, but the firm lacks the kind of robust trading platform active traders require.
Andy Rosen
Kevin Voigt
By Kevin Voigt and  Andy Rosen 
Edited by Pamela de la Fuente

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Our Take

4.2

NerdWallet rating 

The bottom line:

Vanguard is the king of low-cost investing, making it ideal for buy-and-hold investors and retirement savers. But beginner investors and active traders will find the broker falls short despite its $0 stock trading commission, due to the lack of a strong trading platform and accessible educational resources.

Vanguard
Fees
$0
per trade
Account minimum
$0
Promotion
None
no promotion available at this time
Learn more

on Vanguard's website

Pros & Cons

Pros

  • Large mutual fund selection.

  • Commission-free stock, options and ETF trades.

  • Leader in low-cost funds.

  • High interest rate on uninvested cash.

  • High order execution quality.

Cons

  • Basic trading platform only.

  • Limited research and data.

Compare to Similar Brokers

Current Product

NerdWallet rating 

4.2

/5
NerdWallet rating 

4.9

/5
NerdWallet rating 

5.0

/5
NerdWallet rating 

4.9

/5
NerdWallet rating 

4.1

/5

Fees 

$0

per trade

Fees 

$0

per online equity trade

Fees 

$0

per trade

Fees 

$0

per trade

Fees 

$0

per trade

Account minimum 

$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 

None

no promotion available at this time

Promotion 

Get up to 75 free fractional shares (valued up to $3,000)

when you open and fund an account with Webull.

Promotion 

Get up to $700

when you open and fund a J.P. Morgan Self-Directed Investing account with qualifying new money.

Learn more

on Vanguard's website

Learn more

on Charles Schwab's website

Learn more

on Interactive Brokers' website

Learn more

on Webull's website

Learn more

on J.P. Morgan's website

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Full Review

Where Vanguard shines

Large mutual fund selection: Vanguard has more than 3,500 no-transaction-fee mutual funds, and an expanded lineup of proprietary, low-cost, socially responsible 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.

Vanguard is best for:

  • Long-term or retirement investors.

  • Those who prefer low-cost investments.

  • Index fund and ETF investors.

Vanguard at a glance

Account minimum

$0; however some fund minimums start at $1,000.

Stock trading costs

$0.

Options trades

$0 + $1 per contract.

Interest rate on uninvested cash

5.27%.

Account fees (annual, transfer, closing, inactivity)

No closing, inactivity or transfer fees. $20 annual account service fee for all brokerage accounts and IRAs. Waived for clients who sign up for statement e-delivery.

Number of no-transaction-fee mutual funds

More than 3,400 funds from outside providers and 191 Vanguard funds charge no transaction fees.

Tradable securities

• Stocks. • Bonds. • Mutual funds. • ETFs. • Options.

Trading platform

Basic trading platform.

Mobile app

Trade mutual funds, ETFs and stocks; monitor account activity and analyze performance; follow market news and research investments.

Research and data

Average quality but free.

Customer support options (includes how easy it is to find key details on the website)

Phone support Monday-Friday, 8 a.m.-8 p.m. Eastern; email support.

» Looking to switch brokers? View the best broker promotions right now

More details about Vanguard's ratings

Account minimum: 5 out of 5 stars

Vanguard's account minimum is $0, but keep in mind many mutual funds may require a minimum initial investment. Vanguard funds have minimums that start at $1,000.

Stock trading costs: 5 out of 5 stars

Following on the heels of the rest of the stock brokerage industry, Vanguard has eliminated all stock trading commissions.

Options trades: 2 out of 5 stars

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.

Account fees: 5 out of 5 stars

Vanguard charges no closing, transfer or inactivity fees. There is a $20 annual account service fee for all brokerage accounts and IRAs that is easily waived for clients who sign up for statement e-delivery.

Interest rate on uninvested cash: 5 out of 5 stars

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 was paying 5.27% as of August 31, 2023. This was among the highest of any broker we reviewed.

Number of no-transaction-fee mutual funds: 4 out of 5 stars

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.

Vanguard offers more than 3,500 non-Vanguard funds and 191 Vanguard funds currently open to new investors.

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 an August 2023 report from investment research firm Morningstar, the average expense ratio across all mutual funds and ETFs was 0.37% in 2022

.

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.

Tradable securities available: 3 out of 5 stars

Vanguard allows investors to trade stocks, mutual funds, ETFs and options. Bond investors have a solid selection on Vanguard, including Treasurys, US government agency securities, municipal bonds, corporate bonds, CDs, preferred bonds and bond ETFs.

Overall, Vanguard has a good selection for retirement investors, but active traders may want more options such as forex 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.

Trading platform: 2.5 out of 5 stars

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 access to IPOs and over-the-counter trades.

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.

All that said, if you're investing on a years-long time horizon, a few days might not make that much of a difference.

Once you're in, you'll find a platform that's strong under the hood. Vanguard's execution quality is among the best in the business at 99.2%, 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."

🤓Nerdy Tip

The average execution quality of all brokers we review was 97.4% as of August 31, 2023. That means 97.4% of orders were executed 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 price improvement, or a better share price than you were originally quoted.

Mobile app: 3 out of 5 stars

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.

Research and data: 3 out of 5 stars

Vanguard offers research from Argus 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.

Customer support and educational tools: 3.5 out of 5 stars

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.

If you'd rather skip learning and cede investment decisions to the experts, Vanguard’s robo-advisor service, Vanguard Digital Advisor, will manage your portfolio for you for an annual advisory fee of 0.15%. Robo-advisors are computer-based investment advisors who build and manage client investment portfolios.

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? Visit our guide to brokerage accounts.)

How do we review brokers?

NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. brokers by assets under management, along with emerging industry players. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.

We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across more than 20 factors. The final output produces star ratings from poor (one star) to excellent (five stars).

For more details about the categories considered when rating brokers and our process, read our full methodology.

Learn more

on Vanguard's website