Vanguard Review 2022: 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.
Mar 2, 2022

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Our Take

4.0

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 active traders will find the broker falls short despite its $0 stock trading commission, due to the lack of a strong trading platform.

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.

Cons

  • Basic trading platform only.

  • Limited research and data.

Compare to Similar Brokers

Current Product

Vanguard
Merrill Edge
Fidelity
NerdWallet rating 

4.0

/5
NerdWallet rating 

4.5

/5
NerdWallet rating 

5.0

/5

Fees

$0

per trade

Fees

$0

per trade

Fees

$0

per trade for online U.S. stocks and ETFs

Account minimum

$0

Account minimum

$0

Account minimum

$0

Promotion

None

no promotion available at this time

Promotion

Up to $600

when you invest in a new Merrill Edge® Self-Directed account.

Promotion

None

no promotion available at this time

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Full Review

Where Vanguard shines

Large mutual fund selection: Vanguard has more than 3,300 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 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, fund minimums start at $1,000.

Stock trading costs

$0.

Options trades

$0 + $1 per contract. Account balances with $1 million+ get 25 trades for free each year; accounts of $5 million+ get 100 free trades per year.

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 3,300 from outside providers; none of Vanguard's 129 open funds charges transaction fees.

Tradable securities

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

Crypto availability

Vanguard does not offer access to cryptocurrencies, but some crypto-based products are available.

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.

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: 4.5 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. Waived for clients who sign up for statement e-delivery.

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 3,300 non-Vanguard funds and 129 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%. The average expense ratio across all mutual funds and ETFs is 0.41%, according to an August 2021 study from investment researcher Morningstar.

Admiral Shares. 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 35% 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 $10,000.

Tradable securities available: 3 out of 5 stars

Vanguard allows investors to trade stocks, bonds, mutual funds, ETFs and options. It’s a good selection for retirement investors, but active traders may want more options such as forex and futures trading.

Crypto availability: 2 out of 5 stars

Vanguard does not offer access to cryptocurrencies, however some crypto-based products are available.

Trading platform: 2 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.

Mobile app: 5 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

To earn five stars in this category, brokers must offer at least 15 third-party research providers at no fee, as well as a strong selection of research tools. Vanguard offers research from Argus and Vanguard's own bespoke team of analysts.

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). Ratings are rounded to the nearest half-star.

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

on Vanguard's website

Methodology

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