Vanguard vs. Schwab: Which Is Best for Your Investments?
Written by
Dawn Allcot
Edited by
Elizabeth Constantineau
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Whether you’re just looking into investing or already have a substantial portfolio, it pays to shop around for a new investment service. Maybe you’ve outgrown your current investing platform, or maybe you’re searching for an investment service with lower fees.
Retail investors have many choices when it comes to investment services, with Vanguard and Charles Schwab being two of the most popular for beginners and seasoned investors alike. Read on to learn the features, benefits and costs of both so you can make the best choice for your investments.
About Schwab
Founded in 1973, Charles Schwab offers full-service wealth management, managed portfolios for a variety of investments and robo-advisory services for automated trading. The investment firm manages more than $8.88 trillion in assets across its services, including banking and 35.1 million brokerage accounts.
Charles Schwab investment services and its banking division each received 4.7 stars from GOBankingRates reviewers, with Charles Schwab earning an award for Best Checking Account in 2024 by GOBankingRates.
About Vanguard
Founded in 1975, Vanguard serves more than 50 million investors through 423 funds worldwide. Vanguard holds $8.6 trillion in global assets.
The company is owned by those who invest in the funds, not by outside shareholders. This sets Vanguard apart and helps the firm keep operating expenses low to increase investor returns. Vanguard received a rating of 4.8 from GOBankingRates, with 5-star ratings for the brokerage firm’s investing options and fund expense ratios.
Benefits of Schwab
Schwab offers a vast array of investment choices, including stocks, bonds, annuities, options, futures, mutual funds, ETFs and more. U.S.-based stocks and ETFs have commission-free trading. There’s no base commission for options trades, although you’ll pay a 65-cent contract fee. Schwab is upfront about its pricing, promising no hidden fees on any of its accounts.
You can also trade fractionals of S&P 500 stocks, giving those with less to invest access to blue-chip, big-ticket companies like Apple and Amazon.
Schwab offers two tiers of robo-advisory services. Schwab Intelligent Portfolios allows investors to trade ETFs automatically with no advisory or commission fees. It is an affordable robo-advisory service.
For investors with deeper pockets, the Intelligent Portfolios Premium service offers automated ETF trading with personalized support from a certified financial planner. You’ll need a minimum investment of $25,000 and will pay a one-time setup fee of $300, plus $30 per month for advisory services.
Pros
- No hidden fees
- No minimums to open or hold most accounts
- Fractional shares available
- Long history of success
- In-person service at 300+ branches
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Cons
- Top-tier advisory services have $25,000 minimum investment, plus monthly fees
- Basic robo-advisory service requires $5,000 minimum investment
- Fees for broker-assisted trades
Benefits of Vanguard
Vanguard offers trading of stocks, ETFs, mutual funds, CDs, bonds and more. The firm offers fractional shares of Vanguard ETFs, but does not allow trading in fractionals for other investments. Vanguard prides itself on having an expense ratio for the average Vanguard mutual fund or ETF that is 83% lower than the industry average.
Vanguard offers several tiers of advisory services. The Digital Advisor is a robo-advisory requiring a $3,000 minimum investment plus annual advisory fees that equal roughly $15 per every $10,000 invested, with fees waived for the first 90 days.
With a $50,000 minimum investment, you can take advantage of a Vanguard Personal Advisor*, gaining access to a human planner. Investors with more than $500,000 get a dedicated advisor, while those with $5 million or more enjoy a dedicated team of specialists. None of the accounts charge fees greater than 0.30% of the investment.
Pros
- Low expense ratio means more money in brokers’ pockets
- Robo-advisory with low advisory fees for high net worth individuals
- Automatic tax loss harvesting
- Long history of success
Cons
- $25 fee for brokerage or mutual fund-only account
- No in-person branches
- No fractional stock shares
Major Differences Between Vanguard vs. Schwab
With no minimum investment required for many products, Schwab seems more accessible to beginning investors and those without a lot to invest. Schwab also provides a few more investment options, including annuities and futures trading. It also has branches for in-person service, which might be important to many people.
On the other hand, if you’re interested in robo-advisory services, Vanguard’s basic plan requires a minimum investment of $3,000 rather than $5,000. For high-earner customers, Vanguard’s plan provides everything you could ask for, including personal trust services, estate planning and family legacy planning services.
Who Schwab Is Best For
Schwab is best for anyone who wants in-person service at local branches or a connected bank account. Additionally, if you want to buy fractional shares of popular stocks, Schwab is a better choice than Vanguard.
Who Vanguard Is Best For
Vanguard’s top-rated ETFs, including ESG investing, make the brokerage desirable to many people. If you require robo-advisory services and only have $3,000 to start, Vanguard is the obvious choice.
Bottom Line
When comparing Vanguard vs. Schwab, you should know that both brokerages have low fees, robo-advisory services, easy online trading capabilities and a vast array of choices in investment products.
Ultimately, the investment choices offered by each brokerage could be the deciding factor between Vanguard vs. Schwab. Each provides commission-free trading for their own ETFs. Remember that no investment is without risk. It’s best to speak with a financial planner to help you outline your future goals and timelines and determine your risk tolerance for investments.
FAQ
Here are the answers to some of the most frequently asked questions about Vanguard vs. Schwab.- Who is better, Schwab or Vanguard?
- Vanguard's services are highly rated by professionals and the financial media. Vanguard's brokerage services edged out Schwab with 4.8 stars out of 5 based on GOBankingRates reviews. Its mutual funds have industry-low expense ratios, making them more profitable for investors. But Charles Schwab offers commission-free trading with no hidden fees and exemplary in-person service. Your choice of brokerage depends on your needs and how much you have to invest.
- What is better than Charles Schwab?
- Charles Schwab is a top-rated brokerage with two tiers of robo-advisory services. But investors also like Vanguard and Fidelity, which offers commission-free trades on U.S. stocks, ETFs and options, with no account fees. Fidelity has thousands of stocks and ETFs available as fractional trades.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
Data is accurate as of April 11, 2024, and is subject to change.
*Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.
