Vanguard Review: Is It the Right Brokerage for You?
Written by
Joshua Rodriguez
Edited by
Susan Kim
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GOBankingRates Score
Vanguard Brokerage Services
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Investing Options
5.0
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Fund Expense Ratios
5.0
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Return on Investment
4.5
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Tax Benefits
4.5
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Pros
- Industry-leading expense ratios
- Hundreds of funds to choose from
- Over three-quarters of Vanguard ETFs beat competitor returns
- Most Vanguard ETFs don't produce taxable gains, reducing the investor's tax burden
- Free stock trading
Cons
- Margin rates are as high as 13.50%
- No cryptocurrency exposure
Vanguard Overview
Founded in 1975, The Vanguard Group has become a premier investment management company in the U.S. and one of the largest in the world. The majority of its services involve investment-grade funds like ETFs and mutual funds. Investors can choose from a wide selection of highly rated funds and pay minimal expense ratios on Vanguard funds compared to the industry average.
Vanguard also offers an online brokerage service where investors and traders can trade stocks, bonds and ETFs commission-free. Investors who invest on their own aren’t held to account minimums when investing with Vanguard, which offers a vast array of educational materials, making it a perfect option for a new investor.
Key Features
The company manages trillions of dollars in assets and offers a long list of compelling key features. Here’s a look at some of the most important services it provides.
Investing Options
Vanguard offers nearly 400 of its own ETFs and mutual funds to customers, but you can invest in partners’ funds as well. This focus on investment-grade funds is a hallmark of this company. Customers have other investment options, too, which include:
- Stock trading. Offering commission-free, online brokerage services, Vanguard allows investors to trade stocks and ETFs through its platform.
- Retirement accounts. The company also offers a range of retirement accounts like 401(k)s and IRAs. Customers can take advantage of Vanguard’s retirement planning services to ensure they’re on the right track for financial freedom during their golden years.
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Fund Expense Ratios
Vanguard is well known on Wall Street for providing some of the lowest expense ratios on investment-grade funds. The average Vanguard expense ratio is 83% less than the industry average across index mutual funds and ETFs. There are no trading fees or commissions charged, meaning that investors can hold on to more of their returns.
Fund ROI
Vanguard has also become well known for producing above-average returns. Eighty percent of the company’s ETFs beat their competitors’ returns during the 10 years leading up to March 31, 2023.
Tax Benefits
Vanguard takes active steps to reduce the tax burden placed on its investors. That’s why 82% of all the company’s ETFs have had no taxable gains distributions over the five years leading up to Dec. 31, 2022.
No taxable gains combined with minimal expense ratios mean Vanguard investors retain more earnings.
Good To Know
Not all funds, even Vanguard funds, are equal. It’s important to do your research and gain an understanding of returns and fees before investing in any fund.
Other Features
The features above are some of Vanguard’s most exciting, but they’re not the only ones. Here’s a look at some of Vanguard’s other impressive offerings.
Investor Education
No matter what an investor’s doing, they need to educate themselves before making that first investment. Vanguard knows this and, like most competing online brokerages, it offers informational resources and educational tools that help its customers learn about the market and gain a better understanding of it ahead of trading.
The company’s investor education series, for example, covers various topics, including:
- Investment planning and risk management
- Asset classes, allocation and diversification methods
- Investment expenses and cost management
- The differences between investing in bank CDs, ETFs, mutual funds, bonds and stocks
- Investment-related fees
- Tax implications of investments
Vanguard’s experts curate and design the lessons on the platform, giving both beginners and experienced investors valuable, practical information.
Retirement Income Calculator
Most people know that investing for their retirement is important. However, many find themselves in a conundrum when they’re trying to determine how much money they’ll need when they retire and how much they should be putting back regularly to ensure a comfortable retirement. Vanguard has a solution to this problem in the form of a retirement income calculator.
Using this calculator, Vanguard customers simply set the conditions they believe apply to them — like the amount of time they have to invest — their beginning nest egg amount and how much they think they’ll have to spend each year.
Once investors input these details into the platform’s calculator, Vanguard will show them how their money is likely to grow over time and how big a shortfall they might have.
Asset Allocation Determination Tool
An investment strategy that aims to strike a balance between reward and risk, asset allocation divvies portfolio resources based on a person’s goals, risk tolerance and investment horizon. A 50-50 portfolio, for example, has an investment mix that consists of 50% stocks and 50% bonds. The asset allocation an investor chooses will determine the risk and reward potential of their portfolios, with higher allocations to stocks pointing to higher risk but higher potential rewards, and higher allocations to bonds pointing to lower risks and lower potential rewards.
It can be difficult for a new investor to determine the right balance of risk and reward through asset allocation. Vanguard offers the asset mix determination tool to lend a helping hand.
Once an investor launches the tool, it asks them a series of questions surrounding their goals and risk tolerance. The platform uses the answers to calculate the investor’s perfect balance of stocks and ETFs, bonds and cash based on their level of risk tolerance and investment objectives.
Quick-Start Tool
Many people don’t know where to start with investing, which creates a barrier to stock market entry. The Vanguard quick-start tool features a questionnaire that outlines the best way for newcomers to enter the market — with retirement savings, general investing or an emergency fund.
How To Apply
Anyone can apply for a Vanguard account. Here’s what needs to be done:
- Go to the Vanguard website.
- Click the “Open an Account” button.
- Choose whether to open a new account with money from your bank or move an existing investment account.
- Complete all fields as accurately as possible.
- Verify your email address.
You must provide bank information when you open an account, but you can add funds later.
Comparable Investing Services
No investment service is a perfect option for all investors. Those who aren’t interested in signing up for services with Vanguard may want to look at comparable investment management companies. Here are a couple of top options to consider.
Fidelity
Fidelity is a full-service broker with commission-free self-directed trading similar to what Vanguard offers. The brokerage has 335 mutual funds, all with no transaction fees, plus 52 of its own ETFs. However, as with Vanguard, you’re not limited to the brokerage’s own funds.
One thing Fidelity offers that Vanguard doesn’t — and is unlikely to anytime in the near future — is exposure to cryptocurrency. Investors can already buy shares in crypto-related ETFs through Fidelity and trade bitcoin and ethereum commission-free with as little as $1.
TD Ameritrade
Investors who want a brokerage account, but don’t want to work with Vanguard, should also consider TD Ameritrade. The company is a premier online brokerage offering commission-free trading, relatively low margin rates and access to a wide range of assets.
Designed by traders and for traders, the company’s Thinkorswim trading platform offers all of the technical indicators and trading tools that investors might need to make profitable trades in the market.
Vanguard Offers Broad-Ranging Features That Suit Any Investor
The Vanguard Group’s wide-ranging services are a great fit for many types of investors. Those who take a passive approach to investing money will likely benefit from the company’s mutual funds and ETFs while the more active types will probably find great value in the company’s trading platform.
Vanguard’s services are especially suited for those looking to build a nest egg and grow their money over time.
Final Take
The Vanguard Group has earned its position as a top brokerage and fund manager in the United States. The company has a reputation for offering compelling services, low fees and taking a real interest in the success of the investors it serves.
Vanguard FAQ
Here are the answers to some of the most common questions about investing with Vanguard.- Is Vanguard good for beginners?
- Yes, it is because of the in-depth educational resources that Vanguard provides. Moreover, beginners can benefit from accessing the market through ETFs while they learn how to manage their own investment portfolios.
- How much does someone need to invest with Vanguard?
- Investors aren't held to any minimum account balances when investing on their own using Vanguard's brokerage services. Those interested in the company's ETFs will have to purchase a minimum of one share. Market conditions determine the price per share. The price per ETF share will depend on the fund the investor chooses. Minimum investments for mutual funds vary according to the fund, but most of Vanguard's own mutual funds have a $3,000 minimum.
- How trustworthy is Vanguard?
- Vanguard has nearly five decades of experience providing quality services to investors. The company is one of the most well-respected money management firms on Wall Street.
- Which is better, Fidelity or Vanguard?
- Fidelity and Vanguard are similar in that they both offer investment-grade funds and other financial services. It's impossible to determine which would be better for each unique situation as each fund and financial service is different.
- It's best to compare the specific service options you're interested in and determine which company's features and costs line up with your expectations for that specific service.
Daria Uhlig contributed to the reporting for this article.
Rates and fees are subject to change. Information is accurate as of May 30, 2023.
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.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- U.S. Securities and Exchange Commision. "Beginners’ Guide to Asset Allocation, Diversification, and Rebalancing."
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