Are you interested in investing mostly in Exchange Traded Funds (ETFs) and mutual funds? If yes, then Vanguard may be a viable option. Is Vanguard good? Is Vanguard safe for you? In this review of Vanguard, we will cover what this platform has to offer to see if it is a good fit for you.
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To help you make the right investment decisions, this Vanguard broker review is based on our Vanguard opinions in various categories, including cost, customer service, regulation, types of brokerage accounts, and more.
Without further ado, we begin with Vanguard background information.
Vanguard Asset Management (known simply as Vanguard) is the grandfather of low-cost index mutual fund investments. The company was founded in the United States by Jack Bogle in 1975 and has made a name for itself by offering low-cost index monitoring funds that are some of the best and cheapest index monitoring funds to invest in. Vanguard is now a global brand and there are over 20 million individual investors around the world who own Vanguard funds.
In January 2020, Vanguard also became one of the major online brokers that removed transaction fees on stocks, options and ETF trades.
Along with standard brokerage services, Vanguard also offers variable and fixed annuities, educational account services, financial planning, wealth management and fiduciary services.
In the same spirit of providing more information on the different investment options available to active investors today, I wanted to share my experiences with Vanguard's investment services with you. Overall, I've found that Vanguard offers new investors a large selection of low-cost ETFs and mutual funds, but their website is a little out of date and clunky.
What sets Vanguard apart as an asset management company is that it is owned by the funds that people invest in rather than by the shareholders. This presumably means that it is more focused on good investor results rather than profit.
As a Vanguard Personal Advisor Services client, you will have unlimited access to financial advisors. Vanguard Personal Advisor Services are held to fiduciary standards under SEC and other applicable regulations.
No commissions for online trades
Low fee funds available
Commission free stock
Offers retirement planning tools
Regulated and participatES in the SIPC insurance fund
Invest in a wide range of securities
Free transfer assets to Vanguard from another brokerage
No futures or forex trading
Not ideal for day traders
Is Vanguard safe? Vanguard is one of the largest and most trusted investment institutions in the world. However, some passive investors who fear losing their money and sensitive data usually ask, “Is Vanguard a safe platform?” Yes, Vanguard is safe.
For instance, Vanguard has secured an A- rating from the Better Business Bureau (BBB) and this reflects the positive Vanguard opinions from customers, complaint history, business practices, and advertising and licensing information. BBB ratings range from A+ to F, so this indicates a high level of customer engagement on the part of this broker.
Other factors the bureau considers include time in business, type of business, and government actions. But the BBB also states that its ratings don't guarantee a company's reliability or level of performance. For this reason, it's important for active investors to conduct your own research as well.
Notably, Vanguard has closed over 90 complaints in the last 12 months, according to BBB data.
Is Vanguard good? Yes. Our review of Vanguard found that this broker offers active traders two types of trading platforms which come with only basic features;
Proprietary web: The web trading platform runs on most modern browsers, but it has only basic order types (market, limit, stop, and stop limit orders), supports only email alert notification, and has very limited customization features. It’s difficult to search through the platform for tradable Vanguard assets. Compared to other trading platforms, such as the MetaTrader platform, Vanguard’s trading platform does not have enough features and functionalities.
Mobile trading platforms: Vanguard investor mobile trading platform is compatible with Android and iOS devices, and it’s a little easier to use than the web platform. With Vanguard's mobile app trading platform, you can only trade stocks, ETFs and mutual funds.
What financial products does Vanguard offer?
For passive investing, Vanguard Group offers active traders a very comprehensive range of investment options, regardless of the type of brokerage accounts you choose to open. This review of Vanguard focuses only on Vanguard mutual funds and ETFs.
Cutting-edge mutual funds
121 total mutual funds - including money market, international, balanced, bond, REIT and equity mutual funds.
Vanguard offers both actively managed (stock picking) and passively (tracking an index) mutual funds.
It offers “Admiral Shares” mutual fund options at lower fees. These shares generally require a mutual fund balance of at least $10,000. However, the expense ratio for these Admiral shares is generally 30-50% lower than that of regular mutual fund shares.
In addition to Vanguard mutual funds, this company has also become a major player in the ETF markets, currently offering 52 different exchange-traded funds in most of the same areas they offer mutual funds.
In general, ETFs have expense ratios lower than the approximately 0.1% compared to the same class of activity of the mutual fund. While this isn't a huge difference, it can add up over the years with larger account balances.
In most cases, especially if you have complete control over your investment account, you should choose Vanguard ETFs over their mutual funds. Not only are they the cheapest, but they are generally more tax efficient for passive investors.
Vanguard’s screeners help to sort through ETFs and stocks. These screeners are basic and less useful than comparable offerings from competitors.
The bond screening tool is useful. The home screen lists both the term and the type of bond. Upon selecting a requirement, for example, muni bonds with a three-year maturity, a user can access a list of available bonds. From there, you can explore details surrounding the specific bonds.
The CD screen also allows users to delve into available offerings for specific time frames. There are also fixed-income specialists to guide the clients. We preferred the fixed-income screeners over the stock and ETF tools.
Only Vanguard customers have access to screeners.
The most recommended Vanguard funds
Our Vanguard broker review found that the most recommended Vanguard fund in the ChooseFI community is VTSAX. It’s a total stock market fund, which means you invest in the entire U.S. stock market. It also has one of the lowest expense ratios at 0.040 percent.
Here’s a list of some of our favorite Vanguard funds:
13% return over the last 10 years: Vanguard Total Stock Market (VTSAX)
The first index fund for individual investors: Vanguard 500 Index Fund (VFIAX)
In the top third of category peers: Vanguard Mid Cap Index Fund (VIMAX)
8.31% return over the last 10 years: Vanguard Real Estate Index Fund (VGSLX)
At the time of writing this review, the company offers the following account types. Alongside each account type, I've included brief Vanguard opinions, where applicable.
401 (k) Rollover in a Vanguard IRA: For retirement investors, this type of account allows you to transfer your 401 (k) retirement account with your previous employer and convert it to a traditional IRA with Vanguard. I completed this process with my friend's 403 (b), and the process went through with no errors or delays. And better yet, there were no additional penalties/fees incurred by the trial by Vanguard.
Annuities - Vanguard offers both fixed and variable income annuities. While I personally don't have one of these, I understand that Vanguard has some of the lowest rates in the industry for annuities. This is mainly due to the fact that they don't have full time sales reps selling their products and passing the discount on to you.
Roth IRAs and Traditional IRAs: Vanguard offers investors the option to open a traditional IRA (pre-tax contributions) or Roth (post-tax contributions). I personally know some long term investors that have been using a Vanguard Roth IRA for 5 years and these account holders have found it to be a very effective investment vehicle with their low cost mutual funds.
Individual Accounts (Taxable) - Finally, Vanguard allows you to save money in taxable accounts in stocks, bonds, CDs, or mutual funds.
Vanguard does not offer access to cryptocurrencies, but some crypto-based products are available.
One of the main attractions of Vanguard and its investment platform is the low cost funds.
Cost of the Vanguard platform
Vanguard Investor Transaction Fees:
an annual account fee of 0.15% on investments up to £250,000, which is less than half the industry average.
over £250,000 there is no annual account fee. This means there is a maximum platform fee (annual account fee) of £375. This is incredibly cheap but actually not the cheapest way to own Vanguard funds, which I'll talk about shortly.
Vanguard fund charges
Vanguard's ongoing fund charges range from 0.06% to 0.80%, which is again far below the industry average. In October 2019, Vanguard lowered ongoing charges on 36 of its funds by bringing the average ongoing charges figure to 0.20% (up from 0.34% 10 years ago). There are occasional fund subscription fees of between 0.2% and 0.8%, where applicable.
There are no transfer fees and no trading fees applied
The Vanguard opinions from users show that the customer support was really helpful and supportive. Vanguard customer and broker service is available from 8:00 am to 8:00 pm Monday through Friday. While live chat is not supported, you can send a secure message via the website. Vanguard is also featured on Twitter and answers questions within about an hour.
Is Vanguard scam or legit? Vanguard is regulated by US authorities. This broker is considered legit because it has a long track record and it is overseen by top-tier regulators. Vanguard is regulated by the US Securities and Exchange Commission (SEC), as well as the Financial Industry Regulatory Authority (FINRA).
To ensure your safety, the company has hundreds of technology experts whose primary goal is to keep your funds and accounts safe.
You can access the Vanguard mobile app with biometric recognition (facial or fingerprint) and protect against account losses due to unauthorized or fraudulent activity.
In addition, Vanguard has insured clients’ accounts with SIPC by the London Insurance and Lloyd’s of London. Vanguard SIPC insurance provides each customer with $49.5 million in securities and a cash limit of $1.9 million per customer.
The fact that Vanguard has been in operation for a long time and is authorized by these top-tier regulators is sufficient to say Vanguard is not a scam but a legit platform.
Is Vanguard good? As you can see from this Vanguard review, this low cost investing broker is great if you are attracted to low-cost mutual funds, stocks and ETFs. You can access managed portfolios if you have enough assets and if you don't, you can still open your account with $0.
Overall, Vanguard is a commission free trading platform and one of the best online brokers out there in terms of cost, selection, and service.
That being said, if you decide to buy individual stocks, it is best to find other online brokers for that purpose because that is simply not what this platform is designed to do. Vanguard is best for those investing for the long term, especially retirement savers.
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