Vanguard Review 2023 – The Best Overall Discount Stock Broker?
The Vanguard Group is the granddaddy of low-cost indexed-based mutual fund investing. The company was started in 1975 by Jack Bogle, who understood that over 80% of actively managed funds did not beat the market's indices. His theory: Because you can't beat the market, you should become the market and focus on low-cost fees.
Commissions & Fees - 9
Customer Service - 7.5
Ease of Use - 8
Tools & Resources - 6
Investment Options - 9
Account Options - 8
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Vanguard offers an unbeatable selection of ETFs, no-load mutual funds, financial planning and other services you'd expect from a stock broker. While it's great for mutual fund and ETF investors, stock traders will likely prefer other services.
Along with the standard brokerage services, Vanguard also offers variable and fixed annuities, educational account services, financial planning, asset management and trust services.
In the same spirit of shedding further insight on the different investment options available to consumers, today, I wanted to share with you my experiences with Vanguard's Investment Services. Personally, I have been a Vanguard account holder since 1999. Overall, I have found Vanguard offers a wide selection of mutual funds and ETFs at a low cost, but their website to be somewhat outdated and clunky.
Vanguard Features
| Minimum Investment | $0 |
| Stock/ETF Trades | $0 |
| Options Trades | $1/ contract |
| Mutual Funds | 3,000+ no-transaction-fee (NTF) mutual funds |
| Investment Types | Stocks, OTC/Penny Stocks, ETFs, Mutual Funds, Bonds, Options, Forex, Cryptocurrencies, Futures |
| Accounts Types |
|
| Broker Assisted Trade | 25 |
| Virtual Trades | |
| Customer Service | Phone: M-F 8A-10P ET |
Account Options
Currently, Vanguard offers the following account options. Beside each type of account, I've included a brief summary of my experiences, where applicable.
- 401(k) rollovers to a Vanguard IRA – This type of account enables you to transfer your 401(k) retirement account at your previous employer and convert it to a traditional IRA with Vanguard. I completed this process in with my wife's 403(b) with a former, and the process was executed without any failures or delays. And, better yet, there were no additional penalties/fees incurred by the process from Vanguard.
- Annuities – Vanguard offers both fixed income and variable annuities. While I don't personally have one of these, I understand Vanguard has some of the lowest rates in the industry for annuities. This is mostly because they don't have full-time sales people selling their product and pass the discount onto you.
- Roth IRAs and Traditional IRAs – Vanguard gives investors the option of opening either a Traditional (pre-tax contributions) or Roth (post-tax contributions) IRA. I have been using a Roth IRA from Vanguard for 3 years now, and I have found it a very effective investment vehicle with their low-cost mutual funds.
- Individual (taxable) Accounts – Lastly, Vanguard allows you to save money in taxable accounts in either stocks, bonds, CDs, or mutual funds.
Investment Types
The Vanguard Group offers a very comprehensive array of investment options, regardless of the type of account you choose to open. This review focuses only on Vanguard's “bread-and-butter” – mutual funds and ETFs.
Vanguard Mutual Funds
- 121 total mutual funds – including money market, international, balanced, bond, REIT, and stock mutual funds.
- Vanguard offers both actively (stock picking) and passively (tracking an index) managed mutual funds.
- Offers lower fee “Admiral Shares” mutual fund options. These shares generally require a balance in the mutual fund of at least $10,000. However, the expense ratio for these Admiral Shares is generally 30-50% lower than that of the normal mutual fund shares.
Vanguard ETFs
- In addition to mutual funds, Vanguard has also become a major player in the ETF markets, currently offering 52 different ETFs in the majority of the same areas that they offer mutual funds.
- Generally, ETFs have expense ratios ~0.1% lower than the same asset class of mutual fund. While this is not 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 would want to choose the Vanguard ETFs over their mutual funds. Not only are most cheaper but typically are more tax efficient.
Vanguard Personal Advisor Services
Vanguard Personal Advisor Services brings A mix of Robo Investing Advice with low-cost investment choices and Real, Live Human Professionals. Click here to read our review.
Fees and Commissions
In the fall of 2019, a number of online stock brokers — including heavyweights Charles Schwab, Fidelity and E*TRADE — announced that they would eliminate commissions on most U.S.-based trades.
It was the culmination of a long pricing war among online brokers. In no small part, this was spurred on by the emergence of totally free brokers like Robinhood.
It took until January 2020, but Vanguard finally joined the cadre of commission-free brokers. That means investors don't have to pay for stock and ETF transactions when completed online (there's still a charge for trades made via phone). Options trades are also commission-free, but note that there is a per-contract charge of $1. This is higher than what many other brokers charge (50 to 65 cents).
Minimum Balance and Initial Deposit
Generally, the minimum investment amount for Vanguard mutual funds is $3,000 which is somewhat steep for the first time investor. However, for Vanguard ETFs, the minimum is only 1 share and might be best suited for beginning investors. Vanguard also offers admiral shares which have even lower in annual fees. To qualify:
- Invest $10,000 or more in most Vanguard index funds that offer Admiral Shares.
- Invest $50,000 or more in Vanguard actively managed funds that offer Admiral Shares.
Vanguard recently lowered the dollar requirements and is great news for investors.
Mutual Fund and ETF Screener
Vanguard's screener is a very effective tool to find the right fund that meets your investing criteria. You can filter based upon: asset class, minimum deposit, risk level, share class, and tax efficiency.
Once you find the right Vanguard fund for you, you can invest directly. You can also compare the various funds to find out which performed better. It's a useful tool since Vanguard has over 100 ETFs and mutual funds.
Customer Service
Overall, the ease of use of the online Vanguard system, and corresponding customer service has always been very effective and straightforward. Whenever I am unable to figure out something online, it is always easy to get a real, live person on the phone who is knowledgeable and can assist.
Vanguard Portfolio Watch
The portfolio analysis tool is provided for free by Vanguard. You can gain insight in to your asset allocation as well as the overall costs of taxes, and manage risks associated with your portfolio. Their summary section it will give automated recommendations to modify your portfolio.
It does not support external accounts into asset allocation consideration. This is another example of the Vanguard-only-centric view their service has.
Vanguard Alternatives
Here's a quick look at how Vanguard compares to some of the other top stock brokers available today.
| Highlights |  |  |  |
|---|---|---|---|
| Rating | 9/10 | 9.5/10 | 9/10 |
| Min. Investment | $0 | $0 | $0 |
| Stock Trades | $0/trade | $0/trade | $0/trade |
| Options Trades | $0.65/contract | $0.65/contract | $1/ contract |
| Crypto Trades | |||
| Mutual Funds | |||
| Virtual Trading | |||
Further Reading: Our Wealthfront vs. Vanguard vs. E*TRADE Comparison
Pros & Cons
pros
cons
Summary
Vanguard is great if you use their funds and ETFs. When you venture outside of this realm, their service is ok at best. If you ever decide to buy individual stocks, you are best to find another stock broker for that purpose. Vanguard's research tools are almost nonexistent. Unless you have a significant amount invested in them, it may not make sense to use their service for the lower trading fees.
I recommend using Vanguard for your retirement account if possible (there are many poor alternatives, unfortunately), or if you prefer to use only Vanguard funds for your investing. Firms like Fidelity, and TD Ameritrade offer much more comprehensive services, if you are looking for a one-stop brokerage firm.
Readers: How would you rate your experience with Vanguard?
I have been investing in stocks and mutual funds since 1977. I bought my first Vanguard fund in 1984. Right now I am in about 20 mutual funds (regular accounts, IRAs, Roth IRAs). About ½ of my funds are Vanguard funds. I am happy with the performance of the Vanguard funds I am in. I am VERY UNhappy with Vanguard’s customer service. In the last six months I have done two simple things (wire money, rollover a Roth IRA to Vanguard from a non-Vanguard account) and both times there have been problems requiring several calls. I will spare you the details but 1) it is not always easy to reach a rep- they may give you the opportunity for a callback or they may keep you on indefinite hold, 2) the reps were nice but on four occasions Vanguard reps told me things about their process/system that were not true, 3) Vanguard failed to initiate the Roth IRA rollover until I called them back a month later to find out the rollover status 4) their software system is not as intuitive and easy to use as I think it should be. Vanguard was migrating their system during this time, but I do not consider that an adequate excuse for their poor performance.
I am also pretty happy with how my accounts are performing and extremely unhappy with their customer service- literally hours on hold, get bounced from person to person, and today’s gem wa being told that I don’t have the account that I’m actually looking at online as I’m speaking with the rep (who also kept insisting that they no longer handle my employer’s 403(b) – also completely untrue). This most recent experience has seriously shaken my confidence in Vanguard and is making me think it would be wiser to go to Schwab or Fidelity- lower returns and higher fees may be worth better customer service…)
Have been with Vanguard since the 1980s. I remember the days of John Bogle’s and later understudy John Brennan’s Semi-annual and Annual reports and they were very well-written. Have not been too happy lately. The brokerage account, when a Dividend is paid on any of my stocks, I have to remember to go in and change my distribution, otherwise they automatically buy more shares with the Dividend. I had to find this out when I checked in lately, I was not told this, and just assumed they would pay the Div into my Settlement account. Finally, I do not understand why, when I tried to move money from the Settlement account back into my Federal Reserve MM account, received a message that “This fund is closed to new investors”. WTF? I’m not a new investor, I have a six-figure balance there! This is bad; so in effect the trading cash just sits in the Settlement account, I doubt if it earns anything, and apparently all I can do with it is buy more stocks or convert it to another Vanguard fund (or maybe open another Money Market fund that is not currently closed?). May John Bogle rest in peace, I loved him, but Vanguard, his legacy, in my view, has fallen since his heyday.
Customer service is the worst, exceeded only by their useless website. For months now I have been trying to change the withholding on my RMD. My work hours do not allow me to have lengthy conversations or wait time. No representative seems to be able to help me. After being told that I must speak to someone the only result was that they said they would put a form in my messages folder, which turned out to be unresponsive to my request. It was an online form which cannot be printed so you cannot tell that it is unresponsive until you have wasted a great deal of time. I did a search and found that a “normal” form is available on the Fidelity website and that they have longer service hours so that is probably where I will be going.
I have been an investor with Vanguard for many years. But the quality of service has reduced drastically. I have opened a Fidelity account and am seriously considering moving everything there as I find they are upfront with their service offerings and are consistent.
Vanguard fumbled on a charitable transfer request – transferred twice the number of shares at the wrong cost basis. I happened to catch it completely by chance and brought it to their attention. Vanguard brushed it off almost like a simple matter but offered to reverse it. It has been over a 2 weeks and there is absolutely no update on the status of the reversal. They fixed the cost basis apparently, but the # if shares are double. How do I know that there has not been significant errors in all the monthly DCA over the years ? I am really wondering now ?
I also find Vanguard’s website not very user-friendly. I had to ask questions through their automated chat just to find how to transfer funds in to cover a buy. Can you believe there is no tab for Transfers? I finally found it under the Buy and Sell tab. It took me 20 mins. This was painful! Please make your website easy and engaging so we want to visit it and spend more time on it!!! It’s not rocket science…or is it?
After over 30 years of investing with Vanguard, I have decided to move my wife’s and my investments to Morgan Stanley. Most of these investments will stay in Vanguard funds, which was not the problem, but the customer service I have been receiving from them has become awful.
With the race towards 0 basis points, I am guessing there isn’t a lot left over to hire the right number of telephone or chat agents that can make things happen. As they’ve grown much, MUCH bigger than they were 20+ years ago (I even met John Bogle several times in Philadelphia and Princeton), I guess it has been a challenge to offer streamlined services for so many clients AND keep costs razor-thin. A couple of years ago, they wanted to get me to their Advisory Services (a 0.03% wrap-fee charge), that would give me ____________ (some kind of ?) additional customer support. Besides annual rebalancing, I couldn’t figure out what they were offering. Moreover, I still couldn’t figure out how to do some basic things on their increasingly obtuse website, and most-worse, their chat was disconnected and even with my “premium” relationship, I still couldn’t get anyone on the phone when I had a bigger issue or problem. I guess I lost trust, and then . . . El Paso?
As I am now 61 years old, and my wife and I are socking away as much as we can, my investments have become a more important part of our lives. Not just an adjunct to our checking account. While handling some of my father’s financial affairs, I was completely impressed by the care and ethical considerations of his advisor in a nearby town in NJ, who just happens to work for MS. Never would have thought I would switch away from Vanguard . . . and probably pay more than 0.03% for fuller-service investment management & advice. But that’s just what I am doing. I don’t think Vanguard will miss me, but I loved my first 30 years with Vanguard . . . and they are a different company now.
How can you possibly give Vanguard 7.5 stars for customer service?? I’m in Australia. They don’t deserve any more than 1 or 2 out of ten. They don’t respond to emails , you can’t get through to the call center without trying over and over during business hours. Who has time for that? If you leave a voicemail message they dont get back for days. Right now i have been without access to my account for a week and they still haven’t resolved it. They closed the two funds that i hold van0010au and van0011au without any notification, unless it was in the annual report email which i got but haven’t had time to read. Seriously such and important thing should warrant communication , which vanguard lack in all regards. STAY AWAY FROM VANGUARD AT ALL COSTS IS MY RECOMMENDATION.
I have been invested with Vanguard for 30 years and customer service has been drastically reduced to fair/poor from phenomenal. Looking to move all my accounts elsewhere which is why I was at the blog.
I have had accounts with Vanguard since 1999 and have been pleased with low rates & good Mutual Fund offerings. Recently, however, I have needed them adjust the cost basis on two of my accounts after the death of my husband. Granted, doing that is a bit time consuming, but they have so fumbled the ball on this. They used an incorrect method initially, then apologized and said they would fix it. The “Fix” is taking forever. I do believe their customer service has gone downhill perhaps since the death of John Bogle. In addition, I now get statements that I can’t ‘reconcile’. I call to get help to understand the changes in the monthly account and I get little concern over the issue. Very frustrating. I’ve already moved some funds to Fidelity with a new advisor and am considering moving more if these current issues are not resolved soon.
Vanguard’s trading policy could cost you BIG! Let’s say you decide to move money from one investment fund to another because you see an opportunity to pick up shares at a great bargain. It’s 10:30 AM and you execute the trade. Did you know that Vanguard does not purchase the shares for you until AFTER the market closes at 4-PM? So let’s say that at 3-PM the same day, positive news from jobs and manufacturing sector is announced and prices go much higher? You just lost THOUSANDS of dollars because your trade will not execute until after 4-PM. If you have a TDAmeritrade account, your purchase would have executed in 5-seconds and you would be sitting pretty! Not so with Vanguard. Makes you wonder what they’re doing with YOUR money between the time you executed the trade and when they actually get around to it after 4-PM.
well i would use nothing but vanguard… all my doctor friends use vanguard only. we vanguard investors own vanguard !!!
wow. was considering rolling my Fidelity 403b to a Vanguard IRA. Now I think instead I will just transfer within Fidelity from mutual funds to index funds. Why would these very many negative comments about Vanguard customer service and delays in getting back money be translated into a bad review.
“Vanguard also offers admiral shares which have even lower in annual fees. To qualify: Invest $10,000 or more in most Vanguard index funds that offer Admiral Shares.”
The information isn’t correct. A while back Vanguard lowered the admiral share minimum investment to $3,000 for most of their index funds.
Their service is horrible. I sent out a form to roll over my investment to another firm, with instructions, but Vanguard doesn’t seem to read anything that comes with their own form. Ended up waisting weeks going back and forth trying to get that form I sent.
They also tried to get me open a brokerage account without telling me what they were instructing me on the phone. (I was trying to roll over my Roth IRA from another brokerage firm to my Roth IRA account with Vanguard, I did not want to open another Roth IRA account with them) They are misleading their customers and incompetent. I’m closing my account with them since I cannot trust them with my money.
The Vanguard website is almost as bad as Fidelity’s. I didn’t think it was possible. You get battered around to different links, but after an hour you go back to TR Price. No, I don’t work for TRP.
I have significant investments with Vanguard and am a client in their Flagship service. I have been with them since 1996 which was only 2 years after I started investing. It has been a fantastic place to invest. The majority of my investments there are with index funds although I have had an active manager (PRIMECAP) for 20 years that I have been very happy with in regards to long-term performance. The index funds speak for themselves.
The cash flows for Vanguard have been through the roof. Easily the highest of any investment firm and they dwarf their competitors. However, there are some downsides. They don’t pay their rank and file employees (they call them crew-members) very well. Further, I know many people who work there and have worked there in the past. Vanguard has promoted very young people into significant management positions without real experience. Many of the issues with service can be traced back to this. The older employees simply give up trying to adhere to common sense and follow the rules set by some 26 year old that result in numerous errors.
Clearly, it is not affecting them as of yet. I will say that for the $ you are looking to invest long-term without any sophistication, look no further. However, if you need assistance and have some complicated issues, then Vanguard is not the place for you. I do invest through their brokerage since the 25 free trades a year more than cover what I need to do with equity trades. However, be forewarned that Vanguard does NOT have a brokerage platform like Fidelity or E-Trade. They have an order form. That is about it. For option trading (I sell premium), I went to TD and use the Think or Swim platform.
Vanguard declined to allow me to sell naked puts. I actually explained to a brokerage rep how selling (not buying) a naked put is less risky that going long a stock. He tried to debate it at first, then just laughed and admitted I was right but is manager doesn’t understand options so I will not get approved. OK. I appreciated the honest answer.
Anyway, I give Vanguard a 8.5 out of 10. Still a lot to like but it is far from perfect.
“Further, I know many people who work there and have worked there in the past. Vanguard has promoted very young people into significant management positions without real experience. Many of the issues with service can be traced back to this. The older employees simply give up trying to adhere to common sense and follow the rules set by some 26 year old that result in numerous errors.”
People need to be extremely careful when reviewing these types of unsubstantiated claims from an anonymous source. Without any information to back up these claims it’s extremely difficult to determine the accuracy or value.
Vanguard takes way to long to set up for bank transfers, but not for deposits. Disappointing and will be a deciding factor in continuing with them. It would be even worse for my family should something happen to me. I thought it was my money. It should take weeks to set up a bank.
Horrible to deal with after my father’s death. Getting his IRA into my mother’s name has taken weeks of mailings and multiple phone calls and it still isn’t resolved. Ameritrade has brick and mortar offices where we were able to do the same transactions within one afternoon. They may or may not be good portfolio managers, but do your beneficiaries a favor and invest elsewhere.
I’ve been a Vanguard customer since the early 1990s and have had no bad experiences. In the past week (Jan 2017) I had them transfer a rollover IRA from Fidelity to my Vanguard IRA brokerage account. All it took was a phone call to Vanguard and electronically signing a document on their website. Five business days later, the transfer was complete with exactly the right number of shares moved. I have no complaints.
Vanguard is completely incompetent at making any sort of changes. They are great if you don’t need them to do anything. Call in and wait for 20-40 minutes to talk to a 20-year old who would have a hard time turning on a computer let alone doing something for your account. They screw up everything and take weeks in order to process requests. Always a different story from a different unqualified call center person. There’s always a new excuse. Ask them for a document, they send you the wrong form. These guys are the WORST, why would people trust them to handle your retirement? Worst move that I ever made. Closed and transferred my account today (after over a month of paperwork and bs from them). What a relief. Stay Away.
My parents were not at VG until I switched them over in 2000. they have made 7.5 percent return. Vanguard is safe and low cost. Love my Vanguard!!!
I have been a Vanguard Flagship client for many years.
i was happy with them until about a year and a half ago, when working with them became a nightmare. They have triggered taxable distributions several times over 2 years by incorrectly crediting a dividend from a Vanguard Fund held in my IRA to the settlement account for my taxable account. I was told several times that this is a “systems problem” that it had been fixed, but it just kept happening.
Recently, my taxable settlement account balance suddenly and incorrectly dropped from just over +100,000 to -150,000! It isn’t even a margin account! It took several days to fix this. I have been unsuccessful at trying to reach a manager. It seems like they just don’t care anymore.
Needless to day, I am researching options to transfer my IRA (just over $1 million) and developing a strategy to move my $775,000 taxable account away from Vanguard. The taxable account will be tricky, because of substantial unrealized gains.
I think the reviewer got it exactly right. I’ve been with Fidelity, TD Ameritrade, and now Vanguard. If you are an active trader, other brokers have more and better options. However, if you have a retirement account, I think Vanguard is probably the best place to be. Recently, within the last year Vanguard has updated and improved it’s website and account service.
I became a Vanguard customer after reading founder John Bogle’s famous book on investing some 25 years ago. In recent years, their quality of service has gone down hill to the point I will be transferring all of my sizable assets to Fidelity, with whom I already have a 401K account through my employer. Vanguard’s employees are uninformed, poorly trained, difficult to get a hold of, and their bureaucracy makes facilitating simple transactions all but impossible. They may be low cost, but you also get what you pay for. Google “Vanguard Customer Service Reviews”, and then look elsewhere to invest your hard-earned money.
I’ve been doing business with Vanguard for 20+ years. They are a pioneer and leader in low cost funds and ETFs however they are getting very big and most recently I have experienced some serious problems with their customer service; in particular, with account transfers taking a very long time. In fact I was trying to transfer an IRA to Vanguard and after 4 weeks I finally gave up and transferred the account to a different brokerage. My account representative is still very responsive and is trying to help but I get the feeling that their back office operation is either under staffed or incompetent or perhaps bureaucracy has just overtaken the organization. My experience also seems to be echoed in other online reviews (see Vanguard on the consumeraffairs.com website) Hopefully Vanguard management is listening and will address these problems.
I just sold a vanguard energy etf (VDE) needless to say the last 2 years was not good for oil & gas companies when i broke even I sold. i have never sold so i had to call customer service they walked me though it no problem it does go back to your brokerage account and you can do what ever you want cash in or buy a different fund or a little of both do it all online. i been with Vanguard science 2010 and i have other account’s with them and nothing but good experiences with them.
Firm doesn’t employ service personnel; just a tape recording promising to be with us shortly.
Highly recommend you take your business elsewhere. I certainly intend to do so!
Hi, I inherited stocks and bonds from my parents 2 years ago. I left it with Edward Jones, but I feel that I am not getting the best advise. I am NOT money smart, but I know I need this money to grow if I am ever to retire. I am wanting to switch all monies to Vanguard. How on earth do I know what I am doing. I know I need to tell them where to invest the money? HELP!!
I inherited $120K and I want to put into Roth IRA, but I also want to diversify, but I’m not sure when I will need the funds. I am currently staying at home with my almost 2 year old and my husband is the only income. I used to bring in a little less than $100K annually, but being at home for 2 years and lacking the motivation to go back, I’m wondering if I’m living in a fantasy by thinking I can somehow make money investing.
I only use EJ for bonds as their fees for anything else are SO high. They have very few good mutual funds they are allowed to sell you, American Funds being chief among them paying EJ 90% in gratuities to do so. I bled money buying into the American fund push both at load and at selling! When they failed to perform to a reasonable degree. You have to do your homework and learn. Use the Fidelity site to research investments, their costs, what companies they invest in, what countries are invested in at what %, how much turn over they run (should be low like 5 to 10%), and the history of the fund manager. Money is work! Check it quarterly and see if their strategy has changed and if you agree with the changes.
I have to say after reading some of the comments I am really surprised. I have been with Vanguard a little over 4 years now and am extremely happy with them. I called them today to make a change to my Roth IRA and I was able to speak with a live person in less than 5 minutes. They are always willing to help and offer what advice they can. This company has been very good to me and I plan on staying with them for life.
The objective merits of Vanguard and its products are well documented.
I will not keep more than a token amount of money at Vanguard however, because their customer service is inadequate. Their phone hours are far too limited outside of East Coast business hours.
Getting through to them during business hours recently has been beyond difficult. For example, after waiting an hour to speak to a person, that person transferred me to another department, where I just ended up in an interminable hold. What good is a brokerage that will not speak to its customers?
Vanguard services, once good have been deteriorating recently.
Making mistakes which gthey are in no hiurry to fix, thuis preventing purchases.
I’m cashing in.
I agree with you, I recently opened three accounts with vanguard for my children and received no confirmation either by letter or email from them when I transferred the funds, even though they had written in their original email that a confirmation would be received. Only when i chased up was I told how to find documentation about my funds and even though, no apology or acknowledgement of anything gone wrong from their end. Terrible service, not happy.
I would rate my experience with Vanguard as extremely poor. My husband transferred his IRA account from a local bank to Vanguard online, and mistakenly checked the wrong box and had it end up as being a IRA “brokerage account” rather than a traditional-type IRA like mine at Fidelity, where transferred amounts go straight into a cash reserves account. Granted it was his fault, but to rectify it Vanguard wanted to charge him $35 per sale transaction, which would have come to a total of $500-$600. (So much for low-fee investing.) The attitude of the customer service rep we spoke to was more or less “Too bad, so sad, sucks to be you.” So as of tomorrow, he will be joining me as a happy Fidelity customer. I bet it’s one of the shortest relationships with Vanguard on record – less than a week.
I’ve been dealing with both companies for 25 years. I think your comments are quite correct. I don’t trade individual stocks, so using Vanguard funds works well for me, though I have several Fidelity funds that I occasionally feel I should just move over to Vanguard. My wife has her entire investment portfolio with Fidelity has done quite well as she asked me to select more aggressive funds for her back in the late 80s and they have done well. Vanguard does have one advantage for new investors. You can invest with just $1000 with their popular STAR fund. It is a good balanced fund consisting of some of Vanguard’s best mutual funds. This fund of funds has been modified over the years and has become a bit more aggressive, thus enhancing returns. The for-profit nature of Fidelity leads some I think to lean more toward Vanguard. Still, some of Fidelity’s funds with higher expense ratios still do better overall than Vanguard’s comparable funds, so going with one over the other is a matter of personal preference.
Though Vanguard has many great funds with low fees, they are a horror to deal with. I transferred several mutual funds in-kind to Vanguard. After tying up my money for over one month, not allowing normal trading, I had to get the SEC to help complete the transfer. If you read around online you will find horror stories from people wanting to do simple things through Vanguard.
Appreciate your advice. Honestly, I have just dealt with their “customer service” ( Vanguard, Julie Davis and Vanguard, Robert McCreavy) on the QDRO side and they need to rename the group. Two senior people have merely pointed me in the direction of the 800 number despite their refusal to provide my account number. Seems to be an effort to keep my account from moving because they refuse to provide redemption paperwork despite numerous requests for a simple form. So far they have kept my account hostage and won’t even provide paperwork in order to release funds! If I didn’t already want to move my money, they’ve certainly convinced me! I’m leaving Vanguard kicking and screaming for Fidelity who has always done exactly as promised!
Hi my name is chris I’m 52 years old and i have about 16 to 18 years till retirement i have 3 questions :1 can i open an account at Vanguard for ETFS with 1000.00 and add 1000 or 2000 each year after that or do i need more money? 2 i would happily add more money each year as I’m on a fixed income and i wouldn’t touch this UNTIL I RETIRE is this ok to do? 3 if i put money say 2000 a year do u think I’d have a decent retirement savings in 20 years ? Your input is greatly appreciated thanks so much
I would appreciate if anybody could give me his/her opinion on the following matter: I am planning to invest 100-200k in a MANAGED investment account. Would you put this money in Fidelity or Vanguard? Please consider the following in your answer:
1. I am average when it comes to knowledge of the investments world
2. I am conservative to moderate in nature when it comes to taking risk
3. Long term view – I am investing for my retirement.
4. I like to be able to know how my investments are doing regularly
5. I don’t have time/expertise to manage investments myself.
6. I would like to be able to reach someone quickly if I have issues or questions.
I have heard very good things about both Fidelity and Vanguard. I like the local presence of the Fidelity offices and advisors and the low costs of Vanguard. About Vanguard, though, they require that you give them the money before they sketch out a plan for investments…Anybody has or had issues with this requirement?
Thanks a million for your opinion.
Thanks for the straightforward comments about Vanguard.
Of course, all sides are taken but when it comes to retirement funds, you want efficiency in managament, security, and true customer service. No one want their money held hostage. There are reasonable time frames for tranactions. There will be situations when we need access in liquidity. Yes, those 2 words, “customer service, ” are touted (or rather slung about) in our day-to-day dealings and we have all found that sad cases account for about 87% of the time. Everyone wants your money. Everyone! You usually get what you pay for and it is a challange to ferret out the cream part of the milk.
Vanguard will be examined tightly
I understand how other posters can be bothered with the older technology and the need for better customer service. I’m sure Fidelity is an excellent example of what Vanguard would be if there was an extra $100K a month to pay the software vendor for the newer user friendly platform, as well as a couple million to overhaul the bottom line, but Vanguard is one of the best because they are straight forward, do not charge unreasonable fees or fail to disclose them and they have a very established reputation throughout generations.
Fidelity is also great. They just happen to charge us more to maintain their budget which is usually substantially larger due to being privately owned. I like to compare them to a credit union vs. bank. Both have pros and cons enabling customers to pick and choose from both; which is ultimately awesome. 🙂
I wish someone had told me…. I love vanguard. I love John Boogle….but when it comes to vanguard annuities…don’t go there!!! I hope I save one life the frustration of dealing with a bunch of drunk, chain_smoking, retired trained monkeys. I think if you are totally incompetent, then they send you to work in the Vanguard annunity department. I have spent months trying to get two annuities together for my mother and they are still trying to get it right.
I have had problems with Vanguard several years in the past when an account was willed to me. Since I was not holding Vanguard Funds, I transferred the account to another brokerage.
Now, I’m holding several Vanguard Funds at another brokerage I would save $1000 a year if the funds were at Vanguard. So, here’s what happened when I tried to transfer some funds to Vanguard. They held the paperwork for 2 weeks before sending it to the other brokerage. The other broker responded within 2-3 days. Transfer over, you would think. Not so. The funds, considerable, are now in a twilight area at Vanguard. They can be traded but each trade would take 3-5 days instead of the normal 1 day. It’s almost 1 month since I started the transfer, yet I still do not have full control of my funds.
Dear Sir,
I’ve got a small Trust acct. that I can invest (have trading authority under terms of doc.) for my own benefit. I can move it to any broker(s) I choose to work with. Currently using a “full service” brokerage house that uses NFS (a division of Fidelity) to clear the trades and custody assets. I want to move it to a low-cost discount broker where I’ll pay lower fees. Unfortunately many of my positions won’t transfer “in kind” to other firms. I’ve already been told that TD Ameritrade, Scottrade & Trade King can only receive some of the assets, but not all. I own many foreign companies that don’t trade on the U.S. Exchanges. Do you think Vanguard could help me in this regard? I really want a firm that can offer me the most options & investment flexibility. And one where I won’t have to leave any assets behind at my current brokerage firm. Does this make sense? I have “lost my shirt” following all the investment advice of my current broker. And I’am worried the account will never recover. ANY advice you or your readers can give me would be MOST APPRECIATED. Thanks much.
Hi, can you address some of these customer complaints we are seeing? If it’s true as countless people are noting, that they freeze accounts readily, then don’t have the interest or authority to get you back on, that they give many people trouble getting their funds out, that they complicate every little error they or you make with their “byzantine bureaucracy” and generally make old customers realize that this company has turned into a monster that is simply coasting on it’s former reputation for integrity., IF this is true, we need to know. Nothing else matters if they are not trustworthy if they are adversarial with clients. Who wants to fight all time with a big company over one’s money? Please look into this and give us some idea if they are still a high integrity company.
thanks
Hi Steve,
While I have a Vanguard account myself personally I cannot confirm or deny claims made by other commentators.
Steve,
I’ve had an account with Vanguard and until recently really liked the firm. I encouraged a number of friends and family to switch over to Vanguard based on their lower fees. However, I’ve had a recent experience that has totally reversed my faith and confidence in Vanguard.
I was asked by Vanguard to “upgrade” an established mutual fund account with the firm to a brokerage account. Essentially, the “upgrade” was of no real benefit to me, but it was explained to me would make some of the accounting easier for Vanguard. So, I agreed to the “upgrade”.
Turns out the “upgrade” triggered a compliance issue, as Vanguard no claimed it was unable to verify my identity and it froze all of my account at Vanguard. I was unable to access or trade when some significant movement was taking place in the market.
Despite repeated call to Vanguard, no one there is able to make a logical decision. The firm created the issue and does not follow the actual requirements of the laws/regulations it claims are imposed upon it by the federal government. Instead Vanguard’s CIP program is flawed and not consistient with the actual Code of Federal Regulations that governs Broker-Dealer transactions. Vanguard simply refuses to recognize that its Compliance policy is out of sync with the CFR, it claims to be following.
I was so troubled by the matter, I took the time and effort to file a complaint with FINRA. I am not sure how much control FINRA will decide to exercise with Vanguard, but common sense seem to be in extremely short supply at Vanguard. For them to ask a customer to upgrade one of their accounts and then turn around and manafacture a bogus identity conflict and freeze the customer’s account is a sign that the firm is experience difficulties and might be a sign of future problems on the horizon.
The inability to correct a simply mistake created by Vanguard and the firms willingness to alienate an otherwise loyal client is inexcusable. Hopefully, FINRA can interject some logic into Vanguard and if nothing else at least ensure that their compliance policy are actually in sync with the regulations, as opposed to be just vague assertains of fantasy by Vanguard.
When you check online, you can see tons of complaints by clients and mostly now former clients of Vanguard of events similar to mine, where Vanguard self creates a client identity problem and locks the client out. I would suspect, that as others have suggest Vanguard staff is now composed of younger less experienced individuals that simply don’t take the time to know what is proper or just operate by knee jerk reactions. It’s sad, but I can not recommend Vanguard at this point.
What good are lower fees, if in the end the firm creates more problems for you and wastes your time so easily. It only foreshadows likely future problems and frustrations. Maybe paying a higher fee is worth it if you can deal with competient representatives and have confidence that your funds are protected and always available.
Sorry, to report such bad news about Vanguard!
I said goodbye to Vanguard today after 10 years! The customer service front line has deteriorated over the years to 20 something, ill trained wanna be investment kids. The website IT staff–thank you very much–felt the need to change the website which used to be a breeze to use to a more clogged and complicated site where you need to dig down to find anything. There is no real way to speak with an “experienced” person to answer questions or even complain. Multiple attempts failed to find a supervisor and hold times were so hideous I hung up three times. Two emails this week were never returned in “two days” –in fact, none at all. It was not worth the frustration attempts to find someone to help when the gatekeepers who man the phone lines know nothing. So….goodbye.
I had plans to transfer an employee IRA in about two years to Vanguard—no more. Filed today to get out and move 10 years of loyalty somewhere else. There is not even any corporate office to explain why I left or complain. Corporate hides behind the idiot front line youngsters. Good bye.
Sorry to hear of your frustration with Vanguard. I, having been a client of theirs for more than 20 years, have also recently had similar experiences with unprofessional, uninformed, and incapable “youngsters.” The youngster’s incapability is perhaps because they have their hands tied by management in being able to make any decisions about customer service without putting you on hold and/or transferring you, resulting in long hold times and disconnected calls (they didn’t even call back). I did get to speak to a supervisor, by appointment, the next day on her schedule, where she was to call me. She called 5 minutes earlier than the time appointed when I had not yet arrived at the phone, and then was not available until 1 1/2 hours later after I called back. Unfortunately, I will also be looking elsewhere. So much of my time has been wasted on the phone with them.
I keep earning dividends which Vanguard says ONLY increases my share balances but NOT the account balances. Since I’m a CPA and know this not to be correct within SEC guidelines (and for example, Fidelity increases shares and account balances for reinvested dividends as does ComputerShare for DRIPs.) My question is whether any of you are experiencing the same thing in your accounts? Just had $5200 of dividends increase my share balances but not my account balances. Anyone else experiencing the same thing? I’ve confirmed with the SEC that this accounting treatment is not proper……ergo….giving me a increase of a hypothetical 100 shares in my account without a corresponding increase in my account balance at the then current share price is illegal. This seems to be standard Vanguard procedure……but not at Fidelity or Computershare…..would appreciate some independent advice. By the way, it took Vanguard over three weeks to respond to my questions about this illegal practice. I would love to give someone my $5200 of dividends reinvested into 100 hypothetical shares for $0!!!!!!! It’s a scam that requires legal attention.
Did your issue get resolved? I am thinking of investing with them and it scarce me to hear these things because unlike you I would be getting scam not knowing it.
My employer will start a relationship with Vanguard January 2015 for our retirement accounts. I am now with Lincoln and am wondering if it is a better idea I end my relationship with Lincoln and start my retirement account with Vanguard? Also, is there any way I can rollover my current money with Lincoln to Vanguard though I am still with the same employer? Your advice would be helpful because this can be very confusing for a professional with no investment experience.
Look forward to your response.
Worst customer service ever. They cashed a rollover check of mine and still haven’t deposited it in my account two and a half months later. They are thieves in my personal opinion. I am now issuing a fraud suit against them.
Just try to get Vanguard to give you your money back… Good luck! Once they got the official paperwork from TD Ameritrade to roll $200+ K into my accounts there Vanguard simply continued to lose the paperwork from the brokerage firm and now they continually put me on hold or hang up on me. This has been going on for over a month now. They are crooks! You are better off simply retaining an attorney and allowing them to do all the work so they can start the timeline on the litigation or settlement.
Do not use Vanguard! They may be cheap, but they hold your money hostage. When you look at their site and want to invest, see if you can find a link for taking your money out. If you do happen to find it, try to use it. The link does not take you to distribution form. What I’m saying is you can easily put your money in with a few clicks, but it could take weeks to get your money out. However, I got my money out of Fidelity in a few minutes with a simple phone call. I am still waiting to hear rom Vanguard.
Yep I know someone who just had this happen to them they’ve waited 2 weeks for their money amd still havent gotten it.
I get the feeling it’s because Fidelity has a lot of outgoing transfers, and have made it easy. VG seems to be the opposite….
Hi there,
My husband and I are in our early 30s, and trying to figure out the best option for a retirement account. My husband is a teacher, and unfortunately, the companies offered to manage his 403B through his school district are all poor options I associate with high hidden fees and poor returns. Because of this he hasn’t opened his 403B yet. Vanguard is not offered. A friend of ours who works in finance suggested we open an account with Ameritrade and invest in low cost index funds. He also suggested we open a roth IRA, rather than an IRA. I feel very naive about what the right path is to take in terms of investments, and just want a safe, non-risky option. Any suggestions?
Thank you!
Hi Liza,
Under SEC law, since we are not registered advisers, cannot give you specific investment advice. What I will say is there are differences between the two. Fidelity’s site is a good summary:
https://www.fidelity.com/retirement-ira/ira-comparison
Regarding your husband’s 403b. If they do offer matching it’s an instant return on that money (ie say 3%). Even with high fees you come out ahead. Also depending upon your tax bracket can reduce your AGI decreasing the taxes you pay now. If the 403b does offer high annual maintenance fees, and high annual expenses funds with no matching it might not be as good an offer.
We have a post that lists the order of investing to be the most tax efficient.
https://investorjunkie.com/2898/tax-efficient-investing/
My wife and I are looking to roll over moneys into Vanguard – but my wife read discouraging reviews by investors who complained it was hard to get their money out of vanguard in a timely matter. Wondering if anyone can offer insights into this aspect.
We are in it for the long haul – but there will come a time when we will need to remove money from vanguard.
Thanks!
I have accounts at both Vanguard and Fidelity. I have a significantly larger account at Vanguard, yet the level of competence is much lower at Vanguard. What is noticeable:
1. Vanguard customer service is far inferior, it is often like talking to a federal employee, ready to retire & waiting for a coffee break at the same time. You can never get the same person to follow up on anything, and they don’t seem particularly competent or care how much of your time you waste.
2. They have a really hard time understanding how to transfer Assets, and always get you to someone who doesn’t understand
3. There inherited asset transfer process is a time consuming waste. For 3 months I worked on have assets transferred to Vanguard. Hours & hours & hours of time! Always someone new, always different info. Today on the phone with Vanguard for another 2 hours & 10 minutes! All the while the funds were put in cash 3+ months ago when my transfer paperwork was completed. Finally I picked up the phone to fidelity, and had instant great knowledgeable customer service, with the individual offering to be my point of contact. Vanguard is not worth the trouble!
4. The employees seem complacent, and seem to lack the drive and initiative to get something done!
The Annuity department in particular, needs to get a little staff change.
Hope I save some one the trouble. If the going gets slow & wastes your time over at Vanguard, quit while you are ahead, it won’t get better.
So you recommend Fidelity? Both for ease to withdraw funds and fees?
from Vgd website: For mutual fund accounts – $20 fee waived for shareholders who have elected to receive statements and other important information electronically.
Brokerage accounts have a $20 fee for accts under $50K.
So if you have several Mutual Fund, ROTH, IRA accounts you will not pay a annual fee with e-statements, the only acct you will pay a fee on is the Brokerage account (if you have one).
There are two more issues with Vanguard –
The speed and success of trading stocks or options, as they are not “market maker”, they probably have to go thro’ third party. This is even bad when spread is large!
No choice for trailing stops etc, so you have to monitor prices and due to delay in execution in falling market you tend loose capital.
Your comments please.
Jogesh,
I recommend two brokers if you want Vanguard indexes, and trading stocks and options.
Just read this year-old+ thread and will add one point: Vanguard generally gets high marks as a fiduciary because it is a not-for-profit company. It’s neither privately owned (as Fidelity is) nor publicly traded on the stock market (as many mutual fund companies are). So Vanguard has to answer only to its customers–they own the funds–and not to people/shareholders who own shares of the company. That’s one reason the fees are low. The only other mutual fund company like this is TIAA-CREF. See David Swenson’s book Unconventional Success for further details.
Hi Aquinas. Thanks for your comment. We do keep these reviews updated and will be updating it in the near future to reflect updates to their service.
How does that work exactly, that Vanguard brokerage managers have to answer to their customer-owners? I don’t see customers organizing and running Vanguard. The truth seems to be that the inmates (managers) are in charge of the asylum, and while the funds seem to work very well, the brokerage is a disaster, which is why so many people are complaining about errors, huge delays getting things done or fixed, and egregiously bad customer service. As someone else said here, corporate managers seem to hide behind first-level account reps. Customers don’t manage or own, they just leave, that’s what I’m doing.
Hi Don – Yep, that’s correct. It has to be Vanguard’s proprietary products. Honestly, unless you are investing in Vanguard products, having a Vanguard account isn’t the cheapest way to trade stocks, bonds, etc in general
Agreed that if you intend trading in and out of your positions often then a Vanguard brokerage account may not be the cheapest. For investors who look to buy low-cost index funds or other investments for the longer term, perhaps rebalancing once or twice a year, its a great option to consider.
Well said Kevin. I evaluate my asset allocation levels once per month (with Vanguard), but typically only end up actually rebalancing maybe twice per year.
Amount Stocks and ETFs
Less than $50,000 $7 for the first 25 trades
$20 for subsequent trades
$50,000–$500,000 All trades: $7
$500,000–$ 1 million All trades: $2
$1 million plus Free for first 25 trades
$2 for subsequent trades
Regarding the sliding Vanguard brokerage fees tied to value of the account…it’s my understanding that the amounts listed must represent holdings in VANGUARD PRODUCTS in order to move trading fees. Non-Vanguard holdings don’t count. Am I wrong?
I’m pretty new to Vanguard (been with them for less than a year) and mutual fund investing altogether. But I love my experience with my Roth IRA with them so far and intend to hopefully stay with them for a very long time. I currently just have my money in their STAR (VGSTX) fund but once it hits $3000 I plan to roll it into a different fund.
@ Ian – Nice! that’s actually exactly how I started off as well (with the STAR fund because I didn’t have the 3k needed for the regular funds). I just checked Vanguard’s website, and it is an actively managed fund in that the funds that it owns are actively managed. This can lead to higher fees. However, it’s a good place to start!
I just open a Roth IRA account with Vanguard. As I did not have any investment experience, I decided to go with all in one balanced funds, Target Retirement and Star. I did not wanted to invest all and hold some contribution just as cash account, but was told by costumer service, that in order to do so, I have to open money market account with them. Little confusing.
Reading some of the discouraging reviews posted below in regards to problems of getting your money back from Vanguard, I am horrified. Hope I did not make a mistake choosing Vanguard.
I have both fidelity and vanguard. The Vanguard funds are more transparent, e.g., they provide detail of all reinvestment within the fund. The fidelity funds don’t do this at least the ones that I have in my retirement plan.
Mike
Thanks for reading our review Mike! I have experienced the same thing. Vanguard seems to make it easier to find what you are looking for.
I would appreciate if anybody could give me his/her opinion on the following matter: I am planning to invest 100-200k in a MANAGED investment account. Would you put this money in Fidelity or Vanguard? Please consider the following in your answer:
1. I am average when it comes to knowledge of the investments world
2. I am conservative to moderate in nature when it comes to taking risk
3. Long term view – I am investing for my retirement.
4. I like to be able to know how my investments are doing regularly
5. I don’t have time/expertise to manage investments myself.
6. I would like to be able to reach someone quickly if I have issues or questions.
I have heard very good things about both Fidelity and Vanguard. I like the local presence of the Fidelity offices and advisors and the low costs of Vanguard. About Vanguard, though, they require that you give them the money before they sketch out a plan for investments…Anybody has or had issues with this requirement?
Thanks a million for your opinion.
Vanguard is a great company; my work used to invest our 401(k)s through them and the fees were pretty low. Since then, we’ve moved to Fidelity Investments, and they seem pretty solid as well. No complaints here!
Great to hear LifeAndMyFinances! While I do personally prefer Vanguard slightly over Fidelity, I always tell people that if you are investing with either company, you are on the right track!
I’m a huge fan; I have my IRA, 529 with Vanguard and always recommend them as an ethical, low-cost solution. Since fees and diversification are pretty much key to long-term investing, Vanguard’s got it all.
I agree with Darwin that Vanguard have an excellent 529 program for college accounts, also known as the Vanguard Nevada 529 Plan as its sponsored by Nevada – well worth checking out.
That’s great to hear that Vanguard has good 529 options! Since I don’t have any kids yet, I haven’t looked in to it, but it’s good to know that the option is there when the time arises!
I have been a Vanguard customer since the eighties! I am a big fan, however there are instances I wish they had a little more variety. I wish some of my prior employers used Vanguard as well. It would have been a little easier when I left.
@ Krantcents – I have wished the same thing as well about my previous employers using Vanguard. Every past employer of mine has used Fidelity for their 401k plans, though. I think they must do a lot more in marketing their product to companies than Vanguard (maybe this is why they have slightly higher fees???? haha).
I am curious – as far as more variety goes – what types of products do you wish they had?
When I compare Vanguard to Fidelity, there are more funds in many more sectors. Do you need all these choices? Do you need to take sectors and slice them still thinner? I don’t know. I think it goes against Bogle’s philosophy, that is why there aren’t more. He is probably right!
In the books I have read from which I base my investment strategy (Stocks for the Long Run, Random Walk Down Wall Street and books by Larry Swedroe), they all mention that it isn’t necessary to invest in sectors. By simply investing in the total market or in large and small cap value funds, you capture that while maintaining diversification.
$7 a trade is pretty low. Yes, you can find brokerages with lower trading fees, you have to wonder if they’re not making hidden money on the bid/ask etc. and there’s a lot to say for consolidating everything with Vanguard; especially for those companies that you want to buy and hold for a long time.
If you’re self employed, Vanguard makes it very easy to set up a Simple or SEP as well. I haven’t looked into an individual 401k account, but they probably do that too.
Vanguard does offer an individual 401k account.
https://investor.vanguard.com/what-we-offer/small-business/individual-401k
I don’t have a Simple, SEP or individual 401k account with them but more than likely this year or next. I like their fee structure.
With regards to Vanguard and stock trading, I would say that they are really best suited to only own their funds and ETFs. IMHO, other mutual funds and stocks you are best opening an account somewhere else (since it really isn’t their focus). If you have less than $50k, it’s possible you’ll pay $20 a trade. Ouch!
At least for me, consolidating into one vendor doesn’t do anything for me. Using products like Quicken and a spreadsheet it’s not that hard to determine things like proper asset allocation.
One could argue that if you have less than $50k in diversified funds, that you shouldn’t be buying individual stocks. 🙂
That said, if you are going to be buying and selling frequently, or doing complex trades such as options or shorts, then yes, Scottrade, Tradeking, or other would probably be better.
@ Robert – That’s actually a very intriguing question about the bid-ask spread and how it varies between “well-established” investment houses and deep-discount brokerages. I think I’ll put that on my list of things to research and post on!
Hmm, so now a follow up question. Is it a good idea to move money I have from similar s&p 500 index fund (with 0.3% fee) to this fund with 80% less fees? The challenge is that it’s had about 10% gain since I bought it, so I’ll have some capital gains.. While capital gains taxes may be higher in the future, I could lose by not have as much to invest now.. I guess it depends on how the market performs in the future..
David, you should be able to transfer the shares without selling them. Give the Vanguard brokerage services a call.
Robert, you are correct, but I think David is more referring to getting the lower annual fee with Vanguard’s funds.
Whoops, you’re right. My bad.
Hmm sounds like a lot of variables involved with this one. I see:
– Amount invested
– How long you plan on keeping it invested in the S&P 500
– Is it long term or short term capital gains
The primary question is how long do you plan on keeping it? The longer you own it, the more it will drift from the S&P 500 because of the said fees. The tax rates, while more than likely will be higher than current, is an unknown.
I wouldn’t consider the future market valuation since that’s constant no matter which fund you own.
Well, i disagree. Future market valuation makes a big difference… If the market goes way up, then staying where I am makes the best sense. (the fee is only a tiny percentage.. and what I would be paying in taxes this year is earning returns) If the market is flat, then the fee takes away all the returns.. and it’d have been better to pay gains now, and have less fees. Of course we all hope the market goes way up in the long run…
The amount invested should not make a difference, but it’s enough that I’m worrying about a 0.3% fee. I plan on holding it a long time.
Oh I see what you are getting at, yes from the perspective of paying taxes so you can transfer to another account. Maybe the best way to do it is sell shares when forced to rebalance your S&P 500 allocation?
If you believe in Shiller’s PE10, then in the next 10 years it’s expected we’ll have another round of poor returns. Though that indicator has been show to be far from perfect.
http://www.multpl.com/
@ David – Agree with Inv. Junkie. It’s a fairly difficult question to know whether now is the correct time to transfer from your higher cost fund to one with Vanguard.
Even though I am not a professional money advisor, I would say that I would personally move my fund due to the fact that I would prefer to have all of my funds in one place. And, since Vanguard offers so many low cost mutual funds, I would know that there would be other funds that I could find useful in the future.
You mentioned the vanguard admiral shares, with a relatively low $10k investment (it used to be limited to 100k).. but you didn’t mention the fees on that, which are greater than 50% less.. For example, the Vanguard 500 Index Fund Admiral Shares has a fee of 0.07% vs 0.18% for normal shares. Fidelity has a similar large investor fund with 0.07% fee, but requires 100k.
They also have an ETF version with a 0.06% fee, but you’ll have to pay broker commission both buying and selling if you trade somewhere else. However, Vanguard has commission free trades for Vanguard ETFs, if you use there brokerage services. I was just looking into that myself… I’m wondering why anyone would buy the regular mutual fund shares when there is the ETF option with lower fees… Or is there some other disadvantage that I’m not considering?
Oh, there is a $20 annual brokerage fee if you have less than $50k total in your Vanguard Accounts.
Hi Dave,
I just wanted to let you know that Vanguard waives the $20 fee if you sign up for electronic mail delivery.
Best,
-Adam
Hi David,
Thanks for the clarification of fees.
Regarding mutual fund vs ETF (specifically with Vanguard funds at Vanguard since neither has a trading fee with them), it really comes down the the bid/ask spread is the major issue. Even then with ETFs like Vanguard’s S&P 500 that’s traded frequently it’s a very small difference. Right now I show the spread is $0.02 with VOO.
https://finance.yahoo.com/quote/VOO?p=VOO
ETFs that aren’t traded as much this can be a bigger factor.
The other I’ve seen discussed is tax advantages, though I’m not sure really what kind of advantage either would have since they are about as efficient as possible.
The biggest issue with any of them is the tracking error. I’ve created a graph on Morningstar’s web site comparing the differences in said mutual funds and ETFs:
http://rij.cc/eQnqNG
– Vanguard 500 Index Admiral $11,347.30
– Vanguard S&P 500 ETF $10,901.96
– Fidelity Spartan 500 Index Inv $11,266.03
– S&P 500 $11,367.16
I showed the past ten years what would $10k be worth today (includes dividends). Granted this graph is somewhat misleading since Vanguard’s ETF just started in 2009. If you do one year Vanguard’s ETF and mutual fund are almost the same.
Though if you compared the three funds compared to what the S&P would be worth, the Vanguard 500 Index Admiral is slightly better.
For most people just starting out it looks like Vanguard’s ETF is a better deal when using Vanguard to make the trade.
Vanguard brokerage does not trade during the pre-market or after-market as, say, Fidelity. This means that you can lose lots of money on market, limit and stop orders.With many stocks and efts, smart traders like to trade at these times when the unwashed are not active. When the market opens, given ETFs and stocks are often far more expensive than the previous night’s close. Likewise, a stop that you have entered will not be executed if you use a lemon-aid stand brokerage.