Review of Vanguard brokerage account. Investment fees and commissions, cons and pros, minimum requirements and promotion offers for opening a new online broker account.

Rating:  Vanguard brokerage company rating

  • Stocks & ETFs: $0
  • Options: $1 per contract
  • Mutual Funds: $20
  • Minimum to open: $0 for a cash account.

Vanguard Review

Vanguard is a client-owned brokerage firm that provides some unique investment services. The company has a band of loyal followers who swear by the ownership model and pricing structure. Let's take a closer look at this unique broker and see what it has to offer for investors.

The Cost of Trading

Vanguard's commission schedule is simple: stocks and ETFs are $0 to trade. Options are $1.00 per contract.

U.S. Treasury bonds at Vanguard are free to trade. Existing issues of municipal, agency, and corporate bonds in Standard and Voyager accounts cost $2 per $1,000 face value, while the other three accounts pay a lower $1 per $1,000 face value.

Vanguard Brokerage IRA Fees

There is no minimum opening deposit requirement to open an IRA at Vanguard. These accounts come with no setup, inactivity, or closing fees. However, there are several other fees, some of which can be evaded. The first fee is the regular $20 annual fee. Furthermore, there is a $20 charge for a Vanguard mutual fund if it has a balance under $10,000. Retirement savers should be aware that they can avoid these fees by signing up for electronic delivery of statements. Even better, IRAs with assets above $50,000 are not charged the fees to begin with. Custodial IRAs with Vanguard have no special fees beyond the fees already mentioned.

A SIMPLE IRA carries a $25 annual fee if it has a Vanguard fund. The broker charges the fee for every Vanguard fund. So if a SIMPLE account has three Vanguard funds in it, the annual charge would be $75. Typical for the broker, the fee policy is waived for accounts above $50,000.

Mutual and Exchange-traded Funds

Vanguard is well-known as a proponent of passively-managed funds with low fees, although the broker does offer some actively-managed funds. The average expense ratio of Vanguard funds is just 0.18%.

There are 126 Vanguard mutual funds, which have no transaction fee. There are also 55 Vanguard ETF’s, and of course they too are free to trade. The broker's S&P 500 index ETF has an expense ratio of just 0.05%, very low by any standard.

Vanguard Review

Vanguard clients have access to more than 16,000 mutual funds in total. Many of these have no load and no transaction fee. Mutual funds that do carry a transaction fee are $20 to purchase, sell, or exchange.

The broker charges a $20 annual fee for each Vanguard mutual fund below $10,000 in a Standard account if it isn't enrolled in electronic delivery of documents.

Research and Education

Vanguard has numerous educational pamphlets available on its website in pdf format. The broker also has several articles on education and retirement planning. A useful retirement calculator helps investors determine how much monthly income they will need during retirement.

The website has basic screeners for stocks, mutual funds, and ETFs. One screener searches for both ETFs and mutual funds. Analyst reports on equities are available from Argus and MarketGrader free of charge. Other brokers, such as Schwab, provide reports from more than two analysts.

The website has mostly articles, although there are many Vanguard videos on YouTube. These videos cover a range of topics, such as retirement planning and how to buy CD's at the broker.

Vanguard has an active blog and Twitter account. Traders can find helpful investment information at these sites.

Vanguard Personal Advisor Services is an advisory service for Vanguard customers who have an account balance of at least $50,000. Users of this service receive investment advice and a financial plan.

Cash Management Features

Vanguard offers a hybrid brokerage-cash management account called Vanguard Advantage. It is available to Voyager Select clients and above. This policy effectively requires customers to have a staggering $500,000 on deposit just to have banking features. Voyager Select clients must pay a $30 annual fee and $9.95 for checks. Flagship clients pay no fees for Vanguard Advantage. Clients of Vanguard Personal Advisor Services are also eligible for Vanguard Advantage.

ATM withdrawals are free at PNC banks in the United States.

Customer Service

Vanguard can be contacted via phone, e-mail, and snail mail. Unfortunately, customer service is only available Monday through Friday, 8 am to 10 pm, EST. Other brokers, such as E*Trade, have 24/7 customer service. Vanguard does have a phone number for investors outside the U.S.

Trading Tools

The firm's website is user friendly, although it can be somewhat buggy in Google Chrome. Compared to Ally Invest's website, Vanguard's is a little more difficult to navigate.

Trading takes place within the web browser with simple order pages. Helpful information on how to place an order is displayed near the order pane. Charting is available and includes some technical analysis tools.

On the research page for equities, there are no buy and sell buttons. Traders have to navigate to another page to place an order, a slight inconvenience.

Regrettably, Vanguard does not have an advanced platform which is offered at many other brokers.

Vanguard Review: Trading Tools

Mobile Trading

Vanguard has applications for iPhone, iPad, Android, and Kindle Fire. The interface is easy to navigate. Users can place trades, make a mobile check deposit, and contact customer service. Traders can access account confirmations and statements in pdf format on the app. Users can sign up for account activity alerts, which can be sent by text message or email. The app has a printer icon, which allows users to print any page in the app, a unique feature.

There are a few weaknesses with Vanguard's app. Unlike Schwab's app, there is no option to transfer funds or pay bills. And unlike E*Trade's app, there are no educational or news videos.

Vanguard Review Summary

Vanguard is an excellent choice for buy-and-hold investors. Active traders who invest primarily in stocks and ETFs will do better at TD Ameritrade or Webull.

Vanguard Promotion

None at this time.

TD Ameritrade Promotion

$0 stock/ETF trades + transfer fee refund.

Open TD Ameritrade Account

Webull Promotion

Grab your last chance to get 12 free stocks valued up to $30,600.

Open WeBull Account

Vanguard Commissions

Stocks and ETFs $0
Options $1 per contract
Mutual funds $20
U.S. Treasury Free for new and existing issues.
U.S. government agency securities, corporate bonds, and CDs New issues free. Standard and Voyager $2 per $1,000 face amount ($250 maximum). Voyager Select, Flagship, and Flagship Select $1 per $1,000 face amount ($250 maximum)
Mortgage-backed securities & commercial papers $50 per transaction.
UITsSelling UITs $35 per transaction.

Vanguard IRA & Account Fees

IRA Setup Fee$0
Annual IRA Fee$20, $0 with conditions*
IRA Termination Fee$0
Full Account Transfer Out$0
Partial Account Transfer Out$0
Outgoing Wire Fees (Domestic)$0
Outgoing Wire Fees (International)$0
All Vanguard fees »