Compare Vanguard versus Interactive Brokers (IBKR): IRA, commissions, investing fees, trading tools, account differences, pros and cons. Which online broker is better in 2019?

Overview of Interactive Brokers and Vanguard

Vanguard and Interactive Brokers offer different styles of trading. With this article, you should be able to pick the right firm for your investment needs.

Broker Cost

Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
IB $1+ $14.95 $0.25+ per contract $0-$240** $30
Vanguard $7-$20 $8-$35 $30 + $1.50 per contract $20* $20*

Services

Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
IB
Vanguard

Promotions

Interactive Brokers: Open account and get $200 for a friend you refer.

Vanguard: none.


What Products Can I Trade With the Two Brokers?

Vanguard customers have access to stocks, ETF’s, mutual funds, closed-end funds, bonds (including certificates of deposit), and options. Interactive Brokers customers can trade these plus forex, warrants, precious metals, contracts for difference, futures, bitcoin futures, and options on futures.

Interactive Brokers is the clear winner of this category.

Who Has the Better Website?

Vanguard’s website is rather simple. There is no trade bar, and forget about a browser platform. Trades are submitted on simple web pages. Strangely, there are no buy or sell buttons on a security’s profile page. Instead, traders have to click on a link that says “I want to...Trade this stock.”


Vanguard versus IBKR


Vanguard’s trade ticket offers market, limit, and stop orders. There are no advanced order types, and direct-access routing is also missing in action. Despite the site’s simplicity, we found it difficult to navigate at times.

Transitioning to Interactive Brokers, we find a client portal. This is also a fairly simple trading environment. There is an order ticket, market news, basic charting, multiple watchlists, currency rates, and data on securities.


IB TWS


IB also offers WebTrader, a browser-based platform. Charting is worse than Vanguard’s, although the platform’s trade ticket is much more sophisticated. We found trailing and on-the-close order types. Another great feature is direct-access routing. Beyond stocks and ETF’s, other products can be bought and sold on WebTrader. These include forex and warrants.

We’ll call it a tie here.

And What About Mobile Apps?

At Interactive Brokers, traders have charting with technical indicators. There is also a stock screener on the app, an unusual feature. Other highlights include market commentary, an artificial intelligence named iBot, and an advanced order ticket. Options and mutual funds can be traded. During our research, we didn’t find mobile check deposit, although on-demand videos are available.


Interactive Brokers Mobile App


Vanguard’s app has mobile check deposit, but that’s the only feature that will be better here. There are no videos on Vanguard’s app. The order ticket is much simpler than IB’s. Oddly, there is no charting for stocks or ETF’s. Only Vanguard mutual funds can be traded on the app, and options trading is not available at all.


IBKR vs Vanguard


Overall, this category goes to Interactive Brokers.

Are There Any Other Trading Tools?

Vanguard and IB both have mobile apps that function on Amazon’s Kindle. Interactive Brokers (but not Vanguard) has a smartwatch app for Apple Watch.

Perhaps the most notable piece of software IB offers in this category is its desktop program, something that Vanguard doesn’t have. The IB platform has a lot of trading power, including sophisticated charting with a host of tools, a practice mode, Level II data, access to foreign markets, and very good option tools. There is no charge to use the software.

IB takes another category.

Can I Trade During Extended Hours?

Yes, both brokerage firms in our survey do offer extended-hours trading. At Vanguard, an after-hours period lasts from 4:15 pm, EST, until 6:30 pm. There is no pre-market period. At Interactive Brokers, there is a pre-market session (5:30 am till 9:30 am) and an evening session that lasts for 4 hours.

Another loss for Vanguard.

Does Either Broker Offer Level II Quotes?

Vanguard focuses on long-term investing; so it has no reason to offer Level II data. Interactive Brokers does provide the data (there is a charge for this). The quotes are available on firm’s desktop platform.

IB takes another victory.

What Are Their Margin Policies?

Vanguard has a 50% initial margin requirement and a 35% maintenance requirement for both long and short stock positions. The minimum stock price for long stocks is $3, and for short stocks, it’s $5.

IB has a 50% initial requirement for long positions and a 25% maintenance requirement. For short equities, both numbers are 30%, and there’s a $16.67 minimum.

We’ll call it even here.

Is DRIP Service Available?

Dividend reinvesting is possible at both Vanguard and Interactive Brokers. One important difference is that Vanguard permits specific securities to be enrolled or unenrolled. At IB, only an account can be enrolled or unenrolled.

This category is awarded to Vanguard.

Who is Better for Options Trading?

Vanguard’s site offers trading in calls and puts. Its sole search tool is option chains. Interactive Brokers provides trading in derivative contracts on WebTrader and its desktop software. Multi-leg strategies are programmed into both platforms. The desktop system has a large suit of option tools. These include a probability lab, volatility skew, Greek values, and much more.

IB easily wins here.

Are There Resources for Investment Education?

Interactive Brokers provides a lot of educational videos and articles on its website. A “Traders’ Academy” hosts self-guided courses on a wide range of topics. These include margin borrowing, tax implications of trading, an introduction to options, and how to use charts. A video section hosts Chinese-language resources. Both recorded and live webinars are available.

Vanguard’s site contains articles on a variety of topics. During our research, we found articles on ETF’s, charitable giving, saving for college, and more. Its stock screener isn’t quite as thorough as IB’s. While we couldn’t find a mutual fund screener at IB, Vanguard does have one.

We’ll call it a tie here.

Promotions

Interactive Brokers: Open account and get $200 for a friend you refer.

Vanguard: none.


Recommendations

We can suggest Interactive Brokers over Vanguard for frequent trading of most instruments except mutual funds and ETF’s. Vanguard has better resources on mutual funds, and it has a very large list of commission-free ETF’s.

For day trading, we propose Interactive Brokers. Its software and commission schedule are much better suited to this style of trading.

Although neither broker in this survey is ideal for beginners, we recommend Vanguard for new investors.

For cash management, we advocate Interactive Brokers. The firm offers a free debit MasterCard without any account minimums or fees. Vanguard imposes both.

Interactive Brokers vs Vanguard Summary

Interactive Brokers offers better trading resources in everything except funds. Buy-and-hold investors should stick with Vanguard.



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