Vanguard

877-662-7447, 800-523-1188, 800-523-1036, 888-888-7064, 800-997-2798
Malvern, Pennsylvania, United States

The Vanguard Group is the grand daddy of low-cost indexed based mutual fund investing. Started in 1975 by Jack Bogle, he understood over 80% of actively managed funds did not beat the market’s indices. His mantra, is you aren’t best to beat the market, you should become the market, and focus on low cost fees.

Vanguard has grown to become the world’s largest no load mutual fund company. While Vanguard is mostly known for its low-cost index funds, they also offer a variety of low-cost, actively managed mutual funds and exchange-traded funds (ETFs).

Vanguard also provides brokerage services, 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. There is a wide selection of mutual funds and ETFs at a low cost, but their website to be somewhat outdated and clunky.

Account Options Offered At Vanguard

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 Offered

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.

Trading Fees and Commissions

Vanguard charges no commission for trading their mutual funds and ETFs. Purchasing stocks and non Vanguard ETFs through Vanguard can be expensive. This isn’t surprising since their focus is on low cost mutual funds.

Stock and ETF Fee Schedule

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

Unless you have a somewhat large account with them, Vanguard isn’t a great place to trade stocks. You are best to use other discount brokerages. Vanguard’s service is lacking features when comparing to other discount stock brokers. Based upon experience though, if you are wanting to use Vanguard you are only interested in purchasing Vanguard only mutual funds and ETFs.

Minimum Balances 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

Vanguards 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 straight-forward. 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.

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 with them, it may not make sense to use their service for the lower trading fees.

It is assumed you go for Vanguard only for their low cost indexed mutual funds and ETFs. Though they are no longer have exclusivity in this area. Most mutual fund houses offer similar, and in some cases lower annual fees when compared to Vanguard. Many of the brokers offer commission free ETFs, further lowering your transaction costs to match Vanguard.

Founded in: 1975
Licensed:
Platforms: Vanguard's website, Mobile Trading
Capital:
Fees:
Broker: 7
Exchange:
Withdrawal:
Minimum Deposit: 0

Mobile Trading Seminars, Education

User Reviews

DanielD

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.

VangCust

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?

Aquinas

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.

Lindsay
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.
LarryLudwig
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.
Disgusted

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.

mo

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.

Sarah
Yep I know someone who just had this happen to them they’ve waited 2 weeks for their money amd still havent gotten it.
Jeremy
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….
TroyHolmes

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.

Penna

The broker had been very good for a number of years. But recent changes to their system are not good...

GodfreyS.

I have been with them for 25 years. I am thinking of leaving & using T Rowe Price. This is a new development in the last 5 months. Reasons:
- Now their website is very slow
- They screwed up my log-in code
- I tried to make an investment, and they wrongly quoted that I had no money in the fund
- The tech representatives sometimes cannot help me.