Founded in 1975, Vanguard provides US investors with an online trading service via the Vanguard Brokerage Account. Amongst their predominantly US investment product range, investors can trade a vast array of mutual funds, ETFs, stocks, options, Certificate of Deposits (CDs) & bonds. They are geared more towards the mid to long-term investor rather than day traders.
Vanguard do not have the cheapest fees on stocks, options, bonds but do offer some free ETFs for trading. They provide clients with a choice of basic yet user-friendly trading platforms and a limited selection of trading tools. As they tend to be primarily focused on long-term investments and retirement plans of high net worth investors, this does mean that the trading infrastructure may not be as suitable for the average active retail trader.
Vanguard executes client’s orders through trading partners with best execution practices to help ensure the best possible prices. They do have quarterly reports available that show details on the relationships that they maintain with their trading partners. They frequently conduct in-depth reviews on the market centres that they utilise to ensure the trading conditions offer acceptable executions speeds, reliable services and liquidity.
Since they were founded in 1975 by Jack Bogle, they have grown into a company whose main focus is on providing low-cost investment options and a variety of different investment account types for investors. The founder states in the Vanguard website that:
“From its start in 1975, Vanguard has stood out as a very different kind of investment firm. Vanguard was founded on a simple but revolutionary idea that a mutual fund company should not have outside owners. Founder John C. Bogle structured Vanguard as a client-owned* mutual fund company with no outside owners seeking profits.”
Pros / Cons
- Commission-free ETFs
- No minimum account opening fee
- Limited funding options
- Limited trading platforms & tools
- Limited market research & data
- No Forex, CFDs & Cryptos
- Not ideal for day traders
Vanguard is regulated by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) in the Unites States.
As a United States online broker, Vanguard are mainly focused on providing their investment services to clients within the US. They do however have a global presence through their subsidiaries and partners. It should be noted that the product range can vary for each country.
Vanguard Trading Platforms
Vanguard provide a proprietary very basic web and mobile trading platform. The web platform is not the most intuitive platform and has very limited customisation features. It does implement two-step login authentication for security. There is support for basic order types; market, limit, stop & stop limit. You need to search for trading assets which can be a clunky and awkward experience. Alert notifications can only be sent via email whereas other online brokers tend to offer SMS and platform notifications.
The Vanguard Investor mobile platform is slightly easier to get around and compatible with both iOS and Android devices. You can only trade stocks, ETFs and mutual funds via the mobile platform. Overall, most other online brokers offer more advanced trading platforms with more features and functionality, including the ever popular MetaTrader platform.
Vanguard Trading Tools & Education
Vanguard does have a limited selection of educational materials to assist investors with their long-term plans. They also have a toolbox that includes investment calculators and other tools to help strengthen your financial strategy and planning. You can compare investment funds side by side to see a more complete picture and use the stock screener to screen and analyse a list of investment products that you are interested in.
However, they are lacking in research tools for market analysis which again backs the fact that they are perhaps not the most suitable option for the average day trader who needs to conduct technical and fundamental analysis. Quotes are also delayed which can be frustrating especially considering there are so many other brokers who provide free real-time quotes.
Vanguard Trading Instruments
Vanguard have a vast range of investment products so that you can design a portfolio with any combination of mutual funds, ETFs, individual stocks, options, Certificate of Deposits (CDs) & bonds. The investment products offered include:
- Mutual funds – They offer a variety of over 120+ different types of mutual funds. Mutual funds are free but other mutual funds that are outside Vanguard cost $20 per trade.
- ETFs – There is a choice of exchange-traded funds that are similar to a mutual fund but trade more like a stock. Vanguard provides commission-free online trading on approximately 1,800 ETFs, provided you do not buy or sell more than 25 times per year.
- Stocks – Clients can take a hands-on approach by choosing from a range of individual stocks that they would like to add to their portfolio. Stock fees start from $7 per trade.
- Options – Choose from a selection of options which cost $7 + $1 per contract.
- Certificate of Deposits (CDs) & bonds – They have an extensive online selection of fixed income investments that can help investors to find CDs or bonds that meet their individual financial goals.
Vanguard Trading Accounts & Fees
You can choose from a variety of retirement and investment Vanguard accounts depending in your individual goals and requirements. Whatever your age or investment strategy, there is something for everyone. Accounts include:
- Individual & joint accounts – These are the standard investment accounts, primarily for those who are getting started with investing or if other accounts have been maxed out.
- Individual retirement accounts (IRAs) – They offer Roth and traditional IRAs for retirement savings separate from employer-sponsored plans.
- SEPs, SIMPLEs & i401(k)s – These accounts are useful if you have your own business, whether you are self-employed or have employees.
- Annuity accounts – There is a choice of variable annuities that can help to maximize tax benefits of retirement accounts although perhaps not a suitable option for everyone.
- Savings accounts – The 529 college savings plan can be used to save for your children’s college education and has some tax benefits that should be discussed with a qualified advisor.
The larger an investors account balance, the more discounts and potential free trades they can receive. In general, Vanguard accounts with no more than $50,000 in assets tend to face higher trading fees.
There is no minimum deposit size required to open a Vanguard brokerage account. You will need to meet the minimum requirements for purchasing the investment products that you wish to trade. Some funds have a $1,000 minimum whilst others can require a minimum $3,000 – $10,000 amount which can rule out some investors. There is a minimum $2,000 required to trade on a margin account and a minimum $50,000 for the Vanguard Personal Advisor Services.
Although they are mainly focused on offering self-directed investment products, Vanguard also offer managed portfolios and robo-advisors. Whilst these can be customised to meet your objectives and are hands off, they do come with extra fees.
Vanguard Customer Service
Vanguard offer a personal advisor service to help you find a portfolio that is suitable for your goals and preferences. They provide customer support via email and telephone from 8am-10pm Monday through to Friday EST. It would be more convenient to some if they offered an online live chat customer service option. There are also some guides and resources available on their website.
Vanguard Deposit & Withdrawal
Vanguards deposit and withdrawal methods are very limited. They only support wire transfer and USD currency accounts. Deposits have no fee charged but some fees may be charge for withdrawals. The withdrawal time can vary as bank transfers may take a few business days to clear. The funding methods could be greatly improved perhaps by adding some convenient online payment processor options such as PayPal, Skrill or Neteller.
Vanguard Account Opening
Opening a Vanguard account can be done online and although it only takes a few minutes to apply, it can take up to 3 business days or more for your account to be verified. During the account opening process you will need to choose your account type, specify your investment goals, provide personal information, choose your preferred funding method and agree to the terms and conditions. Once you have provided the required verification documents (passport, drivers license, utility bill, etc) your account can be verified for you to fund and start trading.
Vanguard have a wide range of commission free ETFs and generally competitive non-trading related fees. There is a range of account types to choose from and they do support self-directed investments or managed portfolios. Despite this, they are not the most convenient option for the average retail day trader. The trading platforms, tools and funding options are very limited whilst they do not offer trading on Forex, CFDs & Cryptocurrencies.
All investing is subject to risk, including the possible loss of the money you invest. All brokered CDs will fluctuate in value between purchase date and maturity date. The original face amount of the purchase is not guaranteed if the position is sold prior to maturity. CDs are subject to availability. Bonds are subject to the risk that an issuer will fail to make payments on time and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments. Investments in bonds are subject to interest rate, credit, and inflation risk.