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Most Vanguard reviews focus on the firm’s bread and butter: its low-cost index funds.
is not a comprehensive financial services company. But it does have some products other than index funds that money expert Clark Howard recommends.
In this Vanguard review, I’ll explain the specific areas 耀竣金融配资_在线配资炒股:where the investment company excels and point out some things about the company that may make you want to pick a different brokerage firm.
Table of Contents
- 耀竣金融配资_在线配资炒股:The Vanguard Group Review: Quick Look
- What Is Vanguard?
- 耀竣金融配资_在线配资炒股:Who Should Use The Vanguard Group?
- Where Vanguard Shines
- 耀竣金融配资_在线配资炒股:Where Vanguard Falls Short
- What Makes Vanguard’s Index Funds So Attractive?
- 耀竣金融配资_在线配资炒股:Vanguard’s Personal Advisor Services
- Great Alternatives to a Regular Savings Account
- 耀竣金融配资_在线配资炒股:Frequently Asked Questions About Vanguard
I updated this article in May 2023 and I review it every six months.
The Vanguard Group Review: Quick Look
|Company Name||The Vanguard Group|
|Company Type||Investment company|
|Key Features||Low-cost index funds, financial advisors|
|Downsides||Not well-designed for trading, lax customer service|
|Best For||Passive investors, especially those with at least $50K to invest|
What Is Vanguard?
|Robo-Advisor||Financial Advisor||Android App Rating||iOS App Rating|
|$0 for stocks, ETFs and options||$0||Yes||Yes||2.2||4.7|
Who Should Use The Vanguard Group?
Because of Vanguard’s unique structure, let’s first discuss who shouldn’t use Vanguard.
It’s not for you if you can’t meet Vanguard’s minimum investment requirements.
- Retirement investors. Vanguard caters to most long-term investors. But retirement investing is the guiding star of its philosophy. That extends to its fees and costs, its tools, its educational content and the way its operate.
- Investors with plenty of capital. You can invest at Vanguard with as little as $1,000. But $3,000 is the threshold for most of its funds as well as its 耀竣金融配资_在线配资炒股:robo-advisor. If you want unlimited access to a team of Certified Financial Planners, prepare to invest at least $50,000. There are higher investment thresholds that unlock greater benefits.
- Low-cost buy-and-hold investors. Vanguard is synonymous with index funds (which can be ETFs or mutual funds). It doesn’t have any zero expense ratio funds like Fidelity, but it’s hard to beat its volume of quality, low-cost funds.
- Investors who prefer to keep things simple. If you prefer simplicity (maybe you’d rather spend your time doing other things?), Vanguard is an excellent choice. You can invest in a simple 耀竣金融配资_在线配资炒股:target date fund or get crazy and split your money between a total stock market, an international and a bond index fund.
Where Vanguard ShinesIf you aren’t sensing some themes at this point in my Vanguard review, you will within a few paragraphs. Here are some of the things that Vanguard does well:
- Robust selection of low-cost index funds. , Vanguard’s average expense ratio in 2021 was just 0.08%. As you’d expect for a company defined by its index funds, Vanguard has with strong track records.
- Inexpensive access to Certified Financial Planners. For an annual fee of at least 0.30%, you can get a full-fledged to assist you with financial planning. Clark is a big fan of 耀竣金融配资_在线配资炒股:Vanguard’s Personal Advisor Services.
- Strong long-term planning resources. Vanguard’s tools and technology generally lag behind other investment companies. But it more than holds its own when it comes to retirement planning. Vanguard offers a sophisticated, thoughtful approach that includes human advice, . That’s on top of its .
- Free trades. Vanguard started to offer commission-free trades on stocks, ETFs and options in 2020.
- No . Many brokerage firms claw back some of the revenue they’ve lost on commission-free trading by routing your orders through high-frequency traders. These market makers pay for the right to execute orders because they can profit by doing so. But as a result, customers often don’t . Vanguard doesn’t engage in this controversial practice for equities.
Where Vanguard Falls Short
Clark Calls Out Vanguard’s Customer ServiceVanguard’s narrow focus means that completing even common tasks on its website or app, like buying and selling individual stocks, isn’t easy. The Vanguard app has spent several years below 2.0 on Android, for example. The company also doesn’t offer many of the “side” products that go with investing such as banking services.
However, the biggest issue Clark has with Vanguard is its customer service. On a December 2021 podcast, Clark described the company as going through a mid-life crisis.
“I love Vanguard. I’ve been a customer of Vanguard for decades. But the customer service has got to become a focus,” Clark says.
“So this is a callout to Vanguard, one of my children: You’re a little errant right now. You’re off the path. if you’re going to continue to be the company of the future and not the past, you’ve got to get [your customer service] together.”
Vanguard’s Other ShortcomingsWhen it comes to your investing experience, Vanguard also has a few other shortcomings:
- Not set up for The company doesn’t hang a virtual sign that says “no active traders allowed,” but it might as well. Vanguard clearly lacks the tools and platforms necessary to compete in this area. In many ways, active trading runs counter to the investment philosophy that Bogle instilled in his company when he founded Vanguard.
- Limited research and data. Vanguard doesn’t offer its clients the depth of research and tools that Fidelity and Schwab do. That makes sense, as Vanguard focuses on index funds. You can invest in individual stocks through Vanguard, but the company doesn’t make it easy nor does it appear to encourage it, given the research and data resources it provides.
- Little focus on user experience. If you want a sleek user interface, modern graphics, a top-notch mobile app and seamless trading, you’ll have to look elsewhere. But those things probably aren’t important to you if you’re focused on passive investing.
- High minimum investment requirements. What’s considered “high” in terms of investment minimums? That’s relative, to an extent. But there are plenty of investment companies with minimums of a few hundred dollars or even less. Most Vanguard funds require an investment of at least $3,000, which isn’t ideal for those without much capital.
What Makes Vanguard’s Index Funds So Attractive?It’s impossible to do a reasonable Vanguard review without putting a spotlight on the company’s index funds.
Vanguard has prioritized in recent years, designating specific ones as “Select ETFs” based on low costs, liquidity and diversification, according to the company website. ETFs are preferable to mutual funds for individuals with taxable accounts, so customers should welcome the company’s improvements in this area.
Vanguard also has target date funds in five-year intervals through 2070 with expense ratios of 0.08% and minimum investments of $1,000. Clark 耀竣金融配资_在线配资炒股:highly recommends target date funds.
Vanguard’s Personal Advisor ServicesAn industry-standard fee for a full-service financial advisor hovers around 1%.
That number varies widely based on a laundry list of factors. But accessing quality, trustworthy advice from a fiduciary while paying 0.30% in annual fees is nearly unheard of. That’s the opportunity that 耀竣金融配资_在线配资炒股:Vanguard’s Personal Advisor Services (PAS) offers.
This is the premium version of , which is the company’s entry-level 耀竣金融配资_在线配资炒股:robo-advisor. The Digital Advisor charges 0.15% in annual fees (plus expense ratios). It requires a $3,000 minimum investment.PAS is more of a hybrid. If you’ve invested a minimum of $50,000 across any Vanguard asset, you’ll get access to a team of Certified Financial Planners. If you give Vanguard at least $500,000 in assets, you’ll get a dedicated advisor rather than the “first available.” There are thresholds at $5 million (0.20% annual fee), $10 million (0.10%) and $25 million (0.05%) that earn you favorable pricing as well. Perhaps it’s confusing to say that Vanguard will manage your investments through its robo-advisor even with PAS. After all, you’re getting full access to a well-reviewed team of CFPs. But just like a typical robo-advisor, with PAS, you’ll start by filling out a questionnaire about your assets, age and risk tolerance.
Great Alternatives to a Regular Savings Account
You probably know that interest rates are at historically low levels. Even 耀竣金融配资_在线配资炒股:the best high-yield online savings accounts are paying far below 1%.
If you want to put your emergency fund into something that could generate more than 4% APY, Vanguard is a wonderful choice.
Especially if you don’t need those funds immediately, Clark advocates for Vanguard’s short-term bond index funds when interest rates are low and when interest rates are better, like in 2023. Vanguard’s money market funds are also a good alternative to stashing your emergency fund in a savings account at an online bank or credit union.If you’re a high-income earner, look specifically at municipal money market funds. They’re tax free. Depending on your tax bracket, you could have to pay up to 37% on the interest you earn from a savings account. But municipal money market funds are exempt from taxes.
Frequently Asked Questions About Vanguard
Can I Buy Individual Stocks Through Vanguard?Yes, from Vanguard. You can even short sell a stock. Vanguard does a nice job at securing you the best price on your orders. However, the way you have to buy stock on Vanguard is clunky, slow and even a little buried on its website.
What’s the Difference Between ETFs and Mutual Funds?If you’re thinking about investing with Vanguard, you’ll want to understand the differences between ETFs and mutual funds. Both can be actively managed and both can be index funds, which are passively managed.
Does Vanguard Pay Interest on Uninvested Cash?Vanguard doesn’t offer a cash management account. So its customers can’t earn interest on uninvested cash. As such, Vanguard also can’t act as a replacement for a traditional bank, unlike some of its biggest competitors. However, Vanguard offers , CDs and short-term bond funds. All of those are designed to preserve your savings and perhaps earn more on your money than a typical savings account.
Can You Explain Vanguard’s Client-Ownership Structure?Vanguard is client-owned, so it doesn’t have any investors other than its shareholders. That’s unique for an investment management company. It means the company doesn’t need to appease private owners, doesn’t feel pressure to extract more profit from its customers and doesn’t have to be concerned about its stock price. Vanguard is like a co-op for investing just as a credit union is a co-op for banking. If you own shares in a Vanguard fund, you are a part-owner of Vanguard.
What Are Admiral Shares?Admiral Shares are a different class of shares within Vanguard’s funds (as opposed to Investor Shares). , Admiral Shares offered expense ratios that were 41% lower, on average, than Investor Shares.
- $3,000 on most index funds
- $50,000 for actively managed funds
- $100,000 for some sector-specific index funds