Vanguard Review 2023: Pros, Cons and How It Compares - NerdWallet (2024)

Where Vanguard shines

Large mutual fund selection: Vanguard has more than 3,500 no-transaction-fee mutual funds, and an expanded lineup of proprietary, low-cost, socially responsible mutual funds and ETFs.

Leader in low-cost funds: The company has a solid reputation for the well-below-average expense ratios on its index funds and exchange-traded funds. For long-term investors looking to pair a buy-and-hold strategy with the lowest-cost offerings, it's hard to beat the service and selection found with Vanguard.

Where Vanguard falls short

Trading platform: Vanguard’s trading platform is basic, and lacks the analytical and educational tools typically offered by brokers that support stock trading.

Investment minimums: Most Vanguard retirement funds and the Vanguard STAR Fund have investment minimums of $1,000, and other Vanguard funds carry minimums of $3,000. That initial minimum purchase amount of $1,000 to $3,000 will be too high for many beginner investors.

More details about Vanguard's ratings

Account minimum: 5 out of 5 stars

Vanguard's account minimum is $0, but keep in mind many mutual funds may require a minimum initial investment. Vanguard funds have minimums that start at $1,000.

Stock trading costs: 5 out of 5 stars

Following on the heels of the rest of the stock brokerage industry, Vanguard has eliminated all stock trading commissions.

Options trades: 2 out of 5 stars

Options trades are commission-free, but they still carry a contract charge, which is $1 — higher than many other brokerages. That said, account holders with $1 million to $5 million in Vanguard assets get 25 free option trades per year; customers with $5 million or more get 100 free trades per year.

Account fees: 5 out of 5 stars

Vanguard charges no closing, transfer or inactivity fees. There is a $20 annual account service fee for all brokerage accounts and IRAs that is easily waived for clients who sign up for statement e-delivery.

Interest rate on uninvested cash: 5 out of 5 stars

The interest rate you'll get on uninvested cash in your account will vary based on your account settings, but the default settlement fund is Vanguard's federal money market fund, which was paying 5.27% as of August 31, 2023. This was among the highest of any broker we reviewed.

Number of no-transaction-fee mutual funds: 4 out of 5 stars

Vanguard pioneered low-cost funds — founder Jack Bogle actually invented the index fund — so if those are your game, you’re in excellent hands with this brokerage.

Vanguard offers more than 3,500 non-Vanguard funds and 191 Vanguard funds currently open to new investors.

Vanguard’s mutual funds and ETFs aren’t just low cost; they’re significantly less expensive than the industry average. Vanguard’s average expense ratio is 0.09%. According to an August 2023 report from investment research firm Morningstar, the average expense ratio across all mutual funds and ETFs was 0.37% in 2022.

What do you do when you're already low? Go lower. Admiral Shares are a class of Vanguard mutual funds that boast super low expense ratios — as in 29% lower than the company's standard fund share class — and used to be the broker's way of passing along savings to larger account holders. But in 2018, Vanguard lowered the minimum investment threshold for many of those index funds to $3,000 from $100,000.

Tradable securities available: 3 out of 5 stars

Vanguard allows investors to trade stocks, mutual funds, ETFs and options. Bond investors have a solid selection on Vanguard, including Treasurys, US government agency securities, municipal bonds, corporate bonds, CDs, preferred bonds and bond ETFs.

Overall, Vanguard has a good selection for retirement investors, but active traders may want more options such as forex and futures trading.

The platform also has a limited offering of fractional shares, which allow investors to start off on higher-priced equities with a low buy-in. Fractional shares are only available for Vanguard ETFs.

Trading platform: 2.5 out of 5 stars

Vanguard is designed for long-term retirement investors, rather than active traders, as evidenced by Vanguard's no-frills trading platform. You'll have to look elsewhere for bells and whistles such access to IPOs and over-the-counter trades.

Setting up an account can be a heavier lift on Vanguard than with some competing brokers. For instance, our attempts to fund an account with a transfer from our small credit union led to a dead end that could only be resolved by sending Vanguard a check — not ideal for new customers who want to start trading right away.

All that said, if you're investing on a years-long time horizon, a few days might not make that much of a difference.

Once you're in, you'll find a platform that's strong under the hood. Vanguard's execution quality is among the best in the business at 99.2%, and the company is among the rare brokers that don't accept payment for order flow. This means Vanguard doesn't receive compensation from market makers, who sometimes pay brokers to route investors' orders through them. The company touts this as their "client-first philosophy."

Mobile app: 3 out of 5 stars

Vanguard has apps available for iOS and Android, which allow users to trade mutual funds, ETFs and stocks, as well as monitor account activity and analyze performance.

Research and data: 3 out of 5 stars

Vanguard offers research from Argus and Vanguard's own bespoke team of analysts. It's a decent, free, offering — but it falls short of the more robust research programs put forward by top-tier competitors.

Customer support and educational tools: 3.5 out of 5 stars

Like other retirement-oriented brokers, Vanguard offers a wealth of retirement planning tools and resources on its website. Investors can learn about investment options and prioritizing their goals, predict when they'll be able to retire with high-quality calculators and tools, estimate their retirement expenses and weigh the benefits of converting a traditional IRA to a Roth.

If you'd rather skip learning and cede investment decisions to the experts, Vanguard’s robo-advisor service, Vanguard Digital Advisor, will manage your portfolio for you for an annual advisory fee of 0.15%. Robo-advisors are computer-based investment advisors who build and manage client investment portfolios.

Is Vanguard right for you?

Ask yourself this question: Are you part of Vanguard’s target audience of retirement investors with a relatively high account balance? If so, you’ll likely find no better home. You really can’t beat the company’s robust array of low-cost funds.

Investors who fall outside of that audience — those who can’t meet the fund minimums or want a powerful platform to regularly trade stocks — should look for a broker that better caters to those needs. (Need help figuring out what you want in a broker? Visit our guide to brokerage accounts.)