Where Should You Buy Vanguard Funds. Vanguard how to buy

With approximately $ 7.2 trillion in asset management, Vanguard ranks among the top five investment management companies by size. It is well known for its low or free fee products and wide range of mutual funds. A mutual fund helps you diversify your investments and protects your money from market volatility.

Where Should You Buy Vanguard Funds?

Investment advisor discussing Vanguard funds with clients

Kent Thune has spent over two decades in the financial services industry and owns the investment advisory firm Atlantic Capital Investments in Hilton Head Island, South Carolina. He has written hundreds of articles for various outlets, including The Balance, Kiplinger, Marketwatch, and The Motley Fool.

Thomas J. Brock is a CFA and CPA with over 20 years of experience in a variety of areas including investment, insurance portfolio management, finance and accounting, personal investment and financial planning consultancy, and the development of life insurance and annuity education materials.

If you’re looking to buy mutual funds, you’ve probably heard of Vanguard, the world’s largest mutual fund company. Vanguard offers an excellent list of high-quality, low-cost mutual funds and exchange-traded funds (ETFs) free of commission or selling fees (or “charges”).

You have two options to buy Vanguard funds – from a third party brokerage house such as TD Ameritrade or Charles Schwab, or directly through the Vanguard website.

If you already have an account with a third party brokerage firm that offers Vanguard funds, buying them through your broker is the easiest option. However, third party brokers may add fees or restrictions to these purchases. Here’s how to decide.

Key Takeaways

  • The cheapest way to buy Vanguard funds is to use Vanguard.
  • Other large brokers offer limited Vanguard funds, usually with added fees.
  • If you already have a broker, it’s convenient to add Vanguard funds to your portfolio through it.

Where You Can Buy Vanguard Funds (Besides Vanguard)

Due to the popularity of Vanguard mutual funds and ETFs, some large brokerage firms now sell their index funds and ETFs in addition to their own. However, because these companies are also direct competitors of Vanguard, the number of Vanguard funds they offer is often limited. It is also more expensive. For example, you can buy Vanguard’s flagship index fund, the Vanguard 500 Index (VFIAX), through Fidelity, but you’ll pay a transaction fee to get it that way. Fidelity charges a fee because the Fidelity 500 Index (FXAIX) is a competitive fund with identical positions. It is not in Fidelity’s interest to allow investors to easily buy competitor’s funds without additional costs or fees.

The largest broker with the most Vanguard funds available to investors is TD Ameritrade which has complex commissions and various fees from Vanguard funds.

If you buy Vanguard funds directly from Vanguard, you will not incur these additional costs.

Vanguard has been working on improving its mobile app recently, but their Android app is very bad. Users speculate that Vanguard does not care about maintaining and updating Android applications. Here are some screenshots of the Vanguard application:

Vanguard 500 Index Fund Admiral Shares

  • Fund Category: Big Mix
  • Assets under management: $ 241.2 billion
  • Efficiency: 1.3%
  • Spending Ratio: 0.04% or $ 4 per year for every $ 10,000 invested

The Vanguard 500 Index Fund Admiral Shares (VFIAX, $ 403.40) became the first Wall Street index fund in 1975 at the behest of Vanguard founder Jack Bogle. Today, it remains one of the most popular ways to gain diversified exposure to the US stock market with a single holding company.

This Vanguard mutual fund is deceptively straightforward, offering investors exposure to 500 mostly US-based large and mid-cap companies that currently include popular stocks such as Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA). In fact, since many of the world’s biggest companies are tech giants like these, information technology makes up about 27% of the entire fund.

Overall, the Vanguard 500 index is viewed as a diversified and profitable base stock for almost any type of investor looking to have exposure to U.S publicly traded companies. This makes it one of the best Vanguard mutual funds for almost any style of investor.

Note: VFIAX also acts as ETF, Vanguard S&P 500 ETF (VOO).

Vanguard Total Stock Market Index Fund Admiral Shares

  • Fund Category: Big Mix
  • Assets under management: $ 257.6 billion
  • Efficiency: 1.3%
  • Spending ratio: 0.04%

Moving beyond just the largest stocks on Wall Street, the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX, $ 109.58) allows investors to be exposed to approximately 3,800 total positions. As the name suggests, it accounts for almost the entire domestic stock market.

However, as VTSAX is size-weighted, it continues to invest heavily in high-tech stocks, with the sector having the same share (27%) as VFIAX, largely thanks to the same trillion-dollar group of Silicon Valley giants. Moreover, the top 10 positions taken together account for 22% of the total portfolio, despite the fact that thousands of other companies have a fractional stake in this Vanguard mutual fund.

This results in a portfolio with a mix of 70-17-6 large, medium and small for VTSAX, compared to the 85-15-0 for VFIAX – thus slightly more diversified in size but still tied to large-cap stocks. But that’s enough that many investors prefer the Vanguard Total Stock Market Index to the Vanguard 500.

Note: VTSAX also acts as ETF, Vanguard Total Stock Market ETF (VTI).

Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX, $ 11.42) is one of the best Vanguard mutual funds for fixed income investors. This is a huge, simple and inexpensive way to gain broad exposure to US investment grade bonds.

Vanguard at A Glance

  • It offers both self-managed and robo-advisers depending on what type of investor you are.
  • You can choose the right account based on your needs, including Individual and Joint Tax, Traditional and Roth IRA, SEP and SIMPLE IRA, 529s, UGMA and Trusts.
  • Many types of investments are available, including stocks, bonds, options, ETFs, mutual funds, and other services.
  • Mostly no fees, except for some mutual funds and options that have transaction fees.

If you choose to invest through Vanguard, you have thousands to choose from:

You cannot invest in fractional ETFs from Vanguard. Only full shares are available. Investing in fractional stocks allows investors to determine how much they want to invest in a share by buying a portion of it without buying the entire share.

Vanguard Fees

Avant-garde has

Who Is Vanguard Best For?

Vanguard is best for new investors or those who don’t want to spend a lot of time managing their investment accounts. While it is a good idea to review your investment accounts at least once a year, you don’t need to spend a lot of time tinkering with your Vanguard investments.

Visit the Vanguard investor website and click “open an account” to get started. If you already have an account elsewhere, you can select “start transfer or rollover”. If you want to open a new account from scratch, select “create a new account.”

If you’re starting from scratch, follow the instructions on each page. Account funding options include electronic bank transfer or an employer’s plan, or an investment transfer from another financial firm. If you’ve never used Vanguard before, you’ll need to create a login to continue.

If you are transferring an account, you can select the type of account you want to transfer. Optional:

  • Checking or Savings, 403 (b) or other employer’s plan
  • Traditional IRA
  • Roth IRA
  • Inherited IRA
  • Inherited Roth IRA
  • Individual or Common for general investments
  • Rollover IRA
  • UGMA / UTMA (for a minor)
  • 529 Education Savings Plans

commissions and low cost ratios. The cost ratio is the fee an investor charges to invest in that fund.

Fee Sum
Entry fee

Vanguard Compared to Others

Many leading investment platforms compete for your business. Vanguard, TD Ameritrade and Charles Schwab own investment funds with no transaction fees and ETFs with no commission. For many products, these famous asset managers don’t have a minimum account to get started, other than transaction costs. But they stand out in other ways:

  • Charles Schwab has an operating cost ratio of 0.50%. If you invest in other mutual funds outside of Schwab’s, you could be hit with a $ 49.95 per transaction fee.
  • Vanguard, Charles Schwab and TD Ameritrade charge $ 25 for each transaction involving the broker. But online transactions cost you nothing.
  • TD Ameritrade offers futures and forex trading opportunities while Vanguard does not. If you want to diversify your portfolio with these higher risk options, you can look elsewhere.
  • Vanguard does not have an account closure fee, but it will cost $ 75 to transfer your full account from TD Ameritrade. That’s $ 50 with Charles Schwab.
Maintenance costs 0.15% to 0.30%
Annual fee $ 20 to $ 25 depending on account, but can be waived in some cases.
Minimum account

Frequently Asked Questions

Is it worth investing in Vanguard?

Because Vanguard offers such a wide variety of investment options, most investors can find a fund that suits their long-term goals and needs. It’s always a good idea to ask a financial advisor – through Vanguard Personal Advisor Services or an independent service provider – whether your choices best suit your financial needs.

How trustworthy is Vanguard?

Vanguard’s personal advisor services comply with trust standards as set out in the SEC and other applicable laws. This means that when you work with a Vanguard financial adviser to select the funds you wish to invest in, advisors must make recommendations based primarily on your best interests.

Avant-garde advisers do not charge any commission. Due to the large size and weight of assets under management, it is able to lower sales and transaction commissions and make profits with low management fees or annual account maintenance fees. This reduces the likelihood that the advisor will make a risky transaction with your money to try to make a profit.

By comparison, advisers who only charge commissions – such as a stockbroker – do not have the same fiduciary standard and only need to recommend trades that are “appropriate” for your needs (as opposed to trading in your “best interests”).

Is Vanguard a safe company to invest with?

Vanguard has been on the market since 1975 and is well known to most passive investors. While there are inherent risks to investing in the stock market, including losing your money, it is always important to understand what you are investing in. Vanguard has a good reputation and is one of the top five investment managers.

Is Vanguard good for beginners?

Vanguard accounts are widely used by novice and passive traders who prefer the “set it and forget it” strategy. But all investors will find cheap ETFs and Vanguard index funds attractive as they are considering their long term investment strategy.

and above, depending on the account

Transfer fees
Trust fees (if applicable) 0% to 1% depending on fund and fee
Expense indicators 0.09% for ETFs
Trade fees 0%
Account Closure Fees

M1 Finance offers Taxable, Joint, Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, Trust and Custodial accounts (M1 Plus members). They do not currently offer SIMPLE IRA, 401 (k), Solo 401 (k), 529, HSA, or Non-Profit accounts.

Where Vanguard Shines

Vanguard reviews must mention the company

If at this point in my Vanguard review you don’t sense some of the themes, you’ll be within a few paragraphs.

Here are some things Vanguard does well:

  • A solid selection of cheap index funds. Vanguard’s average spending ratio in 2020 was just 0.09% in 2020, according to Morningstar. As you’d expect from a firm defined by its index funds, Vanguard has an impressive variety of low-cost options with a strong track record.
  • Affordable access to Certified Financial Planners. For an annual fee of just 0.30%, you can get a full-fledged trustee to help you with your financial planning. Clark is a huge fan of Vanguard’s personal adviser services.
  • Strong resources for long-term planning. Vanguard’s tools and technologies generally lag behind other investment firms. But when it comes to retirement planning, it has more than its own. Vanguard offers a sophisticated, thoughtful approach that includes human tips, tools, and calculators. Added to this is the educational emphasis on retirement.
  • Free transactions. Vanguard began offering commission-free trading on stocks, ETFs, and options in 2020.
  • No payment for order flow (PFOF). Many brokerage firms recoup some of the revenue they lost from commission-free trading by rerouting your orders through high-frequency traders. These market makers pay for the right to execute because they can gain from it. But as a result, customers often don’t get the best possible price. Vanguard does not engage in this controversial action practice.

Where Vanguard Falls Short

Investing with the Vanguard Group requires meeting high minimum investment requirements and traversing the old school user experience.

Clark Calls Out Vanguard’s Customer Service

Vanguard’s narrow focus means that performing even common tasks on your website or app, such as buying and selling individual stocks, isn’t easy. For example, the Vanguard app is rated below 2.0 on Android.

The company also does not offer many “side” products related to investing, such as banking services.

However, the biggest problem Clark has with Vanguard is customer service. In a recent podcast, Clark described that the company was going through a midlife crisis.

“I love Vanguard. I have been a customer of Vanguard for decades. But customer service has to take center stage, ”says Clark.

– So it’s a call to Vanguard. One of my children. You’re a little stray now. You’re off the track if you’re going to continue to be a company of the future, not the past, you need to bring [customer service] together.”

Vanguard’s Other Shortcomings

When it comes to your trading experience, Vanguard also has a few other shortcomings:

  • Not set up for active traders. The company doesn’t display a virtual sign that says “no active entrepreneur is 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 into his company when he founded Vanguard.
  • Limited research and data. Vanguard does not offer its customers such in-depth research and tools as Fidelity and Schwab do. This makes sense as Vanguard focuses on index funds. You can invest in individual stocks through Vanguard, but the company doesn’t make it easy or seem to encourage it given the research and data resources available.
  • Little emphasis on the user experience. If you need a sleek UI, modern graphics, the best mobile app, and smooth trading, you have to look elsewhere. But these things are probably not important to you if your focus is on passive investing.
  • High minimum investment requirements. What is considered “high” in terms of investment minima? It’s relative to some extent. But there are many investment firms with a minimum of several hundred dollars or even less. Most Vanguard funds require an investment of at least $ 3,000, which is not ideal for those without a lot of capital.

Actually, I’ve talked to people who use both – Vanguard for their set and forget retirement accounts in trusts and M1 for a taxable account to access an extremely cheap margin. Vanguard is also one of the brokerage houses where M1 Finance sees transfers most often:

Vanguard Mobile Experience

Vanguard ensures that you can manage your wallet and accounts even on the go thanks to the mobile app. Available via Apple, Android and Amazon, the mobile app allows access to all accounts. You can check your balances, investment performance, transaction history, prices, returns and more. You’ll also be able to buy, sell, or trade investments. You even have the option to deposit checks directly into your account using your device’s camera. In addition to your own accounts, the Vanguard mobile app also includes educational features to help you learn more about the market, stay up-to-date on financial news, and hone your trading skills.

Vanguard’s Contact Us page allows you to first select the topic you are interested in, so you don’t have to search the phone tree trying to find the right section. In case of problems with brokerage services, you can call customer service, send secure e-mail or send regular mail. You can contact a representative by phone Monday through Friday, 8:00 AM to 10:00 PM EST. You can also contact a representative on a different number, even if you are not yet a customer. Always be careful when sending personal and account information by email, and when sending money by mail.

Who Is Vanguard For?

Vanguard works best for online investors with relatively large deposit amounts, with most Vanguard mutual funds requiring at least $ 3,000 to get started. Having a higher balance can also help you avoid some commissions and gain access to cheaper funds.

Vanguard also favors network-savvy investors. Online investing avoids many commission fees as trading over the phone can result in commissions of up to $ 50. You can also avoid the $ 20 account fee by switching to electronic statement delivery.

Vanguard is not aimed at day traders. The brokerage house lacks the advanced trading platform and screeners found at brokerage houses such as E-Trade. It also discourages large-scale trading due to its fee structure. Vanguard is designed for long term investing with cheap index funds, not for quick selling and quick profits.

to be clear, Vanguard is not the only company to offer cheap index funds. For example, Fidelity Zero funds have zero spending rates (and no investment minima). Schwab and others also offer attractive, low-cost index funds.

M1 Finance vs. Vanguard – Extra Features

Let’s look at the differences between M1 Finance and Vanguard in terms of a few specific features.

Checking and Money Market Accounts

Vanguard does not provide access to an integrated checking account with FDIC insurance like M1 Finance through M1 Spend. With the premium M1 Plus option, you can earn interest and cashback on this checking account. On the other hand, Vanguard offers a money market fund that cannot be obtained from M1 Finance.

Research Tools

Neither M1 Finance nor Vanguard offer solid charting and analysis tools. The research tools on both are fairly simple – stock and ETF screeners, technical indicators etc. Again, no platform is made for day trading.

Expert Advice

Vanguard offers a personal advisor if your account value exceeds $ 500,000 for a fee of 0.30% of your invested balance. Expert Pies by M1 Finance are available to anyone at any time. You can also use M1 to invest in a “lazy wallet” and balance it automatically.

Automatic Rebalancing

Vanguard is also not taking advantage of the famous M1 “dynamic rebalancing” which strategically allocates new deposits to maintain target portfolio allocations. For example, if your portfolio has a stock / bond ratio of 60/40 and after 6 months your stock position was underperforming than the bond side, the allocation might have drifted to 50/50, which required manual rebalancing to get back to 60/40 with a traditional broker such as Vanguard. M1 Finance does this for you by targeting new deposits where needed to keep your target allocation on track.

Fractional Shares

Vanguard also does not offer fractional shares for stocks and ETFs as M1 Finance does. Fractional shares is a feature that allows every penny to work for you. For example, if Apple stocks are priced at $ 300 per share but you only have $ 100, you can’t buy any Apple from a traditional broker like Vanguard. With M1 Finance, you can still buy a fraction of that $ 300 a share. Specifically in this case, for $ 100, you are buying exactly 1/3 of the share of Apple stock. This is especially useful for investors who still want a diversified equity portfolio but do not have a lot of capital to invest. It also prevents unnecessary accumulation of cash in your account without investing. Vanguard offers fractional shares for mutual funds.

Order Control and Trading Window

Vanguard has the typical order control and all-day trading window you’d expect from a traditional broker. Built for passive, long-term buy-and-hold investing, M1 Finance does not offer dedicated order control and only uses one trading window per day. The premium M1 membership, M1 Plus, gives you access to a second trading window in the afternoon.

M1 Finance vs. Vanguard – Summary and Conclusion

  • Both M1 Finance and Vanguard offer commission-free transactions with low or no fees.
  • Vanguard has several account types other than M1 Finance, notably Solo 401 (k), SIMPLE IRA, and 529.
  • M1 Finance offers most ETFs and individual stocks. Vanguard offers ETFs, single stocks, own mutual funds and option contracts.
  • Judging by the number of complaints about Vanguard’s customer service in recent years, I believe customer service should be better with the M1.
  • M1 Finance offers much lower margin rates than Vanguard and the M1 loan can be used for anything you want.
  • Vanguard has a slightly more clunky, confusing UI that would be more suitable for seasoned investors and traders. M1 Finance has a beautifully simple and intuitive interface.
  • Both M1 and Vanguard do not have a minimum deposit requirement. Vanguard Mutual Funds require a minimum investment of $ 3,000.
  • M1 Finance offers some additional benefits that Vanguard does not have: optional integrated checking account and debit card, dynamic balancing and fractional shares.
  • Vanguard has the typical order control and all-day trading window you would expect. M1 does not offer dedicated order control and only uses one trading window per day.
  • M1 is also probably better if you want to implement a “lazy portfolio” and balance them automatically.

I think M1 Finance is slightly ahead of Vanguard for the average retail investor for the reasons outlined above. M1 Finance is great for both beginners and seasoned long-term investors who want complete wallet customization, a modern, intuitive interface and mobile app, access to low-cost margin, optional integrated clearing account, fractional shares and dynamic balancing. M1 is not a good choice for those who need order control and, like Vanguard, is not intended for day traders.

If you’re sure you need access to mutual funds, option contracts and order checks, or you need i401 (k), SIMPLE IRA, or 529 accounts, choose Vanguard.

Actually, I’ve talked to people who use both – Vanguard for their set and forget retirement accounts in trusts and M1 for a taxable account to access an extremely cheap margin. Vanguard is also one of the brokerage houses where M1 Finance sees transfers most often:

m1 financial transfers

M1 Finance is currently on a promotion through March 31, 2022, offering a $ 30 bonus on a taxable brokerage account with more than 400,000 credit within 2 weeks of opening. Details can be found here. The more you deposit, the bigger the bonus:

promotion of taxable deposit m1

They also currently have a transfer bonus promotion until February 18, 2022 up to $ 5,000 when transferring an existing account from another brokerage house as detailed below:

m1 transfer promotion 2022

finance m1 start

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