Vanguard Vs. Fidelity–Which Company Is The Right Choice For You?

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Vanguard Vs. Fidelity
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Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.  See our disclosures for more info.

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Vanguard and Fidelity are the two of the largest, and most well-known investment management companies around.

But why choose one over the other? That’s exactly what I’ll be talking about today.

Let’s get started.

What Is Vanguard?

Vanguard is an investment management company that offers low-cost mutual funds and ETFs. John Bogel–the founder of Vanguard and mutual funds themselves, wanted Vanguard to be a client-owned company (which it is) in order to eliminate outside owners seeking the company’s profits.

Vanguard is the leading authority in low-cost funds, making it great for investors who want to avoid hefty fees.

Vanguard features

Mutual funds

Mutual funds are obviously the star of the show at Vanguard. Vanguard offers no-load mutual funds, meaning you don’t pay any sales fees when you buy fund shares or when you sell fund shares. All you pay is one low expense ratio fee.

And, if you’re concerned about managing your funds, don’t worry about it, Vanguard has experts who keep track of every security your mutual fund owns.

ETFs

ETFs already contains a preselected collection of stocks or bonds, so they help mitigate risk. Vanguard has a large list of ETFs you can choose from.

On average, Vanguard’s ETF expense ratio is 74% less than the industry average.

Accounts Offered

When it comes to retirement accounts and savings vehicles, Vanguard has most options, including:

  • Roth IRA
  • Traditional IRA
  • Simple IRA
  • SEPs
  • Individual 401(k)
  • 529 College Savings 

Minimum Investments

The minimum investment Vanguard requires differs depending on the investing vehicle. For example, mutual funds require a minimum investment of $3,000 (But you can invest in any Vanguard Target Retirement Fund or in Vanguard STAR®Fund with as little as $1,000), while the minimum investment for ETFs is the cost of one share. The same goes for stocks, CDs, and bonds. 

Fees

There are few fees associated with Vanguard, but that doesn’t mean there aren’t any. As I said above, you only pay on expense ratio with mutual funds and ETFs. According to Vanguard’s site, their expense ratio is 82% less than the industry average.

At the time of writing, Vanguard’s expense ratio is 0.11%, while the industry average expense ratio is 0.62%.

Vanguard also has the following fees:

  • $20 annual fee that applies to each of your brokerage and mutual-fund-only accounts.
  • Vanguard’s Personal Advisor Services fee is only 0.30% of assets under management.

Advice

Vanguard offers Personal Advisor Services that can help you create a financial plan that works for your goals and risk assessment.

They offer a helpful video that explains the process of getting one of Vanguard’s advisors, and why you should.

To use Vanguard’s Personal Advisor Services, you’ll need a minimum or $50,000 to invest.

Mobile apps

There truly is an app for everything, including managing your Vanguard account. With the Vanguard mobile app, you can:

  • Check your balances, performance, prices, returns, transactions history, and cost basis
  • Buy, sell, or exchange
  • View your whole portfolio
  • Use Touch ID or Face ID to log on a lot faster (if you have an iPhone)

Related: How To Open Accounts With Vanguard, Fidelity, and Schwab

Who Should Use Vanguard?

Best For

  • Investors looking to trade mutual funds and ETFs
  • Low-cost investing
  • Those looking for a good advisor service

Related: M1 Finance Review — Completely Free Automated Investing

What Is Fidelity?

Founded in 1946, Fidelity is another investment management company that offers many of the same features and accounts as Vanguard.

Unlike Vanguard, Fidelity is privately owned. The current CEO and President of Fidelity is Abigail Johnson.

Fidelity Features

Accounts Offered

Fidelity offers many of the same accounts as Vanguard, including:

  • Rollover IRA
  • Traditional IRA
  • Roth IRA
  • SEP IRAs
  • SIMPLE IRAs
  • Self-employed 401(k) + other 401(k)s

Stocks

Buying and trading stocks with Fidelity is simple. You can use their online platform to get unbiased information on different securities.

Fidelity even has a ton of online tools that can help understand and determine which stocks are right for you.

The best part? Fidelity only charges $4.95 for trades, which is a nice option for newcomers and anyone who wants a low fee.

ETFs

Fidelity offers 265 commission-free ETFs, so there’s definitely something for everyone. Plus, since Fidelity is one of the oldest, largest, and most successful investment management companies, you can trust their securities selection.

Mutual Funds

Even though Vanguard is the creator of mutual funds, Fidelity holds its own when it comes to offering some of the best low-fee mutual funds on the market. In fact, Fidelity offers a number of zero-fee funds. Meaning there’s a 0% expense ratio and no minimum investment requirement.

Here are a few examples:

  • Fidelity ZERO Total Market Index Fund
  • Fidelity ZERO Large Cap Index Fund
  • Fidelity ZERO Extended Market Index Fund
  • Fidelity ZERO International Index Fund

Mobile Apps

Fidelity has fully embraced app culture. Their app allows you to:

  • View and monitor your portfolio
  • Manage your workplace accounts
  • Trade
  • Pay bills
  • Receive alerts
  • Deposit checks

Fidelity GO

Robo-advisors are becoming more and more popular, and for good reason. A robo-advisor does all the investing work for you (at a price), all you have to do is decide how much risk you’re willing to take.

If that’s what you’re looking for, Fidelity is the right choice for you. Their robo-advisor, dubbed Fidelity GO, invests in both mutual funds and ETFs (many robo-advisors only invest in ETFs). You can also adjust your asset allocation at any time if your investing goals change.

You will need a $10 minimum to invest with Fidelity GO (significantly lower than other robo-advisors). There’s also an annual fee of 0.35% of your portfolio, which is deducted from your account quarterly.

Fees

Fidelity’s fees depend on your choice of investment:

  • Stocks: $4.95 per stock or options trade
  • ETFs: $0 per trade for commission-free purchases of select Fidelity and iShares® ETFs; $4.95 per trade for all other ETFs
  • Bonds & CDs: $1 per bond for secondary bond trading and free for US Treasuries traded online
  • Mutual funds: Many of Fidelity’s mutual fund have no fees (see above)

Who Should Use Fidelity?

Best For

  • Anyone who wants an excellent robo-advisor
  • Stock and mutual fund trading

Final Thoughts

Both Vanguard and Fidelity offer low fees and a great array of stocks, mutual funds, and ETFs, so there’s really no going wrong with either.

During my research for this review, however, I personally would go with Fidelity. They offer zero fee mutual funds, one of the best robo-advisors around, and researching securities options was simply easier.

Related Articles

Vanguard Vs. Fidelity

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Comment Disclaimer: Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

5 thoughts on “Vanguard Vs. Fidelity–Which Company Is The Right Choice For You?”

  1. Matt beat me to it. My company just switched HSA providers so I am in the process of rolling my old HSA balance into an HSA with Fidelity. I plan to invest the balance in some of Fidelity’s zero cost mutual funds. Fidelity used to only offer HSA’s for larger companies. I believe the ability to open up an individual HSA account with Fidelity is a rather new development.

  2. I would caution the over exuberance of zero fee fidelity funds. Yes zero ER is great, but we have no idea the index that it tracks as it is their proprietary index. We also know that vanguard VTSAX is more tax efficient compared to Fidelity total market, which is a much bigger deal in comparison to the 4 basis points saved in the expense ratio. Your savings rate and investing discipline are going to matter more than anything, both low cost index funds can get you where you need to go.

  3. The author seems to confuse mutual funds with index funds (which are a specific subset of mutual funds). John Bogel/Vanguard did not invent mutual funds. Bogel invented index funds.

  4. This article is biased towards Vanguard. Some of the most important benefits of Fidelity were ignored including: walk-in offices for face-to-face meetings in most major cities, 24/7 live phone support, robust cash management features (bill pay, 2% cash back credit card, check writing), not to mention their vastly superior website and research tools. If you need to process a bank wire or obtain a signature guarantee for a real estate transaction, simply walk into any Fidelity office for assistance; Vanguard can not help you in that regard. Now with the new ZERO fee index funds, Fidelity is the clear winner.

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