Vanguard Review: Still the One to Beat for Buy and Hold
In this review of The Vanguard Group, we’ll take a look at a company that is the undisputed heavyweight champion of buy-and-hold mutual funds. Its combination of low-cost investing and customer service is second to none.
That said, Vanguard isn’t for every type of trader… In fact, it’s flat-out not a good choice for active trading. Now, some might see this as a negative, but in truth, an active trader is just not the customer Vanguard is intending to service.
If you are looking for the best option for buy-and-hold mutual funds and exchange-traded funds (ETFs) in the marketplace, Vanguard should be your go-to. There, you’ll find plenty of options to help diversify your portfolio and prepare you for retirement.
The Bottom Line: Vanguard Is Still the Champ
It’s important to know both what Vanguard is and what it is not to understand my glowing review. Technically, Vanguard has a trading platform, but it’s not primarily a trading platform like Merrill Edge or the like.
Vanguard primarily creates financial products like mutual funds and ETFs. You can invest in these funds through your 401(k), through an IRA or through a taxable brokerage account, like one from Robinhood.
Vanguard is famous for being inexpensive, which is important when you’re trying to maximize your returns. Let’s say your mutual fund earns you 8% one year, but you’re charged an expense ratio of 1% on your money. This reduces your overall return to 7% – and for what?
On the other hand, the expense ratio for the Vanguard 500 Index Fund Admiral Shares (VFIAX) is a mere 0.04%. That’s mere pennies on the dollar compared with some other mutual funds available on the market.
Of course, having a low cost isn’t everything, but it certainly goes a long way, all else about the fund being equal. Performance matters, and that will vary by which particular fund or ETF you happen to invest in.
Other Vanguard Pros
Inexpensive investing is the main selling point for Vanguard, but it’s not the only selling point. Here are a few more favorable aspects to give you an understanding of why you might want to invest with Vanguard:
- Selection: Vanguard boasts more than 3,100 different mutual funds and ETFs with no trading fees for your investing pleasure. Unless you are looking for something to buy and hold that is highly specialized, chances are you’re going to find what you’re looking for at Vanguard. The mutual funds work great for your 401(k), and if you’re trading in a taxable account, ETFs are a simple way to invest and diversify immediately.
- Customer service and website transparency: The website is clean, attractive and relatively easy to navigate – features that I’m always happy to see. The trading platform, while quite minimalist, is simple to use to make trades when you need to. But with a buy-and-hold mutual fund strategy, you shouldn’t need to do too much. Finally, it is not hard to get a customer service representative on the phone to help you out.
- Resources: Vanguard’s trading platform may not offer you the kind of in-depth research that some other competitors do, but it’s not all that necessary in this day and age. It does have plenty of financial planning and retirement resources on its website properties. Plus, you can go to other websites – like Investment U, for example – for all of your research needs.
Vanguard Cons
Here’s the thing: Vanguard is not meant for everybody. It’s meant for buy-and-hold investors, not active traders or day traders. If you’re looking for active trading platforms, there are plenty of better options out there.
Vanguard’s trading app is also no-frills when it comes to research. But there’s plenty of mutual fund and ETF information to be found on respected financial websites all around the web. There’s little reason to pay an expense ratio premium for bells and whistles like great in-platform research. Remember, what matters most is maximizing the return on your investments and not paying exorbitant fees.
Of course, as with any investment when you’re a self-directed investor, you absolutely must do your homework. If you’re thinking about buying a particular fund or ETF, research it. Find out the associated costs and expenses. Look at its overall performance. Make sure it’s the right investment at the right time for you.
Vanguard Review Conclusion
In summary, I want to emphasize that Vanguard is at the top of the heap when it comes to low-cost buy-and-hold mutual funds and ETFs. It’s where I myself stash a majority of my retirement money. And if you’re thinking about investing with Vanguard, it has a lot to offer.
Of course, you’ll still need to do your investing homework. Being an informed investor is one of the most important things you can do when investing in anything. That’s why we created Investment U, in fact.
Vanguard has been a stalwart in the industry for decades now, and it is still, to this day, at the very top. I award it five stars and encourage you to look into its financial products.
Read Next: Charles Schwab Review
About Brian M. Reiser
Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.
He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.
His primary interests at Investment U include personal finance, debt, tech stocks and more.