Which types of accounts can you open with Vanguard?
Vanguard offers everything from individual/joint personal accounts to IRAs, 401K rollovers, Annuities and 529 college savings plans.
Which one should I open with Vanguard?
We’re not financial or tax advisors and you should do your own work to figure out what exactly is best for you, but we’ll try to give you our take on the best way to think about this:
– If you are at a point in your life where you are generating enough cash over your expenses to start putting some away for retirement 20-40 years from now -> max out your IRAs, both Roth and Traditional
– If you are at a point in your life where you are generating enough cash over your expenses but may need to access it within the next 5-10 years (for a downpayment or wedding, for example) -> open an individual/joint personal accounts
– If you just left a job and have a 401K plan at your old employer which you’d like to move over and take control of -> Go through the 401K rollover process and move this money into an IRA
– If you are trying to save money for your child’s education and live in an eligible state -> take a look at 529 plans
Is there a minimum amount I need to invest?
You can start investing in any of their ETFs for as little as the price of buying one share. But, if you want to buy into one of Vanguard’s mutual funds, you will need at least $3,000 in most cases.
What are all the costs/fees I should be aware of? Are there any hidden ones?
If you choose to receive statements and documents electronically, there are no annual service fees. Otherwise, a $20 fee is charged annually.
When you buy/sell a Vanguard fund or ETF, you will pay $0 in commissions. As of January 2020, if you buy/sell any stock or ETF, you will also pay $0 in commissions. If you choose to buy the mutual fund of a different company, you will likely pay a small commission. Check out this page for a full list of trading fees.
I don’t know much about the markets and this stuff is all a little overwhelming. Which funds/ETFs at Vanguard should I buy?
Again, we are not financial advisors and there are risks to every strategy. But if you are deciding to make a leap towards passive investing on your own and have a multi-decade time horizon, we highly recommend checking out their Admiral 60/40 balanced index fund, Vanguard’s Life Strategy Funds or their Target Retirement Date Funds. They make it as easy as possible for you to find a fund which suits your investment objectives. Right now they offer four different Life Strategy funds which have varying mixes of stocks/bonds. The common philosophy has stated that the more bonds you hold, the more risk averse you are and vice versa for stocks. With the Life Strategy Funds you can choose between an 80/20 mix of bonds/stocks up to a a 20/80 mix of bonds/stocks. Vanguard will handle all the rebalancing for you. It’s as turnkey as you’ll find in the market.
It’s worth noting that these funds are best suited for tax deferred retirement accounts as there are other options out there which might be a little more tax efficient for those investors looking to open an individual, taxable account.
Their full list of ETFs can be found here should you want to build your own portfolio yourself.
Can I open an account at another broker and still invest in Vanguard’s funds/ETFs?
Yes, you definitely can. And this is a solid option also if you already have your assets at another broker and don’t feel like moving them. Just make sure your broker has jumped on board the $0 commissions band wagon. This will allow you to buy/sell Vanguard ETFs for free. However, be aware that you will likely still pay a commission to buy/sell Vanguard mutual funds.
I have money at another broker. How annoying will it be to transfer it over to Vanguard and how long will it take?
This is easily the number one reason why most people are scared to move money from one place to another. Brokers now make it very easy to switch. Once you open an account at your Vanguard and give them your authorization, they will handle it all for you behind the scenes using what is called an ACATS transfer. They will work with your old broker to make sure all your cash/investments are efficiently brought over without any impact on your taxes. You won’t even have to sell whatever you hold at your old broker if you so choose. The entire process can be completed in as little as a week typically.