Inaya Mclaughlin
Vanguard and Fidelity are two of the biggest investment firms in the world, with a broad range of investment options, low costs, and hands-off or active management depending on your preference. When deciding whether to invest with Vanguard or Fidelity, it is important to consider your goals, investment style, and unique circumstances. Both companies have their own advantages and disadvantages, and the right choice for you will depend on which features are most important to you.
| Characteristics | Fidelity Advisors | Vanguard Mutual Funds |
|---|---|---|
| Assets Under Management | $7 trillion | $5.7 trillion |
| Average Expense Ratio | N/A | 82% lower than the industry average |
| Funds | 575 | 200+ |
| Investment Options | Stocks, bonds, asset allocation, sector funds, fixed income, money market, index funds, international equity, domestic equity | Stocks, bonds, asset allocation, sector funds, fixed income, money market, index funds, international equity, domestic equity |
What You'll Learn
Investment philosophy and goals
When deciding between Vanguard and Fidelity, it is important to consider your investment philosophy and goals. Both companies are among the largest investment firms in the world, but they differ in their approaches.
Vanguard is known for its focus on long-term, buy-and-hold investing and is a leading investment firm for retirement planning. The company offers a wide range of retirement accounts, including Roth and traditional IRAs, 403(b) services, individual 401(k) plans, and options for self-employed individuals and business owners. Vanguard has a history of emphasising diversification and was responsible for introducing the first public index mutual fund. The company was founded by the legendary investor John Bogle, and his philosophy centred on long-term investing in low-cost funds. As such, Vanguard is known for its passive index funds and is an industry leader in this area.
On the other hand, Fidelity caters to investors who want a more hands-on, active experience. The company was founded in 1946 and has a history of emphasising growth stocks, investing in companies like Xerox and Polaroid in the 1950s. Today, Fidelity offers a robust trading platform with excellent research and asset screeners, and it caters to both casual and more active investors. Fidelity also stands out for its cryptocurrency offerings, allowing customers to trade Bitcoin, Ethereum, and Litecoin.
When it comes to investment philosophy and goals, it is important to consider your time horizon, risk tolerance, and investment strategy. If you are focused on long-term, buy-and-hold investing and prefer a more passive approach, Vanguard may align with your goals. On the other hand, if you seek a more active, hands-on experience and want access to a broader range of investment options, including cryptocurrencies, then Fidelity could be a better fit. Ultimately, the decision should be based on your personal investment objectives and the specific features and services that each company offers.
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Account and investment options
Both Vanguard and Fidelity offer a range of account types for individual investors and business owners. Whether you want to save for retirement or set aside money for your child's college education, both companies have options for you.
Vanguard is a leading investment firm for retirement planning, with multiple retirement accounts, including Roth and traditional IRAs, 403(b) services, individual 401(k) plans, and retirement options for self-employed individuals and business owners. Vanguard also offers a wide range of investment choices, including low-cost mutual funds, exchange-traded funds (ETFs), stocks, and more.
Fidelity also offers retirement accounts and has other options that may appeal to individual investors, such as health savings accounts (HSAs). While Vanguard focuses on diversification and mutual funds, Fidelity provides a broader selection of securities, including cryptocurrencies like Bitcoin and Ethereum.
Fidelity offers more extensive investment options, including:
- Certificates of deposit (CDs)
- Annuities
- Bonds
- Cryptocurrency
- Direct indexing
- ETFs
- Mutual funds
- Options
- Stocks
In terms of fees, Vanguard has a $25 annual fee for brokerage accounts under $5 million and a $25 fee per Vanguard mutual fund for customers with less than $5 million in qualifying Vanguard assets. These fees can be waived by opting for electronic delivery of statements.
Fidelity, on the other hand, has no account fees and does not require minimum balances for retail brokerage accounts, including IRAs. It also offers no-fee mutual funds and hundreds of other funds with no transaction fees.
When it comes to account minimums, both Vanguard and Fidelity have no minimum balance requirements, making them attractive options for new investors.
For investors seeking a robo-advisor, Vanguard offers Vanguard Digital Advisor, which requires a minimum investment of $3,000 and charges up to 0.25% in advisory fees after the first 90 days. Fidelity's robo-advisor service, Fidelity Go, has no minimum balance requirement and is free for accounts under $25,000, with a 0.35% annual fee for accounts over that threshold.
Overall, both Vanguard and Fidelity provide a diverse array of account and investment options, with Fidelity offering a slightly broader range of choices, particularly for investors seeking more active trading platforms and tools.
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Performance and cost
When it comes to performance, Vanguard and Fidelity have a lot to offer. Vanguard is known for its passive index funds and is an industry leader in indexing, offering hundreds of low-cost options. On the other hand, Fidelity offers a more robust platform with excellent research and asset screeners, making it a better choice for casual investors and traders who want access to more tools and technical analysis.
In terms of cost, both Vanguard and Fidelity charge $0 commissions for online equity, options, and ETF trades for US-based customers. However, they differ in other types of trades and fees. For options trades, Fidelity charges $0.65 per contract, while Vanguard charges $1 per contract for clients with less than $1 million in assets. For broker-assisted stock trades, Fidelity charges $32.95 compared to Vanguard's $25. Fidelity also offers some zero-cost funds, while Vanguard has a $25 fee for certain accounts, which can be waived with a higher balance or electronic delivery of statements.
Overall, both Vanguard and Fidelity are known for their low-cost investment options, but they cater to different types of investors. Vanguard is ideal for long-term and retirement investors seeking low-cost, diversified funds and buy-and-hold investors. In contrast, Fidelity caters to investors who want a more hands-on experience, offering more tools and resources for a broader range of investor types.
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Functionality and tools
Fidelity and Vanguard both offer online trading services and educational tools, but they differ in their target investors. Vanguard's platform is geared towards buy-and-hold investors, so it lacks real-time data on specific funds or customisation options. Fidelity, on the other hand, has more advanced tools for charting and screening, making it a better choice for day traders. It offers features such as Active Trader Pro charts and advanced order types, which may appeal to those seeking a more hands-on experience.
Fidelity's website is also more user-friendly for both beginners and seasoned investors. It provides flexible screeners for stocks, ETFs, mutual funds, and fixed income, as well as a good selection of tools, calculators, and news sources. Its web-based and Active Trader Pro platforms offer customisable charting with technical indicators, drawing tools, and historical data.
Vanguard, however, has updated its website to be more user-friendly and modern-looking. It offers basic screeners for stocks, ETFs, and mutual funds, as well as news and retirement planning tools. While Vanguard's platform may be adequate for passive investors, it falls short for traders seeking a responsive and customisable experience.
When it comes to mobile apps, Fidelity's app is easy to navigate, allowing users to manage orders, check pending transactions, and place trades. Vanguard's mobile app is a bit outdated and lacks certain features, such as charting and real-time quotes.
Overall, Fidelity offers more functionality and tools, especially for investors seeking a more hands-on, technical trading experience.
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Customer support
When it comes to customer support, there are several differences between Fidelity and Vanguard. While both companies offer customer service during the week, Fidelity has the added benefit of 24/7 support. This includes a Virtual Assistant available on their website, as well as a Crypto Help Desk for those with questions about cryptocurrency trading. Fidelity also has a live chat feature with limited hours (Mon-Fri 8am-10pm ET and Sat-Sun 9am-4pm ET) and a 24/7 phone line.
In comparison, Vanguard's Client Services team is available Monday through Friday, 8 a.m. to 8 p.m. Eastern Time for personal investors. For retirement plan participants, the team is available from 8:30 a.m. to 9 p.m. Eastern Time. There are also separate phone lines for institutional investors, nonprofit organizations, and financial advisors, each with their own specific hours. Vanguard does not offer live chat support, but customers can send a secure message through the website.
Both companies provide a range of contact options to meet different needs, but Fidelity's 24/7 support and live chat features may be more convenient for customers who require assistance outside of standard business hours.
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Frequently asked questions
Both companies charge $0 commission for stock and ETF trades. However, Fidelity has a slight edge when it comes to options trades, charging $0.65 per contract compared to Vanguard's $1 per contract for customers with less than $1 million in assets. Vanguard also charges a $25 annual fee for brokerage accounts under $5 million, but this can be waived by opting for e-delivery of statements.
Both companies have no account minimum, allowing new investors to open an account and fund it with any amount when they are ready.
Both companies offer the standard choices of stocks, ETFs, mutual funds, bonds and options. However, Fidelity also offers crypto trading in popular coins such as Bitcoin and Ethereum, as well as fractional shares on purchases of stocks and ETFs.
Both companies offer standard account types such as individual and joint taxable accounts, IRAs, small business retirement accounts and 529 plans. Fidelity offers a few more options, including health savings accounts (HSAs), trusts and charitable accounts.
Fidelity offers 24/7 phone support, as well as email and chat support. They also have over 200 branch locations across the country. Vanguard offers phone support from 8 am to 8 pm ET, Monday to Friday, as well as email support.
