vanguard vs. fidelity

Vanguard vs. Fidelity: Which Powerhouse Brokerage is Better?

When it comes to investing for your future, two names consistently pop up: Vanguard and Fidelity. These financial powerhouses offer a range of investment options and services that cater to different investor needs. But which one is the right fit for you? Let’s dive into a comparison of Vanguard vs. Fidelity to help you make an informed decision.


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Vanguard vs. Fidelity

The following are some factors to consider when investing with Fidelity vs. Vanguard.

Fees and Expenses

Fees and commissions must be considered when choosing a brokerage firm to open an account with. If the fees are too high, it will negatively affect your investment portfolio and overall returns. Vanguard and Fidelity have taken a similar stance by not charging any commission on trading stocks, ETFs, options, and most mutual funds. However, there are fees for other investment vehicles.

Options at Vanguard have a $1 contract fee, and Fidelity charges $0.65. Some mutual funds incur transaction fees. Fidelity charges $49.95, and Vanguard charges $20 transaction fees.

Vanguard charges a $20 annual fee for brokerage and IRA accounts, while Fidelity doesn’t charge anything. Vanguard will waive the fee if there is at least $10,000 in ETFs and mutual funds.

Account Minimums

Neither Vanguard nor Fidelity has account minimums to get started with investing. This allows investment companies to make their funds more accessible and cater to investors with diverse budgets.

Online and Mobile Apps

While mobile apps are available for Vanguard and Fidelity on the Apple App Store and Google Play Store, there are many more positive reviews for the app belonging to Fidelity.

With 2.1 million reviews, the Fidelity app has an average rating of 4.8 out of 5 stars. The Vanguard app has 171,400 reviews and received an average rating of 4.7 out of 5 stars.

On the Google Play store, Fidelity received an average rating of 4.3 stars from 122,000 reviews, and the Vanguard app received an average rating of only 2.9 stars from over 8,000 reviews.

A major difference between the Vanguard vs. Fidelity apps is that Vanguard’s online trading platform and app are more basic and suitable for smaller investors who just want to make a few trades, buy mutual funds, and check performance. Conversely, Fidelity is perfect for a seasoned investor comfortable with a more complex interface and extensive offerings. For investors who plan to trade frequently, Fidelity is the better option.

Many reviewers mentioned that Vanguard’s app is outdated and has lost functionality. Users have been receiving error messages and complained on the Google Play store that navigating the app isn’t intuitive.

Portfolio Management Options

Before investing with Fidelity or Vanguard, investors should decide how they want their portfolios managed: actively, passively, or with robo-advisor management.

Investors who prefer their funds to be actively managed by a professional advisor are willing to pay a management fee so that their investments can potentially outperform the market. Advisors are given full reign to decide what securities to buy and sell. Both companies offer actively managed funds.

Passively managed funds are not actively traded and are designed to perform similarly to the market, a specific index such as the S&P 500 Index or the Nasdaq.

Similar to Vanguard’s online experience, the brokerage is more suitable for long-term investors and passive management. Vanguard is known as an industry leader in index funds and ETFs, so it’s perfect for investors with a similar buy-and-hold philosophy.

It’s important to note that Fidelity funds have no minimum requirements or initial investments, whereas Vanguard requires a start of $3,000. Beginning with Fidelity may be the better approach for new investors still learning.

Both Fidelity and Vanguard offer robo-advisor services. Fidelity has two programs available: Active Trader Pro for active traders and Fidelity Go for self-directed investors who can still access financial planners for basic questions. Vanguard has a hybrid robo-advisor service called Vanguard Personal Advisor Services. With this service, algorithms assist with portfolio construction and asset allocation, while human advisors help answer financial planning questions. There are some fees and account minimums required with these services.

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Retirement Planning

Both brokerages offer excellent retirement planning tools and suitable mutual funds for retirement accounts. However, Vanguard is one step ahead with its education and portfolio analytical tool for retirement savers. They also offer low-cost funds and professional advice. But, retirement planners should compare costs and fund requirements at both brokerages.

Ultimately, whether you lean towards Vanguard or Fidelity depends on your individual preferences, investment goals, and the specific services that align with your financial needs. Overall, Vanguard is more suitable for investors who follow a buy-and-hold philosophy and Fidelity and best for investors who wish to be more actively trading and hands-on. However both companies offer reputable investment solutions, but understanding the nuances of each can help you make an educated choice that works best for your financial journey.

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Nadia Tahir is a freelance writer and content creator. She mostly writes in the areas of lifestyle and personal finance. She also enjoys writing on her blog about motherhood at This Mom is On Fire.

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