Vanguard IRA Review 2014
Vanguard Roth IRA, Traditional IRA, Rollover IRA, SEP IRA, SIMPLE IRA (individual retirement accounts) review, promotion offer, rating, fees and commissions. Is Vanguard IRA good way to invest?
- $7 first 25 trades, $20 subsequent trades for stocks/etfs for account with less than $50,000
- Options commission: $30 plus $1.50 per contract
- Mutual funds: $35
- U.S. Treasury: $0.75 per $1,000 face amount, $40 min–$75 max
- Mortgage-backed securities: $50 per transaction; GNMA minimum purchase: $25,000
- Roth IRA
- Traditional IRA
- SIMPLE IRA
- 403(b)(7) Plan
- Individual 401(k)
- Vanguard(R) Retirement Investment Program
Vanguard Brokerage ROTH/Traditional/IRA Rollover/SEP/Simple/401(k) IRA Accounts Fees
- IRA set-up fee: $0
- Annual IRA fee: $0
- IRA termination fee: $0
- $20 annual fee applies to each Vanguard fund in an account with a balance of less than $10,000 (if not signed up for electronic statements)
- $25 SIMPLE IRA annual account service fee for each Vanguard fund in an account. This fee is waived if you are a Voyager, Voyager Select, or Flagship client
- $15 403(b)(7) annual account service fee for each Vanguard fund in the plan
- $20 Individual 401(k)/Individual Roth 401(k) plans annual fee for each Vanguard fund in an Individual 401(k) account
- $20 529 Plan annual fee if your 529 account balance falls below $3,000. This fee cannot be waived
Vanguard IRA Review
The modern age offers many options for IRA management. Vanguard provides one such option, offering brokerage or mutual-fund only accounts. Vanguard’s key advantage is the low costs- no fee for investment in a majority of their mutual funds for IRA or brokerage accounts. Vanguard has one of the lowest expense ratios for investing (0.19%) as compared to the industry average (1.08%). A small amount of the funds have fees when selling a holding held for less than 3 months or more. The fee is intended to discourage short-term/speculative investing and helps control costs.
Cost controlling measures
- No sales loads
- No commissions on Vanguard funds and ETF’s
- Waived annual account service fee (w/ sign-up for e-delivery)
There is a yearly fee of $20 for investors with holdings less than $10k. The fee is waived if enrolled in electronic account management (a paperless account). The typical minimum fund investment is $3000, but they offer a few funds for $1000. Most other companies offer lower or even no minimum.
For holdings exceeding $50,000
Vanguard has a graduated system of member levels (Voyager Services, Voyager Select Services, and Flagship Services) in which the fees and trade costs decline greatly as the value of the investment holdings increases.
Additional benefits include discounted analysis from a Certified Financial Planner who will help the investor develop an investment strategy tailored to the investor’s needs and goals.
Trading activity is the best determinant of whether Vanguard is the best choice
Costs can accumulate quickly in a Vanguard account if the investor is an active trader. Unless investing larger sums of money, the fees for trades of stocks and options are higher than those of Vanguard’s competitors.
Vanguard charges $7 a trade for the first 25 trades each year for an investor with holdings valuing under $50k. Any trades after hitting this limit will incur a charge of $20. Thus, for a person picking and holding companies for the long-term, Vanguard is a solid choice. An active trader can quickly exceed 25 trades in one month. In this case, there are many other investment companies which would better serve such a trader’s needs.
A quick breakdown on the basic costs of Vanguard and competitors
Prefer face to face advisement and service?
Vanguard does not offer appointments in-person, whereas some of their competitors do. Many competitors have storefront locations across the United States. Vanguard compensates for this minor short-coming by offering phone consultation and video-conferencing, allowing those seeking a person-to-person connection the reassurance of an advocate and advisor guiding them through the investment process.
A more independent route
For those looking for a platform from which to personally manage their IRA, Vanguard has numerous online guides and interactive calculators as well as research tools and articles on the markets and investment strategies. Their mutual fund recommendation calculators have slider and radio button inputs allowing a user to select their exact financial situation, needs, risk, and goals. Given this information, the system will then show a user recommendations and options as well as communicate the possible gains and risks of an investment.
There are also calculators that help project costs and plan for distribution based on the user’s age and expected needs. This information guides the individual to plan for their future and increase their understanding of how accessing their IRA will affect their holdings and financial stability.
The convenience of using sliders as part of the user-interface allows the user to tweak their responses and fine-tune their decision-making for an individualized investment profile.