Vanguard IRA Review 2014
Vanguard Roth IRA, Traditional IRA, Rollover IRA, SEP IRA, SIMPLE IRA (individual retirement accounts) review, promotion, rating, fees and commissions
- $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
I opened my first IRA in 2002 with Vanguard. After contributing for a few years I let my account sit idle because I was eligible for my employer’s 401(k), which had both an employer match and higher contribution limits, plus a tax benefit in every paycheck instead of having to wait until the end of the year. I later moved to a new job, and in 2010 my new employer decided to terminate their 401(k) plan. Suddenly Vanguard was back at the forefront of my retirement investing.
In the meantime, I had opened a Roth IRA account with Vanguard in addition to my traditional IRA. I also rolled over two different 401(k accounts into my traditional IRA.
And last year, wanting the ability to trade on some specific market trends, I opened a brokerage account within my traditional IRA.
Originally opening my account (and subsequently opening others) was straightforward and hassle-free, and I was able to do almost all of it online.
(I had to mail in some signature documents initially.) At the time I took the automatic contribution option, which deducted a set amount from my checking account every month and
transferred it into my IRA. Doing that waived the minimum purchase requirements for the investments I had chosen.
The two 401(k) rollovers I made later were seamless. Vanguard has assistance available by telephone, but I can’t recall that I’ve ever had to use it.
I’m one of those people who would rather do it myself online than deal with a real human, and so far with Vanguard I’ve been able to with no problems.
Finally, opening the brokerage account was also easy. Vanguard has stock and ETF trading commissions about average among online brokerages — $7 per trade.
(If your overall account has less than $50,000 in Vanguard funds and ETFs—not just the total balance—you only get 25 $7 trades per year; after that the
commission is a much steeper $20 per trade. Of course, a brokerage account inside an IRA isn’t exactly meant for active trading, so I’ve never heard
anyone complain that this is an issue. But if you’re looking for a brokerage account where you can do lots of trading, this isn’t the place for you.)
Vanguard is known for its mutual funds, and of course there is a definite preference for those funds cost-wise. In its more popular funds, Vanguard offers “Admiral” shares, which for a minimum investment of $10,000 in that fund give you lower expense ratios. Of course, Vanguard is pretty much the king of the index fund, so it has plenty of mutual funds with low expense ratios even in its standard funds.
If you want simplified investing, you can do that, too. They offer the “LifeStrategy” funds, which are targeted to a particular retirement date and automatically adjust the investment mix as you get closer to retirement. (I have a Target Retirement Fund in my Roth.) There are also the Total Stock Market Index Fund, the Total Bond Market Index Fund, and the Total International Stock Index Fund, which are all exactly what their names say. (Ben Stein, the comedian and actor best known as the economics teacher in Ferris Bueller’s Day Off who also happens to be an economist and a lawyer, recommends a mix of just two funds—the Total Stock Market Index and the Total Bond Market Index—as the most basic retirement portfolio for those who just aren’t interested in managing investments or paying someone else to do it.)
Vanguard offers plenty of non-Vanguard funds and ETFs and other investments, like annuities. I have been very happy with the extremely low expense ratios on Vanguard funds.
I’ve always found the website pretty easy to navigate. Vanguard recently changed the look and layout a bit, but it was nothing too jarring. The account home page shows you your account balances at a glance (I see my traditional IRA, traditional IRA brokerage, and Roth IRA accounts listed separately) and your current asset mix compared to the mix recommended for people your age (although you can set your own target asset mix if you prefer), along with transactions within the past 30 days.
There are good tools for researching mutual funds, stocks, and ETFs. I also have a Scottrade account, and while the Vanguard tools don’t quite rise to the level of a dedicated brokerage site, they’re reasonably capable—and Vanguard was never meant to be a brokerage first and foremost anyway.
When I first started with Vanguard, my low account balance meant a $10 quarterly account management fee. Vanguard later offered an option to waive that fee in return for going paperless,
which I immediately jumped on. (Without that or meeting the minimums, it’s $20 now.) On a side note, I use Quicken for my personal finances, and Vanguard downloads easily into
All in all Vanguard is a decent company for an IRA. But it has just too many fees. There are much better options available for investors, both cost-wise and feature-wise.
Reviewed by IRA Reviews on