TD Ameritrade 300

Is Vanguard Account Cash FDIC/SIPC Insured? For How Much?


Is Vanguard FDIC protected? For how much brokerage, IRA investing accounts cash and funds have SIPC insurance coverage?



Is Vanguard FDIC Insured?


Vanguard does not operate its own bank. However, it does provide cash sweep services. This means that the broker moves cash balances in a FDIC-insured account. The FDIC insurance applies only to cash and not to investments, and has a maximum $250,000 coverage.


Is Vanguard SIPC Insured?


Vanguard is a member of the SIPC, and so its brokerage accounts are protected to the maximum amount - $500,000 per account. This means that if Vanguard were to go bankrupt or fail for some reason, SIPC guarantees each account up to that limit, with $250,000 of investors cash protected within that account.


Vanguard vs Merrill Edge, and Ally Invest


Investors often come to Vanguard for its low expense ratios on funds. But some of its rivals, including Merrill Edge, and Ally Invest, may actually be a better choice in other areas. The following article will compare these brokers and try to find their strengths and weaknesses.


Pricing


Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
Ally Invest $0 $9.95 $0 + $0.50 per contract $0 $0
Merrill Edge $0 $19.99 $0.65 per contract $0 $0
Vanguard $0 $20 $1.00 per contract $20* varies


Services


Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
Ally Invest
Merrill Edge
Vanguard


Customer Service


Merrill Edge is the only broker to offer phone service 24/7. Ally Invest and Capital One Investing are the only firms to offer on-line chat for clients, although they offer it only during the weekday. Merrill does offer it for customers trying to open an account. None of the four have a network of branch locations. However, Ally Invest, Merrill Edge and Capital One Investing do offer financial advice for a fee at select bank branches. Vanguard does offer investment advice, but the company is not owned by a bank and therefore does not have multiple locations throughout the U.S.

Overall, Ally Invest wins the first category for its online chat.


Investing in Funds


There are more than 16,000 mutual funds from a large number of fund families on the Vanguard website. Over 2,400 of these are no-load, no-transaction-fee products. Merrill Edge offers 4,000 funds with 800 of these carrying no load and no transaction fee. Capital One Investing provides slightly more than 1,000 funds. Of these, roughly 400 carry no load and no transaction fee. Ally Invest rounds out the bottom in this category, offering no NTF funds. All mutual funds with the broker cost $20 on both the buy and sell sides. Regrettably, OH does not have a mutual fund screener.

Exchange-traded funds are also available with all four brokers. Vanguard is the only one that has a list of commission-free ETFs. The firm manages its own selection of 55 Vanguard ETFs. They are free to trade in a Vanguard account.

Vanguard wins here.


Trading Tools


Merrill Edge and Capital One Investing have user-friendly websites that are simple to navigate. Both websites have trade bars at the bottom of the browser. They provide vital trading data, such as bid-ask spread, percent change, and the day's volume. Merrill Edge's trade bar is able to display a small graph, and trades can be placed on it. Capital One's cannot perform these functions. Merrill also offers an advanced desktop system for active traders, whereas Capital One doesn't have one.

The Vanguard site is more difficult to navigate. It is hard to locate the broker's mutual fund screener. The drop-down menus tend to provide informational pages that require further navigation. There is a search field in the upper right of the site that makes browsing a little easier sometimes. The broker has no advanced platform or trade bar.

At Ally Invest, all trades and security research takes place on a web-based platform, which is free for all customers. The website is used mainly for account management, such as updating address information or downloading statements. The platform provides charting with some technical studies, a watchlist, and market news in article format.

Overall, it's a win for Ally Invest.


Mobile Apps


Mobile platforms are available from all four brokers. Merrill Edge also provides an app for Apple Watch. The Vanguard app can be used on Kindle Fire, while Capital One Investing's platform can be used on devices running Windows. None of the four apps have live streaming of financial news. Vanguard's app can be used to access account documents in pdf format, a unique feature. The best charting is on the Ally Invest platform, which also has mobile check deposit.

Merrill Edge wins the category.


Banking Features


Merrill Edge investors can add checks and a debit card to an existing securities account at no charge. Check writing is unlimited and bill pay is free. Because the broker is owned by Bank of America, ATM transactions at the bank are also free. A Bank of America deposit account can also be linked to a Merrill Edge trading account.

Strangely, Capital One Investing does not offer checks and a debit card. A brokerage account's core cash position is either an FDIC-insured deposit account or a money market fund.

Vanguard and Ally Invest both offer cash management options, but the former firm has steep requirements. Vanguard clients must maintain $500,000 or more in account assets to add checks or a debit card. Furthermore, they carry fees if the account is below $1,000,000. Ally's customers can open a no-fee account with Ally Bank, which can easily be linked to a trading account. There are no fees with these accounts, the bank reimburses ATM surcharges up to $10 per month, and the savings account pays a very attractive 1.35%.

Merrill Edge wins again.


Outcome


Vanguard took one category, Capital One Investing failed in all categories, Merrill Edge (review) succeeded in 2 categories, and Ally Invest (review) won 2 categories. Ally Invest is also by far the cheapest broker in this review and is a good choice for cost-conscious investors.


Open Ally Invest Account



Open Ally Invest Account

Open Merrill Edge Account



Open Merrill Edge Account