Vanguard vs Schwab vs Fidelity for young/new investor

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backpacker61
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by backpacker61 »

abuss368 wrote: Thu Apr 29, 2021 8:00 pm
Iorek wrote: Wed Apr 28, 2021 8:14 am
Almost all of our money is at Vanguard so I am somewhat inclined to recommend that— simple choices, low fees, tax efficiency.
Moving our portfolio to Vanguard has been the best financially decision we have ever made. I have never really needed customer service as we have the ability to handle most things online. However, when I have called Vanguard, I have not experienced any issues.

Tony
Not to put too morbid a spin on this, but the last of my parents passed away last year. Most of my parents' assets were at Vanguard, and both my sibling and I had accounts at Vanguard already, also.

It was actually pretty helpful for me to consolidate all of my parents' assets into their trust accounts at Vanguard, then I had Vanguard split the assets 50/50 between my sibling and I after consolidating everything.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by abuss368 »

backpacker61 wrote: Fri Apr 30, 2021 7:17 pm
abuss368 wrote: Thu Apr 29, 2021 8:00 pm
Iorek wrote: Wed Apr 28, 2021 8:14 am
Almost all of our money is at Vanguard so I am somewhat inclined to recommend that— simple choices, low fees, tax efficiency.
Moving our portfolio to Vanguard has been the best financially decision we have ever made. I have never really needed customer service as we have the ability to handle most things online. However, when I have called Vanguard, I have not experienced any issues.

Tony
Not to put too morbid a spin on this, but the last of my parents passed away last year. Most of my parents' assets were at Vanguard, and both my sibling and I had accounts at Vanguard already, also.

It was actually pretty helpful for me to consolidate all of my parents' assets into their trust accounts at Vanguard, then I had Vanguard split the assets 50/50 between my sibling and I after consolidating everything.
Thank you for that.

God bless.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by pokebowl »

ruralavalon wrote: Fri Apr 30, 2021 6:01 pm
Fractional shares are routine for mutual funds.
AM/FM radio is a standard offering for automobiles, but with how modern automobiles offer much more functionality and options for entertainment at no additional cost, it doesn't make sense to settle for the automobile that just offers AM/FM radio.

Where other major brokerages allow such functionality (whole dollar/fractional share investing) for both individual securities and non-mutual funds (ETFs, etc), Vanguard only allows this for mutual funds, which is a legacy concept to which the original poster was referencing.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by abuss368 »

pokebowl wrote: Fri Apr 30, 2021 9:45 pm
ruralavalon wrote: Fri Apr 30, 2021 6:01 pm
Fractional shares are routine for mutual funds.
AM/FM radio is a standard offering for automobiles, but with how modern automobiles offer much more functionality and options for entertainment at no additional cost, it doesn't make sense to settle for the automobile that just offers AM/FM radio.

Where other major brokerages allow such functionality (whole dollar/fractional share investing) for both individual securities and non-mutual funds (ETFs, etc), Vanguard only allows this for mutual funds, which is a legacy concept to which the original poster was referencing.
I don’t even know if I get AM in my car!

Tony
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by ruralavalon »

pokebowl wrote: Fri Apr 30, 2021 9:45 pm
ruralavalon wrote: Fri Apr 30, 2021 6:01 pm
Fractional shares are routine for mutual funds.
AM/FM radio is a standard offering for automobiles, but with how modern automobiles offer much more functionality and options for entertainment at no additional cost, it doesn't make sense to settle for the automobile that just offers AM/FM radio.

Where other major brokerages allow such functionality (whole dollar/fractional share investing) for both individual securities and non-mutual funds (ETFs, etc), Vanguard only allows this for mutual funds, which is a legacy concept to which the original poster was referencing.
Why buy individual stocks anyway? That's like wanting an 8 track tape player :) .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
solarcub
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by solarcub »

What if the young investor is only 16, just got their first job (with W2), and wants to open a Roth IRA? Since they are under-age, does that make a big difference in the Vanguard/Schwab/Fidelity decision? Who handles that the best?
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by beyou »

I had advised my son to use Vanguard a few years ago.
Then his employer opened Fidelity accts for his 401k and stock bonus programs. I looked over the options and website with my son.

The target date funds at Fidelity were much more expensive than Vanguards, so I steered him to some low cost Fidelity index funds to roll his own similar AA. His Roth IRA at Vanguard is easier to manage as a result, owning a low cost Vanguard target date fund.

Overall I found both websites easy to use.

Kids today have little desire to go to a brick and mortar place and see a person (nor do I), so this is at best a minor advantage of Fidelity/Schwab. In my experience (I worked in the industry), the people who can solve tougher problems are in a central operations office, not in branches. Easy things should be possible to do online. Hence my avoidance of branches and prefer lowest cost Vanguard despite no branches.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by starboi »

Iorek wrote: Wed Apr 28, 2021 9:18 am I have heard repeatedly that Vanguard manages its index funds in an especially tax efficient way so I went looking for some evidence/quantification of that and I what I found on a quick search is this 2015 report which talks about the greater potential for managing taxes in an index fund vs a managed fund but doesn’t seem to show any advantage for Vanguard when comparing index fund to index fund.

Anyone have better info on that? (Although to be honest at the amounts/income level we are talking about taxes probably aren’t that relevant as a consideration)

https://personal.vanguard.com/pdf/ISGTEEI.pdf
You can hold Vanguard funds anywhere so that isn’t a factor.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by mkc »

starboi wrote: Fri Jul 01, 2022 8:31 pm
Iorek wrote: Wed Apr 28, 2021 9:18 am I have heard repeatedly that Vanguard manages its index funds in an especially tax efficient way so I went looking for some evidence/quantification of that and I what I found on a quick search is this 2015 report which talks about the greater potential for managing taxes in an index fund vs a managed fund but doesn’t seem to show any advantage for Vanguard when comparing index fund to index fund.

Anyone have better info on that? (Although to be honest at the amounts/income level we are talking about taxes probably aren’t that relevant as a consideration)

https://personal.vanguard.com/pdf/ISGTEEI.pdf
You can hold Vanguard funds anywhere so that isn’t a factor.
Not all of them, and in many cases, not Admiral shares
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by starboi »

mkc wrote: Fri Jul 01, 2022 9:21 pm
starboi wrote: Fri Jul 01, 2022 8:31 pm
Iorek wrote: Wed Apr 28, 2021 9:18 am I have heard repeatedly that Vanguard manages its index funds in an especially tax efficient way so I went looking for some evidence/quantification of that and I what I found on a quick search is this 2015 report which talks about the greater potential for managing taxes in an index fund vs a managed fund but doesn’t seem to show any advantage for Vanguard when comparing index fund to index fund.

Anyone have better info on that? (Although to be honest at the amounts/income level we are talking about taxes probably aren’t that relevant as a consideration)

https://personal.vanguard.com/pdf/ISGTEEI.pdf
You can hold Vanguard funds anywhere so that isn’t a factor.
Not all of them, and in many cases, not Admiral shares
OP says they want simple index funds so VTI and BND work.
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markjk
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by markjk »

Both Fidelity and Vanguard are fine choices. I'm assuming this is an investment account and not a trading account so I suspect there would be very little difference between the two.

The one differentiator I can think of is with Fidelity, you would have access to the Fidelity zero cost funds. Those funds are only available with a Fidelity account. Something to consider.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by Vulcan »

VTWAX therefore Vanguard.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by oldcomputerguy »

An off-topic post concerting a consumer service was removed. See: Acceptable Topics: Help with Personal Investments
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by superbrugha »

I have both of my children (24 and 25) in Vanguard.

Vanguard is not the cheapest, it does not have the slickest interface or best customer service.

But you cannot buy individual shares on the platform.

That, in my opinion, is its greatest asset, especially for a young male investor.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by BabaWawa »

ruralavalon wrote: Wed Apr 28, 2021 10:54 am
Iorek wrote: Wed Apr 28, 2021 8:14 am My kid is turning 18 and wants to (or maybe is being strongly encouraged to) open an investment account to start putting away various gifts he has or might received (doesn’t really have earned income yet so Roth is a future possibility).

Almost all of our money is at Vanguard so I am somewhat inclined to recommend that— simple choices, low fees, tax efficiency.

However, I will say that I think customer service is better at Schwab, and I know Fidelity has zero fee index funds, so I wondered if we should give those a closer look.

Am I overthinking this?
Anyone of the three is a good choice, it's largely a matter of personal preference.

My personal preference is Vanguard because Vanguard has by far the largest self tion of low expense ratio mutual funds, plus I like their website and their app. Even actively managed Vanguard funds have low expense ratios. My experience with Vanguard customer service has always been good. All of our accounts are at Vanguard and we use only Vanguard index funds.

Fidelity mutual funds are not as tax-efficient as Vanguard funds. Tax-efficiency may be important later, but not at the start. Fidelity ZERO funds in a taxable brokerage account are a poor idea because not as tax-efficient and can never been moved because can only be held in a personal retail account at Fidelity. Fidelity ZERO funds so far have not done better than Vanguard index funds, the small difference in expense ratios has not been significant. For example, comparing FZROX versus VTI versus VTSAX: Portfolio Visualizer, 2019-2021.

Schwab does not offer a total international stock index fund or a small-cap value index fund, both Vanguard and Fidelity do offer those types of funds. Schwab mutual funds are not as tax-efficient as Vanguard funds. Tax-efficiency may be important later, but not at the start.

Both Fidelity and Schwab have local customer service offices in some cities, Vanguard does not.
If someone has the desire to stick with our grandfather's mutual funds for some reason, yes Vanguard would probably be the choice. If someone is interested in a superior product with many advantages over mutual funds, then educate them on ETFs. Fidelity and Schwab are great with superior customer service, a multitude of low cost investment options and an excellent investor education platform.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by SchruteB&B »

solarcub wrote: Fri Jul 01, 2022 6:16 pm What if the young investor is only 16, just got their first job (with W2), and wants to open a Roth IRA? Since they are under-age, does that make a big difference in the Vanguard/Schwab/Fidelity decision? Who handles that the best?
All 3 will allow you to open a custodial account (presuming you are the young investor’s parent?) Depending on state law, the account will need to be transitioned at either 18 or 21 into a regular account. When my kids started earning money at 16 I choose Schwab for their Roth IRAs because Schwab had the lowest cost Target Date Index funds and there was no minimum investment required to open the accounts. I believe Vanguard requires $1000 minimum and Fidelity has comparably higher ERs on their target date funds.
Statistical
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by Statistical »

Fidelity hands down. I also hear similar things about Schwab but no direct experience. Of the big three my last choice would be Vanguard.

For taxable I prefer ETFs regardless because they are portable and you have good TLH swaps (VTI -> ITOT -> SCHB). ETFs are transaction fee free at Fidelity (and essentially everywhere) so VTI doesn't require a Vanguard account.

For tax sheltered accounts you can also use ETFs or use Fidelity low cost or zero fee funds. That really is a personal choice. Either way you have options. Fidelity also has great tools for bonds, treasuries, and cds. It has a no fee checking account. You can get a 2% cashback card which rewards go into your checking or brokerage accounts.

Vanguard FUNDS are still great. Vanguard as a brokerage is meh. It just is. The website is dated and clunky. They are behind on features and options. They are starting to add fees and minimums. With the rise of ETFs, other low cost mutual funds, fractional ETF shares, and zero fees on stocks/ETFs at virtually any brokerage these days there is very little reason to pick Vanguard as a brokerage.

I mean to show how behind Vanguard is until very recently the only brokerage you couldn't buy fractional shares of VTI at was ... Vanguard.
Last edited by Statistical on Sat Jul 02, 2022 7:58 am, edited 2 times in total.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by NYCaviator »

I will add a recommendation for Schwab. One of the nice things is the bank. If your kid is going off to college away from home, it will be really nice to have a bank that charges zero fees.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by Vulcan »

NYCaviator wrote: Sat Jul 02, 2022 7:48 am I will add a recommendation for Schwab. One of the nice things is the bank. If your kid is going off to college away from home, it will be really nice to have a bank that charges zero fees.
DS, 20, invests with Vanguard, and banks with Schwab, Ally, DCU, and MIT FCU. They each offer unique benefits.

There's no real benefit to banking where you invest. In fact, there's something to be said for separating the two from the security standpoint: to run away with your money, the bad guys would have to break into two places at once instead of just one.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by Vulcan »

Statistical wrote: Sat Jul 02, 2022 7:40 am I mean to show how behind Vanguard is until very recently the only brokerage you couldn't buy fractional shares of VTI at was ... Vanguard.
We could still buy fractional shares of VTWAX there - and that's all we need.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by betablocker »

Grt2bOutdoors wrote: Wed Apr 28, 2021 8:38 am I’d go with Schwab or Fidelity - for reasons noted above. Vanguard doesn’t offer a cash management product but Schwab does as does Fidelity and they offer debit cards. You can find low cost index funds there and you can buy ETFs.
Only thing I can’t stand about Schwab is that they force you to hold cash. You can’t have them automatically liquidate a money market when you withdrawal cash, pay bills, etc. Fidelity does that. Way better.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by egri »

I have accounts with all three. My personal preference is Schwab>Fidelity>Vanguard, but I don't think you can go wrong with any of them.
solarcub
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by solarcub »

Does anyone have specific experience with how well they handle custodial accounts, in terms of ease of setting up and also ease of use once you have the account established?
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by Fpdesignco »

Quite simply avoid vanguard for brokerage and if you want to read horror stories about customer support it won’t be hard to find them here.

Schwab and Fidelity are top of their class and both have a outstanding reputation as well as vast offerings of different financial products.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by tibbitts »

markjk wrote: Sat Jul 02, 2022 4:38 am The one differentiator I can think of is with Fidelity, you would have access to the Fidelity zero cost funds. Those funds are only available with a Fidelity account. Something to consider.
Even with an account at Fidelity I don't find the Zero funds better overall than the other Fidelity index funds with non-zero expense ratios, so I wouldn't consider their availability a factor.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by DIYtrixie »

solarcub wrote: Sat Jul 02, 2022 5:43 pm Does anyone have specific experience with how well they handle custodial accounts, in terms of ease of setting up and also ease of use once you have the account established?
I set up a custodial Roth IRA for my son when his W2 earnings started. I first tried to do this at Vanguard but gave up when I could not figure out how to do it, despite a lot of searching around on the web site. Fidelity made it super easy to set up and fund.

When son turned 18, he opened a Fidelity cash management account for the no-fee ATM, to avoid the lousy banking options near his university. This means he and I can both “see” his Roth IRA on the Fidelity app, which is convenient as I match his Roth IRA contributions.

Zero experience with Schwab.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by starboi »

superbrugha wrote: Sat Jul 02, 2022 5:54 am
Vanguard is not the cheapest, it does not have the slickest interface or best customer service.

But you cannot buy individual shares on the platform.
Can new Vanguard users even sign up for the mutual fund platform?
Statistical
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by Statistical »

starboi wrote: Tue Jul 05, 2022 3:14 pm
superbrugha wrote: Sat Jul 02, 2022 5:54 am
Vanguard is not the cheapest, it does not have the slickest interface or best customer service.

But you cannot buy individual shares on the platform.
Can new Vanguard users even sign up for the mutual fund platform?
No. For a while if you called customer support and told them you had a regulatory restriction they would grandfather you in but they don't even do that anymore.
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Re: Vanguard vs Schwab vs Fidelity for young/new investor

Post by niagara_guy »

I have accounts at all 3, all 3 are very good.

Fidelity and Schwab have offices in major cities, Vanguard does not. In general phone wait times for Fido and Schwab are probably shorter, although wait time was zero last 2 times I called Vanguard. I think both have 24x7 phone support, Vanguard I believe is only weekdays.

Vanguard made a mistake on my account many moons ago, they researched it and gave me the option of leaving the money where they put it or making me whole and putting the extra dollars back that were lost from having it in the wrong place. They did the right thing, made me a loyal Vanguard customer.

And, I had the unfortunate luck to have to deal with another provider (won't mention the name here) and it made me appreciate all 3 of these companies because the service (and not telling the truth) was awful. Moved it to Vanguard and don't have to ever deal with them again.
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