Vanguard vs Fidelity: Which Low-Cost Broker Is Best?

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Vanguard and Fidelity are two of the largest and most established brokerages in the country.

Both allow you to open brokerage accounts with no minimums. And the two firms also let you invest in commission-free stocks and exchange-traded funds (ETFs). You can also find a variety of account options including individual retirement accounts (IRAs), Roth IRAs, 529 college savings plans, and more at both Vanguard and Fidelity.

In particular, Vanguard is known for leading the charge in proprietary low-cost mutual funds and exchange-traded funds (ETFs). This makes it a solid option for buy-and-hold investors.

However, Fidelity’s ETFs and mutual funds are nothing to scoff at. Plus, the firm stands out for its wide range of offerings including advanced research tools and a meaty investment menu that would satisfy most active traders. And unlike some major brokerages, Fidelity allows you to directly invest in cryptocurrencies like Bitcoin.

But there’s more than meets the eye. So let’s take a closer look.

Vanguard overview

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Vanguard is known for its low-fee index funds.

Vanguard opened its doors in 1975 in Valley Forge, Pennsylvania. Since then, it has become an industry leader in low-cost investing. In fact, the average Vanguard mutual fund and ETF expense ratio (annual fund operating fees that directly impact your returns) is 83% lower than the industry average.

Today, Vanguard works with more than 50 million investors worldwide. And unlike many of its competitors, Vanguard is investor owned. This means fund shareholders own the funds they invest in – and therefore, own Vanguard.

Fidelity Investments: An overview

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Fidelity offers a wide range of investing options and research tools.

Fidelity has been around since 1946, when it first opened its doors in Boston. Today, it offers a large variety of little-to-no fee investment options. These include more than 3,000 no-load, no-transaction-fee mutual funds.

In addition, Fidelity offers a line of zero expense ratio mutual funds and a collection of zero-minimum- investment index mutual funds. And considering that minimum investments for mutual funds can range from $300 to more than $10,000, Fidelity has done its part in lowering the barrier to investing.

Today, Fidelity works with more than 50 million customers. The firm also runs physical branches throughout the country.

Vanguard Vs. Fidelity: Offerings

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Fidelity and Vanguard both offer a wide range of options.

When it comes to offerings, Fidelity Investments takes the win. Fidelity allows you to invest in the following.

  • Stocks
  • Bonds
  • Options
  • ETFs
  • Mutual funds
  • Certificates of Deposit (CDs)
  • Crypto: Bitcoin and Ethereum
  • Precious metals: Gold, Silver, Platinum, and Palladium

And here’s what you can find at Vanguard

  • Stocks
  • Bonds
  • ETFs
  • Mutual funds
  • Certificates of Deposit (CDs)
  • Options

Overall, Fidelity and its offerings may better serve the active investor. Unlike some of its competitors, Fidelity provides direct access to Bitcoin and Ethereum. Additionally, Fidelity offers robust research tools.

Its highlight is Active Trader Pro. This advanced trading platform is equipped with powerful charting capabilities and customizable analytical tools that can help traders take a deep dive into the markets and develop investing strategies.

Vanguard is generally limited to basic fund screening tools, charting capabilities, and calculators. But these can be very useful for beginners.

Vanguard vs Fidelity: Fees

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Make sure you consider the fees before making a choice on Fidelity or Vanguard.

When it comes to fees, both brokerages stand out. Both firms allow you to open brokerage accounts with no minimum investment. And both let you trade commission-free stocks and ETFs.

But the average Vanguard mutual funds and ETF expense ratio is 0.08%, clobbering the industry average. Still, Fidelity does offer four zero-expense-ratio funds that investors may want to take a look at as well.

Fidelity Vs. Vanguard: Robo-advisors

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Robo-advisors are automated portfolios that may be best for set-it-and-forget it investors.

Robo-advisors are becoming increasingly popular. A robo-advisor recommends a diversified and personalized investment portfolio. The digital platform then automatically manages, monitors, and rebalances your portfolio to adhere to your goals.

Both firms offer a robo-advisor option: Fidelity GO and the Vanguard Digital Advisor. But they vary.

Fidelity GO would build your portfolio with its line of Fidelity Flex mutual funds. Vanguard may create a portfolio using a combination of mutual funds and ETFs. These could also include environmental, social, and governance (ESG) funds, which may better suit investors who want to align their investment decisions with their personal values.

But the fee structures also differ. There’s no minimum investment to open a Fidelity GO account. Fidelity GO charges no advisory fee on balances less than $25,000. After that, it’s a 0.35% advisory fee. But this also gets you unlimited 1-on-1 coaching calls.

Vanguard requires at least $3,000 to enroll in Digital Advisor. And advisory fees depend on how much you invest. Vanguard says you’d pay no more than $20 to $25 a year for every $10,000 invested, depending on the investment strategy for your portfolio.

Fidelity Vs. Vanguard: The Verdict

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Make sure you weigh the pros and cons before choosing either Vanguard or Fidelity.

Both Fidelity and Vanguard are juggernauts in the investment management space. Both stand out for their low-fees, longevity, and customer satisfaction.

Both offer access to a wide range of investment options, retirement services, financial advisors, robo-advisors, and more.

But the choice may come down to the type of investor you are.

Vanguard generally caters to long-term investors who prefer low-cost index mutual funds and ETFs. But Fidelity may better suit the active investor. It provides a wide range of investment options including alternative investments like crypto and precious metals. It also offers a variety of advanced and robust research tools.

Why this matters

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Carefully weigh the pros and cons before deciding which brokerage to work with.

These days, there are many ways to jump into the world of investing. Several providers offer various investment options, account choices, research tools, and more. But not all brokerages are one-size-fits all. They have varying investment options, fees, and more. So to help you clear the noise, we compared two of the biggest investment management companies around: Fidelity and Vanguard.

If you want to learn more about Fidelity, check out our regularly-updated list of Fidelity Investments guides, news, and coverage.

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