What's so great about Vanguard?

[ea1776]

I've seen many people around here using Vanguard as their online investment bank of choice. I visited their website, and I'm trying to figure out why their service is the preference of some of the experts around here. Is it interest rates, lack of fees, customer service, or something else?

Thanks,
ea1776

[sweeps]

Is it interest rates, lack of fees, customer service, or something else?

Yes .

[Scanner]

It's the group marriage

[Scanner]

Seriously, Vanguard has low expense ratios and specializes in indexing, which is a popular philosophy of investing.

It's the "frugal" investors choice.

[Broken Arrow]

Yes .

With a little bit of knowledge, Vanguard's index fund system can allow you to avoid quite a bit of pitfalls out there that comes with investing. The result may not wow anybody at a dinner party, but if this is for long-term investing like retirement, chances are good that it can perform just as well as many other strategies out there that would require much more research and effort on your part.

For example: IRA + Target Retirement Fund 2040 (for someone with that horizon). What could be simpler?

In short, Vanguard is very user-friendly, and that's why it gets recommend it quite a bit, especially for people who is willing to put forth the money to invest, but would rather be doing something else with their time and energy. With Vanguard, sure and steady wins the race....

But to be fair, it's not the only mutual fund company that offers target retirement type products, not to mention the myriad of strategies out there that goes beyond target retirement funds. We've had quite a few lively discussions about that here.

[Broken Arrow]

It's the group marriage

You're just sour because they didn't invite you to their mass reception.

[Aleta]

I think that all of the above reasons are why Vanguard is so well-liked among investors. I have been helped any time that I had a question. There are those that could make an investor feel stupid. Vanguard isn't like that. They will walk you through what you don't understand. They're great. Lower fees. Good service. Love their retirement funds.

[sweeps]

Vanguard isn't without its flaws. I don't like the minimum $3,000 investment on most funds (except for Star fund which I am not a fan of anyway). I wish their commission for trading individual stocks was lower. I also think their web site could use some sprucing up.

However, I think Vanguard is really on your side. They're not out to gouge you with fees. They don't try to trick you with gimmicks. They don't sell you out to the big traders. They don't low-ball you on their money market interest rates. They don't try to hurry up and get off the phone when you call them with a question. They genuinely seem to have your interest at heart.

Plus honestly I'm a big fan of index funds. Sure they save lots of time and money. But it's more than that. What you see is what you get. You know exactly what you're investing in. You don't have to worry about a quick management change, or a sudden investment style change, or manipulation by the fund manager to make the quarterly numbers. There are no loads. And there is no high expense ratio hurdle that the manager has to overcome each quarter. (Most managers can't anyway.)

If you have time on your hands after investing the bulk of your money in index funds, then take the rest and research and buy individual stocks. (But don't use Vanguard for that. Use Scottrade or Sharebuilder.)

[Scanner]

I have criticized the Vanguard cult around here but there really are compelling reasons to use them as Sweeps just outlined.

The only thing I would add to it is that when they invented mutual funds, they were supposed be simple - you pool all of your money, an investor (or if you are indexing, a computer based on what a committee picks) picks the stocks you are supposed to invest in.

You get your return and the manager/fund co. takes a small cut.

Sounds simple, right?

The problem has been every time the financial industry finds something simple, they make it complicated - 12-1(b) fees, front end loads, Class C shares.

When there is no reason to be complicated. It's just a trick of getting you to part with your money.

Vanguard diligently avoids these practices that the financial planning industry engages in (as does T. Rowe Price and others).

For that, I have to compliment Vanguard.

[GrimJack]

You're just sour because they didn't invite you to their mass reception.

Was there Kool-Aid?

[LuxLiving]

hahahaahaaaaaa~! SNORKLE SNORT!!!

[disneysteve]

Vanguard isn't without its flaws. I don't like the minimum $3,000 investment on most funds

Of course, that is part of what helps them keep costs down. Little accounts cost just as much to oversee as big accounts, but don't generate much in income. By not allowing a bunch of $50 and $100 and $500 accounts on their books, they avoid that problem.

[Aleta]

DisneySteve: That is a very good point and it makes sense.

[sweeps]

Of course, that is part of what helps them keep costs down. Little accounts cost just as much to oversee as big accounts, but don't generate much in income. By not allowing a bunch of $50 and $100 and $500 accounts on their books, they avoid that problem.

I understand the reasoning behind it, but I think it's short-sighted. A lot of people new to investing don't have $3K to deposit right away, but if you get them early you can build brand loyalty. At least do what T.Rowe does and offer the ability to put in $50 or $100 a month.

[Aleta]

When we first started with Vanguard, we had to pay a fee if our fund didn't have $10,000. in it. It was something like $5 per quarter I think, but it gave us a chance to start investing.