In this episode, we take on one of the epic battles of the financial world, who is better – Vanguard or Fidelity.
Listener, Tracie, wanted to know why we only hear all the hype about Vanguard and not Fidelity. Tracie writes:
“I see many podcasts touting Vanguard index funds, but nobody seems to talk about Fidelity no-cost funds. Perhaps you can share your thoughts on that. I recently moved from a managed account to managing my own money again through Fidelity and they’ve done right by me. My previous custodian charged me management fees plus annual account fees for years. When I closed my account, they charged me $100 account closure fees (x 6 accounts) plus $50 in some other fee. Fidelity reimbursed me for the account closure fees and I’ve been doing well managing my own stuff. I can sit down in person with my advisor when ever I want to at our local branch as well. Everyone talks about how great Vanguard is…just think they should also consider fidelity…in case there is something I’m missing? I’d love to know your thoughts on the no-cost funds by Fidelity.”
First, let me just say, $600.00 in fees to close your accounts?!?!? THAT’S CRIMINAL TO ME. Not a fee in my book, but a clear penalty – let’s be real. Shame on them.
And KUDOS to Fidelity to reimbursing you those to you, when they really didn’t have to. That’s how you build some brand loyalty – FOR SURE.
But what you say is true Tracie, there does seem to be a bias; and, as satisfied Vanguard account holders, I am sure we have done our part to perpetuate that bias.
We opened our very first index funds with Vanguard shortly after discovering the FIRE movement and after reading JL Collins book, The Simple Path to Wealth, which we will link to below.
We had heard the words “Index Funds” before but really had no idea what they were or why they were so trusted by this community.
And if you are new to your journey and want to get a good overview, Jim’s book is a great place to begin or you can take a look at one of his many posts on the subject, HERE.
So let’s tackle the questions of which is better and see if Vanguard is deserving of all of the hype or not….
|FEATURES AND BENEFITS||VANGUARD||FIDELITY||WINNER|
|TRADING FEES STOCKS||$7 (tiered based upon dollar amount)||$4.95||Fidelity|
|TRADING FEES OPTIONS||$7 (tiered) + $1 Per Contract||$4.95 + $.65 Per Contract||Fidelity|
|TRADING FEES ETFS||$0.00||$4.95 (But some $0.00)||Vanguard|
|TRADING FEES MUTUAL FUNDS||$20.00/$8.00/$0.00 (tiered)||$0.00 on Fidelity, $49.95 on Non-Fidelity||Tie|
|CUSTOMER SERVICE||M-F 8:00AM – 10:00PM EST||24/7 Phone and Live Chat, 140 branch offices||Fidelity|
|FINANCIAL ADVISORS||Balances over $50,000.00||Managed Accounts||Vanguard|
|PLATFORM||NOT USER-FRIENDLY||VERY USER-FRIENDLY||Fidelity|
If this were a boxing ring, the winner would be Fidelity after 10 rounds. But this is not a boxing match. It’s up to you to decide what is important to you.
For instance, we have been very happy with Vanguard; however, I have personally experienced the frustration of their outdated and cumbersome platform.
Had I known more about Fidelity when I opened my accounts, I might have opened them with Fidelity because usability and east of access to me are very important, all other things being equal.
Both Fidelity and Vanguard each offer the same investments (stocks, options, ETFs, mutual funds, etc.) as well as the same options for accounts available (IRAs, 401(k), SEP, taxable and non-taxable accounts, etc.) so what it really boils down to is deciding what other benefits and features mean the most to you.
And the winner is…
When putting it that way, Curt and I have to declare the real winner is….YOU! You win with either. The most important thing is to just get started. Pick one and start growing your portfolio.
We highly recommend JL Collins book, The Simple Path to Wealth. It is a great resource – especially for those new to the FIRE movement and for anyone else who wants to create a solid financial future.
WE HAVE A NEW WORKBOOK!
This workbook is based upon out 7-Step Money Foundations course and can be used as a companion to the course, or on its own.
It is a NO NONSENSE designed to take you step-by-step through your finances and build a solid money foundation so that you can reach your money goals.
HAVE YOU JOINED OUR PRIVATE FACEBOOK GROUP YET?
Connect with us and each other. Our group is full of other parents on the same journey. We built our group to share and support one another and grow our House of FI family!