The investing world is always changing. Although Vanguard and Charles Schwab might be better known as asset managers (or, in Charles Schwab's case, a bank), both companies also act as brokers to process millions of trades for their customers around the clock. If you plan on opening a brokerage account, either broker could be a very good choice for you.
Here's how these two popular brokerage services compare on the basis of commissions, research, and other important criteria for long-term investors.
Vanguard vs. Charles Schwab: At a glance
| Offer | Vanguard | Charles Schwab |
|---|---|---|
| Rating | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
| Commissions | $0 online; $25 broker-assisted fee for some phone trades of stocks and ETFs from other companies (Less than $1 million) | $0 stock, ETF, and Schwab Mutual Fund OneSource® trades |
| Account Minimum | $0 | $0 |
| Next Steps | Read Review | Read Review |
Trading costs and commissions
While there's more to a brokerage than its trading costs, how much you pay to place a trade is important, especially for people who are more active in the markets. In the cases of Vanguard and Charles Schwab, here are the commissions for online trading of several different investments:
| Broker | Stocks and ETFs | Options | Mutual Funds |
|---|---|---|---|
| Vanguard | $0 per trade | $1 per contract | $0 for Vanguard and no-transaction-fee mutual funds, up to $20 for others |
| Charles Schwab | $0 per trade | $0.65 per contract | $0 for Schwab Mutual Fund OneSource® funds; up to $74.95 per purchase for others |
Data source: Vanguard and Charles Schwab.
As you can see, both brokers have joined the $0 commission club for online stock and ETF trading (but there are still commissions for some phone and broker-assisted trades). For mutual funds, Vanguard is significantly cheaper, while options traders would save money with Charles Schwab.
Mutual fund investors should keep in mind that these costs apply only to some funds. Both brokers offer a long list of mutual funds that can be traded with no transaction fee.
No-transaction-fee mutual funds
If funds play an integral role in your portfolio, you'll be pleased to find that Vanguard and Charles Schwab offer thousands of no-transaction-fee (NTF) mutual funds.
| Broker | NTF Mutual Funds |
|---|---|
| Vanguard | Over 3,000, including all Vanguard funds |
| Charles Schwab | Over 4,000 |
Data source: Vanguard and Charles Schwab.
Depending on how you build your portfolio, either broker could be a good fit for fund investors. You could easily construct a diversified portfolio from just the NTF mutual funds available with either brokerage.
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Account minimums
Although it takes money to make money, it doesn't take much money to get started. Vanguard and Charles Schwab have no minimum account requirements.
We'll caution that it may be wise to start with a little more than just pocket change. You'll need to have enough money in your account to buy at least one share of a stock or ETF, or to meet the minimum initial investment for a particular mutual fund (and pay the commission, if applicable).
Trading platform
Both of these brokers have platforms that are more than sufficient for most long-term investors. Charles Schwab's platform offers more features that should appeal to more active investors, including its Charles Schwab Mobile platform (which can be used even on Apple Watch) and its full-featured desktop StreetSmart Edge platform. Both of Charles Schwab's platforms are available to all investors, regardless of account size. On the other hand, Vanguard's trading platform is geared toward long-term investors who simply want to be able to place an occasional buy or sell order.
Long-term investors will find Vanguard and Charles Schwab suitable for their needs, but active investors and frequent traders would probably be better served with Charles Schwab. Truthfully, a preference for any platform is usually rooted in subjective personal opinion, so we'll let you be the judge of which platform feels better to you.
International stocks and ADRs
Cancel your flight. You don't need to go overseas to invest in foreign companies. Vanguard and Charles Schwab customers can trade American depositary receipts (ADRs) from their online accounts.
If you want to invest in stocks that don't have a listing in the United States, your options are a little more limited. Schwab investors can access more than 30 international markets through Charles Schwab's Global Investing Services desk. The Charles Schwab Global Account™ platform also offers trading in seven local currencies in 12 foreign markets.
Vanguard doesn't offer this same type of global investing capabilities, but it has several international stock and bond mutual funds and ETFs. Charles Schwab and Vanguard both offer international funds that let you invest in a diversified mix of thousands of international stocks and bonds.
More information is generally a good thing. Both brokers have plenty of research material and tools, including stock and fund screeners, news sourced direct from the wires, and proprietary features available only to their customers.
Vanguard provides a wide range of market research, financial news, commentary, and insights to help customers learn about market trends and make better-informed investment decisions. Charles Schwab customers can tap into third-party research from Standard & Poor's, The Economist Intelligence Unit, Morningstar, and Argus Research analysts from their account. Truly, you'll find plenty of easy-to-use research tools at either broker.
Mobile app
You can now make a trade from virtually anywhere around the world thanks to mobile trading apps. Here's how each broker's users and clients rated their mobile capabilities on iOS and Android.
| Broker | Apple App Store | Google Play |
|---|---|---|
| Vanguard | 4.7 stars | 3.5 stars |
| Charles Schwab | 4.8 stars | 2.4 stars |
Data source: Google Play and the App Store.
Naming the better broker: Vanguard vs. Charles Schwab
Can we call it a tie? The truth is that either broker is suitable for a long-term investor, depending on one's needs. Vanguard could be a better choice for passive investors who want index funds; Charles Schwab offers more features that appeal to active investors. Ultimately, the better brokerage is dependent on how you invest.
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Alternatives to Consider
We recommend comparing brokerage options to ensure the account you're selecting is the best fit for you. To make your search easier, here's a short list of our best trading platforms of 2024.
| Account | Fees | Account Minimum | |
|---|---|---|---|
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | $0 for stocks, ETFs, and options | $0 | Open Account for Robinhood |
Rating image, 4.0 out of 5 stars. 4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | $0 per trade | $0 | Open Account for J.P. Morgan Self-Directed Investing |
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Commission-free; other fees apply | $0 | Open Account for E*TRADE |
FAQs
Charles Schwab offers over 4,000 no-transaction-fee (NTF) mutual funds, while Vanguard offers over 3,000. Both of these brokerages offer a comprehensive range of investment choices that could be a great fit for many investors' financial goals.
But if you want the widest selection of no-fee mutual funds, Charles Schwab exceeds Vanguard's offerings by about 1,000. As long as you use Charles Schwab's Mutual Fund OneSource® service, you won't have to pay any loads or transaction fees.
While Vanguard has some actively managed funds, and you can use Vanguard to buy individual stocks, the main focus of Vanguard is long-term index investing. It's not designed for picking stocks or frequent trading.
If you want a more aggressive, hands-on approach to your investment portfolio, Charles Schwab might be a better fit. Charles Schwab offers advanced features for active investors, like Schwab Trading Powered by Ameritrade™, and free access to the award-winning thinkorswim® platform suite of investment analytics and trading strategy tools.
Our Brokerages Experts
By:Matt Frankel, CFP®
Writer, Analyst
Matt is a Certified Financial Planner™ and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.
By:Ben Gran
Fact CheckedEric McWhinnie
Eric McWhinnie has been writing and editing digital content since 2010. He specializes in personal finance and investing. He also holds a bachelor’s degree in Finance.
