Vanguard vs. Schwab: Which Is Better?

ByI. Mitic
March 28, 2022

There have never been more investment platforms to choose from. Vanguard and Schwab are two of the most popular, but which one is better?

This article will compare them and see how they stack up against each other by looking through their offers, pricing and fees, customer support, and trading and mobile experience.

By the end of this article, you should be pretty clear on the right platform for your needs.

Overview

Before we dive into the details of Vanguard vs. Schwab, let’s briefly go over what each company is all about.

Vanguard is one of the largest investment companies in the world, with more than $7 trillion in assets under management. It was founded in 1975 and is headquartered in Valley Forge, Pennsylvania.

Vanguard offers a wide range of investment products, including stocks, IRAs, 401(k) plans, mutual funds, and ETFs.

Charles Schwab is another significant investment company with a long history. It was founded in 1971, and its headquarters are in San Francisco, California.

Schwab’s range of investment products includes stocks, bonds, mutual funds, and ETFs. It also has a banking division that offers checking and savings accounts, credit cards, and loans.

Now that we have a general idea of what these two industry giants have to offer, let’s start their comparison!

Schwab vs. Vanguard: Offers

Both Vanguard and Schwab offer a wide range of investment products. However, Schwab has an edge in the number of mutual funds and ETFs: Vanguard offers 130 of the former and 76 of the latter. On the other hand, Schwab has thousands of mutual funds and over 75 ETFs.

When it comes to stocks, both platforms offer a good selection. However, Vanguard offers more international stocks than Schwab does. So if you’re looking to invest in foreign companies, Vanguard is the way to go.

Both platforms also offer IRAs, 401(k) plans, and other retirement products. However, Vanguard’s selection is somewhat broader than Schwab’s.

Pricing and Fees

One of the main pros of Vanguard and Schwab is low fees. In fact, they are both considered to be affordable in terms of fixed costs, and Vanguard’s prices are lower than Schwab’s across the board. For example, its mutual fund expense ratios average 0.10%, while Schwab’s go around 0.30%.

When it comes to trading fees, Vanguard is once again the clear winner. It has $0 commission trades for online ETFs, stocks, and options, but there’s a $1 per-contract fee involved in options trading.

Schwab charges $0 commission for stocks and ETFs, but it does have a $0.65 fee for options trades.

What's also important to note is that Vanguard requires a $3,000 minimum investment for most of their mutual funds. Schwab has no minimum investment requirements for its mutual funds. So if you’re looking to invest in mutual funds but don’t have a lot of money, Schwab is the better option.

Overall, if you compare Vanguard and Schwab, you will see that Vanguard has lower fees and a better pricing structure in most cases.

Order Types

Vanguard and Schwab offer a wide range of order types, but the former has more complex orders than the latter. For example, Vanguard allows you to make orders with conditions for executing the trade, for instance, if the stock price reaches a specific level.

Schwab also offers some complex orders, but not to the same extent as Vanguard, so the answer to “Which is better, Schwab or Vanguard?” for this category is Vanguard.

Research and Analysis

Analysis and research tools are essential for any investor. Fortunately, both trading platforms we’re reviewing give you the means to make an informed decision.

Their offers practically mirror each other: Where Vanguard’s variety of implements includes market news, charts, and screening tools, as well as a learning center with educational articles and videos,

Schwab has market analysis, news, screening tools, and an investor education section, with articles and videos on various topics.

In other words, whichever solution you choose, the result will be pretty much the same, and you’ll hardly be disappointed with the level of information availability and accuracy.

Portfolio Analysis

When it comes to portfolio analysis tools, our Vanguard vs. Schwab comparison shows that Schwab is superior in this department.

The latter firm’s tracker allows you to track your portfolio performance in relation to several indices and your investment goals, asset allocation, and risk level. 

Vanguard does have a portfolio tracker, but it’s not as robust: You won’t get that many details about how your investments are performing, and there are frequent reports of the interface being buggy or showing bogus data.

Trading Experience

Both Vanguard and Schwab offer a good trading experience and have user-friendly platforms with advanced features. However, there’s still a difference between Vanguard and Schwab.

Schwab’s platform is more customizable than Vanguard’s, so it’s better suited for active traders looking for customizable charts and streaming quotes.

Schwab also has superior extended- and after-hours trading compared to Vanguard. While Vanguard’s extended-hours orders can be executed from 4 p.m. to 5:30 p.m., Schwab’s order window lasts until 8 p.m. If you like to trade outside of regular market hours, once again, Schwab is the superior platform.

When it comes to mobile trading, both options have well-developed apps. However, Schwab’s app is more user-friendly and has more features, so traders will probably enjoy its mobile app more.

In this leg of the Vanguard vs. Charles Schwab debate, Schwab wins: Vanguard’s app is not user-friendly and can be challenging to navigate.

All things considered, Schwab wins for active traders, after-hours trading, and mobile traders. Vanguard is better for those who want lower fees for specific trades and trade internationally.

Security

Security is another factor to consider when choosing a trading platform. Vanguard and Schwab are large, well-established brokerage firms with decent reputations.

They are both regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) and are members of SIPC.

They also both offer two-factor authentication and have a long history of providing excellent customer service.

Users can log into Vanguard or Schwab accounts using fingerprint or Face ID. So, if you want to use the latest security features, both Vanguard and Schwab are excellent options.

Customer Support

Ultimately, the best trading platform will be the one that caters to as many customer needs as possible. To that end, Vanguard and Schwab offer multiple support channels, such as phone, live chat, and email.

Vanguard’s Client Services team is available Monday through Friday, 8 a.m. to 8 p.m. ET. Unfortunately, there is no phone support during weekends, which is one of Vanguard's disadvantages.

On the flip side, Schwab's phone support is available throughout the week. From Monday to Friday, 4 a.m. – 8 p.m. PT and 6 a.m. – 7:30 p.m. PT during weekends. What's also important to note is that Schwab offers multilingual support for its international clients.

Both platforms also have extensive FAQ sections on their websites, so you shouldn't have any trouble getting the assistance you need.

Final Thoughts

Both Vanguard and Schwab offer a great experience and have a lot to offer to investors. However, the two platforms have some key differences, and the deciding criteria will vary by trader.

To finish off, let’s review the significant pros and cons of both Schwab and Vanguard:

If you're looking for a platform with longer after-hours trading, excellent customer support, and an enviable mobile trading experience, Schwab is the better choice.

If you're looking for a platform with international trading and lower fees, Vanguard will do just fine.

FAQ

Is Charles Schwab cheaper than Vanguard?

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The answer depends on the type of trading you’re doing. Both platforms have similar fees and pricing structures, and offer commission-free trading on stocks, ETFs, and mutual funds. However, Vanguard does have some lower-cost options for certain types of investments, and has a $1 fee on options trades, instead of the 0.65% fee you’ll find at Schwab. So if you wish to compare Charles Schwab vs. Vanguard pricing terms, it depends on what type of investment you're interested in.

Does Vanguard have commission fees?

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Vanguard does not have commission fees, so you can trade stocks, ETFs, and mutual funds without paying anything to the broker.

Does Vanguard have a brokerage account?

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Yes, Vanguard offers a brokerage account. This account provides access to Vanguard's investment products, including stocks, ETFs, mutual funds, and securities from other companies. The Vanguard Brokerage account has no minimum balance requirements and no annual fees.

Is Charles Schwab good for beginners?

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Charles Schwab is an excellent platform for beginners, and if you compare Vanguard vs. Schwab, you'll find that Schwab offers some great advantages to its customers. It offers commission-free trading on all ETFs and mutual funds. It also has a wide range of investment products, including stocks, bonds, and options. Finally, Charles Schwab provides extensive resources and support for beginner investors. So if you're new to the world of investing, Charles Schwab is a great choice.

About author

For years, the clients I worked for were banks. That gave me an insider’s view of how banks and other institutions create financial products and services. Then I entered the world of journalism. Fortunly is the result of our fantastic team’s hard work. I use the knowledge I acquired as a bank copywriter to create valuable content that will help you make the best possible financial decisions.

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