Foreigner's Finances

In the Roth IRA video post, I mentioned that Vanguard was one of the mutual fund companies you can open an IRA with. My Roth IRA is hosted with Vanguard and I’ve been thrilled with my time there.

They’re one of the most professional companies I’ve ever had experience with and I was would recommend them to most people.

But with over a year of Vanguard experience, I’ve learned that Vanguard doesn’t fit everyone’s situation so here’s a review of the company.

Background

Vanugard’s co-founder is John Bogle, the creator of the index fund. One of the first and best investment books I’ve ever read, The Bogleheads’ Guide to Investing is about Bogle and his simpe investing philosophy.

I like Vanguard because their key principals for investing line up with that of most passive investors: buy funds that represent a wide range of stocks to negate risk, keep costs low, and make investing simple.

Vanguard is truly a customer’s company. They’re honest and you never feel like they’re ripping you off or treating you poorly.

It’s the exact opposite.

Vanguard feels like a close friend who wants to help you accumulate a fortunate and they’ll charge you a tiny fee for their services.

Vanguard promotes their own funds which they’re known for. They have around 100 low cost funds that are great for buy and hold investing.

Fees

According to their site, the average Vanguard fund expense is just .20%, compared to the industry average of 1.19%. The numbers are so small that it doesn’t seem like much, but assuming that most retirement accounts have over $100,000 we’re talking about savings in the thousands with Vanguard’s cheap expense ratios.

This is Vanguard’s biggest selling point and rightfully so. Why pay a company a large amount in fees just to host your money as you let it sit for the next 20-40 years?

The low prices continue, as Vanguard IRAs have no account fee as long as you sign up for electronic statements. This is a savings of $20 every year.

Site Layout

Vanguard’s site layout deserves an A-. It’s simple to navigate and all of your vital trading information – value, asset mix, investment return – is presented on the first page. It’s easy on the eyes and professional looking.

The research section is fairly well organized. All of the information is rightfully available, but it could be easier to scroll and search through the funds.

The pages for the individual funds are nicely set up and provide all of the information you need for researching a fund. They don’t hide any of the details, instead opting for honesty and trust between the company and customer.

The Highs & Lows

Vanguard’s intent is for you to grow your money without distraction. They help you out along the way by providing partial shares to optimize your investing. They also do automatic investing and automatic dividend reinvesting – which was a complaint of mine about Zecco.

One problem young people will run into is that Vanguard markets themselves to an older audience who has money and is thinking long term. With that being said, Vanguard is not a good fit for the novice investor. All of their funds have a minimum initial investment of $3,000. They do offer one alternative – the Star Fund – which has a minimum of $1,000 and can be sold once it gets to $3,000.

Vanguard is great though for people who are looking to invest in an IRA or taxable account with at least $3,000. After the initial investment, each additional investment is just $100. Their site and attitude are worth the high minimums so if you have the funds I would recommend them with no hesitation.

Vanguard is not the place for day traders who want to time the market and buy shares today and sell them next week. But if you want a mutual fund company who will treat you with respect, keep costs incredibly low, and help you grow your money then Vanguard is for you.

With certain companies you get the feeling they are trying to rip you off and steal pennies from you, but Vanguard is the exact opposite. They’re honesty shines and you’ll be a happy customer if you decide to partner with them.

Learn more at Vanguard.com