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Fidelity or Vanguard? Which is the Better Option for Investors?

The old stock market adage is to “Sell in May and Go Away.” Neither Fidelity or Vanguard took that advice as they slice fees to attract individual investors. If you’re wanting to keep your money at a traditional brokerage, should you choose one of these options?

Both brokerages let you trade individual stocks, bonds, ETFs, and mutual funds. But, you’ll pay different fees with either company. So, you’ll need to decide if Fidelity or Vanguard is the better option for you.



Vanguard [1] needs little introduction. If you ask almost any Facebook investing group or another neutral forum, Vanguard will almost always be the most common answer. In fact, there’s an entire online forum and following called Bogleheads [2] that captures the excitement behind the original low-cost leader for DIY investors a few decades ago.

About the only group of investors that won’t recommend Vanguard are day traders and momentum traders. This is mostly because of Vanguard’s relatively expensive trade commissions and lack of advanced research options.

Trade Commissions

For starters, you will need to enroll in electronic document delivery to avoid the $20 annual account fee. There isn’t an account minimum to open an account.

Otherwise, your trade fees for individual stocks is largely based on how much money you have invested in Vanguard Funds and ETFs. Regardless of your account balance, you won’t pay trade fees for any Vanguard ETF or Mutual Fund. But, most Vanguard mutual funds have a minimum initial investment of at least $3,000. If you don’t have $3,000 to invest at once, you can trade the ETF version of the mutual fund instead.

Buying Individual Stocks and ETFs

If you’re just beginning to invest, you will want to start with ETFs and mutual funds first to instantly diversify your portfolio. So, it’s entirely possible that you won’t regularly buy individual stocks until you cross the $50,000 threshold. Until then, it might be better to only own a few individual stocks that add more earning potential to your portfolio but won’t tip you over the 25 annual trades.

Over 1,800 ETFs Will Trade Commission-Free

Vanguard made big news in July of 2018 by announcing you can buy non-Vanguard ETFs for free [3]. You’ve always been able to but Vanguard ETFs for free and there are plenty of them, but you can now get access to iShares funds and other leading names that can be better products than their Vanguard counterparts.

Once you can trade most non-Vanguard ETFs for free, the $7 trades only apply to company stocks and options.

Mutual Funds

Vanguard has two different classes of mutual funds:

Admiral shares have lower expense ratios than Investor Shares. You hold the same assets, but your fund expense ratio might only be 0.04% instead of 0.14%. On a $10,000 investment, this discount saves you $10 in investment fees every year. Even if you can only afford the investor shares now, you can automatically convert to Admiral shares when your balance is large enough.

Vanguard also lets you trade over 2,500 mutual funds transaction fee-free. Other funds may require a $20 transaction fee.

Navigating the Vanguard Platform

One complaint for Vanguard is that their interface is out-of-date and not as easy to navigate as other online brokerages. Like any online brokerage, there’s a learning curve to learn the ins and outs.

Since Vanguard’s core investments are index funds [4], target date retirement funds [5], and other Vanguard ETFs and Mutual Funds, the relative lack of navigability isn’t a big deal. Now that you can trade almost 1,800 non-Vanguard ETFs for free, it will be interesting to see if they make it easier to compare similar ETFs.



Fidelity [6] is another fan favorite. This is partially because they are a long-time Vanguard competitor and they host many employer retirement accounts. If your employer 401k isn’t managed by Vanguard, there’s a good chance that it’s at Fidelity instead.

You might prefer Fidelity more for the following reasons:

If you like trading Fidelity mutual funds and trading stocks and options, you will like Fidelity more.

Trade Commissions

Fidelity offers flat-rate trade fees for all customers. If you transfer an account from your existing brokerage, you might qualify for free trades for up to two years.

Individual Stocks and ETFs

You will pay $4.95 per trade for stocks and most ETFs. There are more than 265 commission-free ETFs from Fidelity and select iShares funds.

If you’re happy with the commission-free ETFs and can benefit from the $4.95 trades (versus $7 for Fidelity), Fidelity can be cheaper than Vanguard for trading stocks.

Mutual Funds

Fidelity specializes in mutual funds. If you prefer mutual funds to ETFs, you should also consider Fidelity instead of Vanguard. To sweeten the pot, Fidelity has also eliminated the minimum initial investments for their Fidelity mutual funds. While you’ll have to fork over $3,000 to open a position with most Vanguard funds, you can gain exposure to Fidelity for only $1.

And, Fidelity is also pledging to reduce expense ratios by 35% which means you can keep more of your investment returns each year too.

Also, Fidelity is launching an industry-first two expense ratio free index funds (fund symbols: FZROX and FZILX). This means you won’t give any of your gains away to cover fund management fees. Over the course of your investing career, this savings puts a few extra dollars into your nest egg.

Website Navigation

Fidelity is an easier platform to navigate than Vanguard. This is important when you need to research potential stock picks or compare competing ETFs and mutual funds.

Active traders will also prefer Fidelity for these additional tools:

You can open a free trial account to test out the Fidelity web platform without a financial commitment for 30 days.

When Vanguard is Better

You will probably like Vanguard better for these reasons:

When Fidelity is Better

Fidelity is the better option for these reasons:


Both Vanguard and Fidelity are good options and each brokerage has their own loyal following. Either one provides world-class service and competitive pricing. If you like ETFs, Vanguard might be the better option. For stocks and mutual funds, Fidelity is better because of the lower fees and no initial minimum investments.