Who is Better Fidelity or Vanguard?
The answer to the question of who is better, Fidelity or Vanguard, largely depends on individual investor needs and preferences, with Fidelity being the overall pick for the best online broker due to its comprehensive platform and services, and Vanguard standing out for its low-cost index funds and appeal to buy-and-hold investors and retirement savers. Both Fidelity and Vanguard offer robust robo-advisors, but Vanguard’s Personal Advisor Services provides more hands-on guidance for clients meeting the $50,000 account minimum, and Vanguard also boasts slightly lower expense ratios on its index funds.
Overview of Fidelity and Vanguard
To delve deeper into the comparison, it’s essential to examine the features, benefits, and drawbacks of each platform. Fidelity is renowned for its $0 trading commissions, extensive selection of no-transaction-fee mutual funds, and top-notch research tools. On the other hand, Vanguard is celebrated for its low-cost index funds and its appeal to buy-and-hold investors, retirement savers, and those seeking professional advice.
Frequently Asked Questions
1. Why Do People Prefer Vanguard Over Fidelity?
People prefer Vanguard over Fidelity for its lower expense ratios on index funds and the hands-on investment guidance provided by Vanguard’s Personal Advisor Services.
2. What is the Downside to Fidelity?
The downside to Fidelity includes high margin rates and fees for some mutual funds, despite its low trading and non-trading fees and commission-free US stock trading.
3. What are the Cons of Vanguard?
The cons of Vanguard include relatively high minimum investment requirements, higher-than-average per-contract options fees, a slow process to open an account, no trading platform for active traders, and no fractional shares of stocks or ETFs.
4. Can I Have Both Fidelity and Vanguard?
Yes, there’s no reason you can’t have accounts with both Fidelity and Vanguard, although this might require managing multiple statements, phone numbers, and websites.
5. Is Fidelity Financially Sound?
Fidelity is financially sound, having been in operation since 1910, and its customers are FDIC insured up to $250,000 per depositor per account ownership category.
6. What Happens if Fidelity Goes Out of Business?
If Fidelity goes out of business, the Securities Investor Protection Corporation (SIPC) will cover up to $500,000 in securities, including a $250,000 limit for cash held in a brokerage account.
7. Is Fidelity or Vanguard Better for Retirees?
While Fidelity wins overall, Vanguard is the best option for retirement savers due to its tools and education focused on retirement planning.
8. What Happens if Vanguard Goes Bust?
If Vanguard goes bust, the funds would not be affected and would simply hire another firm to provide administration and other services, as Vanguard is paid by the funds for these services.
9. Is My Money Safe at Vanguard?
Yes, securities held in Vanguard Brokerage Accounts are eligible for SIPC coverage, protecting up to $500,000, including a $250,000 limit for cash.
10. How Safe is My Money in Fidelity?
All deposits at Fidelity Bank are FDIC insured, and uninvested cash balances are eligible for FDIC insurance, with balances above $5 million potentially placed in a non-FDIC insured money market fund.
11. Is Fidelity No Longer FDIC Insured?
Fidelity is not a bank, and brokerage accounts are not FDIC-insured, but uninvested cash balances are eligible for FDIC insurance.
12. What is Fidelity Best For?
Fidelity is best for its $0 trading commissions, selection of over 3,300 no-transaction-fee mutual funds, top-notch research tools, and mobile platform, making it ideal for a wide range of investors.
13. Why Are Investors Pulling Money from Vanguard?
Investors are pulling money from Vanguard possibly due to retiring, being negatively affected by the pandemic, or other personal financial reasons, leading to outflows from index mutual funds.
14. Who is Vanguard Best For?
Vanguard is best for bond investors, with a solid selection including Treasurys, US government agency securities, municipal bonds, corporate bonds, CDs, preferred bonds, and bond ETFs, as well as for retirement investors.
15. Can You Lose Money on Vanguard?
Yes, you could lose money by investing in Vanguard Cash Reserves Federal Money Market Fund or Vanguard Federal Money Market Fund, as these funds seek to preserve the value of your investment at $1.00 per share but cannot guarantee it, similar to any investment, there’s always a risk of losing money.