Fidelity Investments vs Vanguard: A Comparison of Fees and Features

Fidelity Investments and Vanguard are two of the largest asset managers, offering low-cost funds and online brokerages. Fidelity was named Bankrate's best broker in several categories due to its low fees, extensive account types, research resources, and customer service. Vanguard offers thousands of no-transaction-fee mutual funds and commission-free online trading. The choice between the two depends on individual circumstances and desired features.

In the competitive world of online brokerage services, Fidelity Investments and Vanguard stand out as two of the largest asset managers. Both offer a variety of low-cost funds and robust online brokerage platforms, making them attractive options for investors. However, the choice between the two depends on individual investment needs and preferences.

Costs

Both Fidelity and Vanguard offer competitive costs, with Fidelity having a slight edge overall. While both charge zero commission for stock and ETF trades, Fidelity charges $0.65 per contract on options trades, compared to Vanguard's $1 per contract for customers with less than $1 million in assets. For mutual funds, both brokers offer over 3,000 no-transaction-fee funds, but Fidelity's ZERO funds charge no expense ratio, while Vanguard's expense ratios are rock-bottom. Fidelity also offers more account types without fees, while Vanguard charges a $25 fee in certain accounts, which can be waived with high balances or electronic statements [1].

Account Minimum

Both brokers have no account minimum, allowing new investors to open accounts and fund them later. However, Fidelity may be more suitable for those interested in mutual funds with little initial savings, as it offers $0 minimum index funds. Vanguard requires a $1,000–$3,000 minimum investment in its funds but allows customers to invest as little as $1 in ETFs [1].

Tradable Securities

Both brokers offer a wide range of tradable securities, including stocks, ETFs, mutual funds, bonds, and options. Fidelity recently began offering crypto trading, providing an edge for investors interested in digital assets. However, both brokers may not meet the needs of investors seeking more exotic markets like futures or forex [1].

Account Types

Both Fidelity and Vanguard offer a variety of account types, including individual and joint taxable accounts, IRAs, small business retirement accounts, and 529 plans. Fidelity, however, offers additional account types such as health savings accounts (HSAs), trusts, and charitable accounts, providing more flexibility for investors with specific needs [1].

Fractional Shares

Fidelity stands out in this category with its Stocks by the Slice offering, allowing customers to buy into any of the more than 7,000 stocks and ETFs for as little as $1 at a time. Vanguard offers fractional shares on dividend reinvestments but not on new purchases of stocks and ETFs, except for its own ETFs [1].

Customer Support

Both brokers provide robust customer support, but Fidelity has a slight edge with 24/7 phone support and over 200 branch locations. Vanguard offers phone support for 12 hours a day, Monday through Friday, and email support [1].

Conclusion

While both Fidelity and Vanguard are strong contenders, Fidelity edges out Vanguard due to its slight advantages in cost, account types, and fractional shares offering. However, Vanguard's extensive lineup of no-transaction-fee mutual funds and commission-free online trading make it a solid choice for many investors. Ultimately, the best broker for you will depend on your specific investment needs and preferences.

References:
[1] https://finance.yahoo.com/news/fidelity-investments-vs-vanguard-212134146.html
[2] https://www.etf.com/sections/daily-etf-flows/bil-gains-787m-assets-trumpmusk-feud-rattles-markets
[3] https://finance.yahoo.com/news/3-top-ranked-mutual-funds-120003429.html