When it comes to two of the best online brokers, investors of all stripes are likely to consider Vanguard vs. Robinhood. Vanguard is one of the older brokers in the industry, and its long-term success lies in its broad mutual fund offering to passive investors. Robinhood is an upstart, famous for zero-dollar commission fees and focusing on user experience above all else. Which broker is best for you? Read on, where we'll break it down in our review of Vanguard vs. Robinhood.
Vanguard vs. Robinhood: At a glance
| Offer | Vanguard | Robinhood |
|---|---|---|
| Rating | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
| Commissions | $0 online; $0 by phone; $25 broker-assisted fee for ETF trades from other companies (Less than $1 million) | $0 for stocks, ETFs, and options |
| Account Minimum | $0 | $0 |
| Next Steps | Read Review | Open Account for Robinhood Read Full Review |
Ratings methodology
Vanguard vs. Robinhood: Commissions & fees
Like many brokers, Vanguard offers zero-commission trading for online stock, ETF, and Vanguard mutual fund trades. In terms of options contracts, Vanguard's $1 commissions are much higher than what we typically see for competitors, but it's worth noting that accounts with over $1 million invested with Vanguard get a certain number of options trades for free.
Vanguard's mutual fund commissions are lower than what we usually see with other brokers. There are no commissions for Vanguard's own mutual funds, as well as many other no-transaction-fee (NTF) funds, and commissions are only $20 for funds on the transaction-fee (TF) list. And just like with options, Vanguard gives high-balance accounts a certain number of mutual fund trades for free. Vanguard charges a $25 account service fee annually, but it's easy enough to avoid by signing up for e-delivery of account communications.
Since Robinhood announced $0 commissions on stocks and ETFs in 2013, it has been a race to the bottom for nearly every major broker. Today, Robinhood continues to forge ahead by offering $0 commissions on options and cryptocurrencies as well. With no account maintenance fee, Robinhood offers a low-cost broker experience for its customers. However, transferring an account from Robinhood will cost you $75, which is typical among brokers.
READ MORE: Best Stock Brokers
For investors interested in stocks and ETFs only, there isn't much difference between Vanguard vs. Robinhood. But mutual fund investors may favor Vanguard. Options and cryptocurrency traders will look to Robinhood for the best commissions.
| Vanguard | Robinhood | |
|---|---|---|
| Stock & ETF Commissions | $0 | $0 |
| Options Commissions | $0 + $1 per contract (for account values <$1M) | $0 |
| Crypto Commissions | N/A | $0 |
| Mutual Fund Commissions | $0 for Vanguard mutual funds and no transaction fee mutual funds, $0-$20 for others | N/A |
| Account Transfer Fee | $0 | $75 |
| Account Maintenance Fee | $25, but waived if account holder chooses e-delivery of statements. | $0 |
Data sources: Vanguard and Robinhood.
Vanguard vs. Robinhood: Investments available
Vanguard offers one of the largest mutual fund families we've found, and it's frequently ranked as one of the best brokers for mutual funds. Currently, Vanguard boasts 266 funds with a variety of management styles, asset classes, and strategies. Vanguard doesn't require a minimum dollar amount to open an account, but the mutual funds themselves do have a minimum initial investment. Most investment minimums are $3,000 (there are a few with $1,000 minimums), but can exceed $50,000 for some mutual funds. Vanguard also offers investors a variety of investments including stocks and ETFs, options, CDs, and bonds.
Robinhood offers users stocks and ETFs like other brokers, but it allows them to be traded as fractional shares. With fractional shares, those with less to invest can own some of the biggest names. Like Vanguard and many other brokers, Robinhood allows users to trade options. And unlike most other brokers, Robinhood also allows users to trade cryptocurrencies.
READ MORE: Best Options Trading Platforms
When it comes to investments available to trade, there are stark differences between Vanguard vs. Robinhood. Both brokers offer stocks, ETFs, and options. However, Vanguard offers more traditional investments including mutual funds, CDs, and bonds. Robinhood offers the fractional shares of many stocks, and also offers cryptocurrencies. Vanguard offers fractional shares, but only for its own ETFs, which allow investments of as little as $1. The type of investments offered is one of the larger differences between Vanguard and Robinhood.
| Vanguard | Robinhood | |
|---|---|---|
| Stocks and ETFs | Yes | Yes |
| Fractional shares | ETFs only | Yes |
| Options | Yes | Yes |
| Mutual funds | Yes | No |
| CDs | Yes | No |
| Bonds | Yes | No |
| Futures | No | No |
| Crypto | No | Yes |
| Currencies | No | No |
Data sources: Vanguard and Robinhood.
Vanguard vs. Robinhood: Account types available
Vanguard offers a wide range of investment account types beyond taxable accounts. Vanguard customers can open joint accounts, retirement savings accounts, and custodial accounts. Among their retirement accounts, Vanguard offers traditional and Roth IRAs, as well as SEP and SIMPLE IRAs. Vanguard also offers Digital Advisor, a robo-advisor, to rebalance accounts automatically. Additionally, users can open a margin account to invest borrowed money.
READ MORE: Best Robo-Advisors
Robinhood offers users only a few types of accounts. Investors on Robinhood can trade in standard (taxable) brokerage accounts, as well as in traditional and Roth IRAs. For the cost of $5 per month, users can unlock Robinhood Gold, which gives certain benefits such as lower margin rates, a high interest rate on your uninvested cash, and superior trading tools.
READ MORE: Best IRA Accounts
For investors seeking only a taxable trading account or basic IRA, Robinhood is a good choice. An investor with any other type of retirement account -- or the need for a custodial or joint account -- will value the variety of accounts offered by Vanguard. Vanguard offers many account types while Robinhood offers only a few.
| Vanguard | Robinhood | |
|---|---|---|
| Taxable brokerage | Yes | Yes |
| Joint tenant | Yes | No |
| Margin | Yes | Yes |
| Robo-advisor | Yes, Vanguard Digital Advisor | No |
| Traditional IRA | Yes | Yes |
| Roth IRA | Yes | Yes |
| Other IRA | Spousal, SEP IRA, SIMPLE IRA | No |
| Custodial | 529, UGMA/UTMA | No |
| Checking | No | No |
| Savings | Yes | No |
| Credit card | No | No |
Data sources: Vanguard and Robinhood.
Vanguard vs. Robinhood: Mobile app and trading platforms
Vanguard's trading platform lacks the fancy gadgets offered by many brokerage firms. However, it provides the necessary tools to its target user -- the passive investor. The Vanguard platform includes all of the features typically offered by a broker:
- Portfolio information
- Account history
- Trading capabilities
The Vanguard mobile app operates similarly, and is highly reviewed on the App Store.
Robinhood is one of our most highly rated stock trading apps, and for good reason. With a streamlined approach, the Robinhood app doesn't outshine its competitors in terms of features. However, the visual appeal and ease of trading offered by the app have yet to be replicated by competitors we've seen. Robinhood's desktop platform is modeled after the mobile app and provides similar features, but without as much pizzazz.
Both brokers offer a highly rated interface. However, Vanguard's platform is built for the passive investor while Robinhood's platform is designed for active traders. Interested investors can try out both and then stick to their personal preference.
LEARN MORE: Best Online Stock Brokers for Beginners
Final take
Vanguard is a strong choice for passive, long-term investors seeking more than the typical taxable account or IRA. Plus, Vanguard offers a suite of highly rated mutual funds and may be the right broker for investors seeking to buy the Vanguard family of funds without paying commissions. Each of these funds can be held in a tax-advantaged account, potentially saving investors money. As mentioned above, investors should be aware of investment minimums required by some Vanguard funds.
Robinhood offers $0 commissions on trades of stocks, ETFs, cryptocurrencies, and options but doesn't offer mutual funds or certain other types of investments. For crypto and derivatives traders, removing broker commissions from the equation can add up. Investors with smaller portfolios can take note of Robinhood's fractional shares on many stocks and no account minimums. For crypto, derivative, and fractional share investors, Robinhood is a strong choice, and the platform certainly offers more features for active traders than Robinhood does
In the case of Vanguard vs. Robinhood, finding the best broker for you may not be straightforward, but both are a good option for many investors. When choosing a broker, fees, minimums, investments offered, and tax efficiency matter. Think about the factors that are most important for your investing needs, and see which one feels like a better fit for you.
FAQs
Generally speaking, Vanguard is the better choice for long-term investors, while Robinhood is designed to provide resources traders need. Having said that, there are a lot of variables to consider, such as what you want to invest in (for example, Robinhood doesn't offer mutual funds and Vanguard doesn't offer cryptocurrency), as well as what type of account you want to open.
Robinhood is a solid all-around broker, especially for newer investors who want to get started in stock investing, but there are some drawbacks. For one thing, it doesn't offer the ability to invest in mutual funds, CDs, or bonds. Plus, it doesn't have as many educational resources as many other brokerages, and only offers a few different account types.
Our Brokerages Experts
By:Charlie Pastor, CFP®
Certified Financial Planner®, Founder of Damn Good Planning
Charlie Pastor, CFP® is a full-time financial planner dedicated to overserving the underserved. He has a degree in Finance, Accounting, and Personal Financial Planning from the University of Colorado Boulder. His professional experience includes founding a Registered Investment Advisor firm dedicated to serving young professionals. Outside of writing for The Ascent, Charlie enjoys serving as political advocacy chair for the Financial Planning Association of Colorado.
By:Matt Frankel, CFP®
Writer, Analyst
Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.
Fact CheckedAshley Maready
Writer and Editor
Ashley Maready is a former history museum professional who made the leap to digital content writing and editing in 2021. She has a BA in History and Philosophy from Hood College and an MA in Applied History from Shippensburg University. Ashley loves creating content for the public and learning new things so she can teach others, whether it's information about salt mining, canal mules, or personal finance.
Certainly! The comparison between Vanguard and Robinhood involves several key concepts related to brokerage services, investment options, account types, fees, and user experiences. Let's break down the concepts used in this article:
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Online Brokers:
- Vanguard and Robinhood are online brokerage platforms facilitating stock trading, investment management, and various financial services.
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Commissions & Fees:
- Both platforms offer $0 commissions for stocks and ETF trades. However, they differ in fees for other services like options, mutual funds, and account maintenance.
- Vanguard charges higher commissions for options and imposes a $25 account service fee annually.
- Robinhood, famous for zero-dollar commission fees, charges a $75 account transfer fee.
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Investment Offerings:
- Vanguard primarily focuses on traditional investments like mutual funds, stocks, ETFs, options, CDs, and bonds. It offers a wide range of mutual funds with varying minimum initial investments.
- Robinhood offers stocks, ETFs, options, fractional shares (of stocks), and cryptocurrencies, making it appealing to diverse investor preferences.
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Account Types:
- Vanguard provides a broader spectrum of account types, including joint accounts, various retirement savings accounts (Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA), and custodial accounts. It also offers a robo-advisor service.
- Robinhood offers standard brokerage accounts and traditional/Roth IRAs. There's a premium service called Robinhood Gold for additional benefits.
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Mobile App and Trading Platforms:
- Vanguard's platform is tailored for passive investors, offering essential tools for trading and portfolio management.
- Robinhood's platform, known for its user-friendly interface, targets active traders and provides a streamlined approach for easy trading on mobile and desktop.
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Expert Opinions:
- The article incorporates insights from financial experts like Charlie Pastor and Matt Frankel, who discuss the suitability of each platform for different types of investors based on their goals and preferences.
These concepts paint a comprehensive picture of the differences between Vanguard and Robinhood, showcasing their strengths and weaknesses in terms of investment offerings, fees, account types, and target user bases.
