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Retail investor using a mobile trading app

As you begin investing, you’ll likely hear about two popular online investing companies: Vanguard and TD Ameritrade. These are two of the largest brokerage firms in the U.S. While the companies have a few similarities, they each cater to vastly different investors. In either case, it’s wise to work with a financial advisor to develop financial goals and realistic steps to reach that goal. Here is what you need to know before deciding to work with Vanguard or TD Ameritrade.

Vanguard vs. TD Ameritrade: Fees

There are usually four types of fees to look out for when choosing a trading platform. You should look out for these when evaluating any investment or trading service:

  • Trading Fees – Any fixed charge attached to each trade that you make. This can come in the form of a flat fee or what’s known as the “spread.” This is when your broker charges you based on the difference, if any, between the buying and the selling price of an asset.
  • Trading Commissions – This is when a broker will charge you a percentage based on the volume or value of each trade.
  • Inactivity Fees – Any fees that the broker charges you for not trading, such as for keeping money in a brokerage account.
  • Non-Trading/Other Fees – Any form of fee for trading on this platform not covered above. For example, a brokerage might charge you for making deposits into your brokerage account, taking money out of it or signing up for additional services.

In recent years, online trading platforms have had to be increasingly competitive. Therefore, many have dropped or reduced their fees for certain kinds of trades.

Account Trading Fees 

Both Vanguard and TD Ameritrade have a $0 account minimum. Additionally, they allow for $0 fees for trading stocks and exchange traded funds (ETF). However, outside of these necessary trades, their fee schedules are different.

Options Trading Fees 

Vanguard charges a $1 fee for all options contracts traded under $1,000,000. After a person has traded over that threshold, a sliding scale decreases the fees associated with options trading. Additionally, Vanguard charges $1 for every $1,000 of bonds traded and $0 for mutual fund purchases. Vanguard does not charge for the trading of stocks, mutual funds and ETFs.

TD Ameritrade charges $32.50 for 50 options contracts. Per-contract options commissions are $0.65 when made online. All broker-assisted options, stock and ETF trades cost $25. Users can trade no-transaction-fee mutual funds without commission, but no-load mutual funds cost $49.99 to trade. TD Ameritrade does not charge for online trading of stocks, mutual funds and ETFs.

Vanguard vs. TD Ameritrade: Services and Features

Woman using her mobile trading appVanguard caters toward buy-and-hold investors who do not need streaming data and up-to-date charts, technical indicators and more. Therefore, their desktop services and features are relatively limited. The buy-and-sell process on the desktop app can be relatively cumbersome. Additionally, their data has a short delay of 20 minutes when making a trade. This delayed trading fits with building a long-term portfolio rather than doing day trading.

TD Ameritrade has an online platform called thinkorswim that provides users with advanced charts and tools to evaluate their potential trades. Their website follows the market in real-time and helps users master their trading skills through charts that show trends and more. Users can also use the online platform to make trades, customize order templates and more.

Vanguard vs. TD Ameritrade: Mobile Experience

Vanguard’s online mobile app offers quotes and trading options. Users can use the app to monitor their positions, analyze their portfolios, read up-to-date news about the market and place some orders. However, due to Vanguard focusing on buy-and-hold investors, the app is not as comprehensive as other online brokerages.

TD Ameritrade has two mobile apps. The first, TD Ameritrade Mobile App, is designed for active traders and allows for real-time data and asset trading. The second, thinkorswim Mobile, offers to chart, watch lists and trading.

Vanguard vs. TD Ameritrade: Who Should Use It?

Vanguard is designed for buy-and-hold investors. Therefore, if you have a long-term investing strategy that does not include frequent trades, Vanguard is likely the best option for you.

TD Ameritrade’s mobile and desktop platforms have robust information for users to research the latest trends and information, allowing them to make the best buying and selling decisions. TD Ameritrade is the better option for people that intend to buy and sell often.

The Takeaway

Black man using his mobile trading appBoth TD Ameritrade and Vanguard are online brokerages that have proven track records. However, different users might use each company for different reasons. TD Ameritrade has more robust reporting software and is better for people that are making frequent trades. Vanguard is better for buy-and-hold investors and has less real-time information available to users.

Tips for Investing

  • All investing should start with a carefully thought-out financial plan and corresponding investment strategy. Therefore, you should consider talking to a financial advisor for expert help in both areas. SmartAsset’s matching tool can help you find a financial professional in your area to walk you through the ins and outs of your finances and put together the right long-term plan for your money. If you’re ready, get started now.
  • Now that you know how these platforms stack up, it’s a great time to learn more about them. In our dedicated brokerage reviews, we go into the details on both Vanguard and TD Ameritrade.

Photo credit: ©iStock.com/scyther5, ©iStock.com/RichVintage, ©iStock.com/Tempura

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
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