Vanguard vs Schwab

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jbogler
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Vanguard vs Schwab

Post by jbogler »

When I first found the boglehead philosophy, I chose Vanguard and Vanguard funds. I did this because it is the Jack Bogle philosophy that drives this site, and correct me if I am wrong, was the first to offer low cost index funds.

A few years in, looking at Schwab, they are "cheaper". Their IRA's and most accounts have 0 fees, whereas Vanguard charges you $20-$25 (I am assuming a year), Their Total US Stock/Bond Index funds are lower than vanguards by .01%.

I understand the difference in price is very small but are there any other advantages/disadvantages from using Schwab vs Vanguard? Are we just talking Chevy vs Ford?

I am about to set up some new accounts and I will always take the lower cost option (schwab) just wondering if there is anything i might be missing by going with Schwab over Vanguard.
inverter
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Re: Vanguard vs Schwab

Post by inverter »

Schwab makes a significant amount of their money from net interest income, i.e. the spread between what they get on your money and what they pay you. Vanguard does not, and their settlement fund is at 4.30% versus Schwab at .45%.

Schwab is a for profit company with shareholders, Vanguard is not.
jbogler wrote: Wed Feb 01, 2023 7:29 pm A few years in, looking at Schwab, they are "cheaper". Their IRA's and most accounts have 0 fees, whereas Vanguard charges you $20-$25 (I am assuming a year), Their Total US Stock/Bond Index funds are lower than vanguards by .01%.
I'm unaware of Vanguard charging an annual fee. Schwab's index funds are likely a loss leader to try and get you to pay for advisory services.
nalor511
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Re: Vanguard vs Schwab

Post by nalor511 »

Fidelity > Schwab > vanguard, IMO. Fidelity has no fees, pays good interest on MMFs, let's you buy any ETF (including vanguard) that you like with as little as $1. Schwab makes you buy full shares
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jbogler
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Re: Vanguard vs Schwab

Post by jbogler »

nalor511 wrote: Wed Feb 01, 2023 7:35 pm Fidelity > Schwab > vanguard, IMO. Fidelity has no fees, pays good interest on MMFs, let's you buy any ETF (including vanguard) that you like with as little as $1. Schwab makes you buy full shares
Thank you will look into Fidelity.
radiowave
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Re: Vanguard vs Schwab

Post by radiowave »

OP does it matter to you if you have a local Schwab branch that you can go to and actually talk to someone or willing to do all support online/phone (Vanguard)?
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exigent
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Re: Vanguard vs Schwab

Post by exigent »

We used to be with Vanguard but have consolidated things w/Fidelity (b/c that's where my work retirement accounts are), and our kids are with Schwab. They're all good options, imho. One really nice thing for people just starting out (e.g., our young adult children) is that Schwab has very low minimum investments for their index funds compared to Vanguard. But that's an issue that goes away quickly.

The main difference w/Fidelity vs. Vanguard is that Fidelity is much more interested in managing your money — for a fee, of course — but if you tell them that you're self-directed and uninterested, they leave you alone (in my experience, anyway). Schwab isn't "investor-owned" like Vanguard, but they seem to be less (overtly) profit-oriented than Fidelity. Then again, as others have pointed out, their rates no cash equivalents are lower.

Vanguard's tech and customer service is probably the 'worst' of the three, but none are bad and all are totally workable.
exigent
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Re: Vanguard vs Schwab

Post by exigent »

radiowave wrote: Wed Feb 01, 2023 7:39 pm OP does it matter to you if you have a local Schwab branch that you can go to and actually talk to someone or willing to do all support online/phone (Vanguard)?
Fidelity also has local branches, fwiw. Whether or the other is near you depends on where you live. In many cases, in larger cities, both are a 'local' option. But if you're not in or near a big(ger) city, then you're probably out of luck.
Last edited by exigent on Wed Feb 01, 2023 7:44 pm, edited 1 time in total.
Living Free
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Re: Vanguard vs Schwab

Post by Living Free »

Vanguard I believe may charge that account fee only if you don’t agree to electronic statements. Main advantages of vanguard include excellent money market funds and if one is holding mutual funds in a taxable account then vanguard index mutual funds that have a corresponding ETF can avoid distributing capital gains to mutual fund investors.

Main advantage to use Schwab is they have the banking feature, which I’ve never used, but from what I’ve heard is an excellent choice for a checking account. Some also say their customer service is better than vanguard’s. (I personally don’t have serious issues with vanguard customer service, but complaining about vanguard customer service is somewhat common on this forum, and in my opinion it can be overstated here)

The differences in fund expense ratios is of no consequence and washes out with index tracking error which can even boost vanguard fund returns a few basis points over competitors’ funds.
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typical.investor
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Re: Vanguard vs Schwab

Post by typical.investor »

inverter wrote: Wed Feb 01, 2023 7:33 pm Schwab makes a significant amount of their money from net interest income, i.e. the spread between what they get on your money and what they pay you. Vanguard does not, and their settlement fund is at 4.30% versus Schwab at .45%.
It's not difficult to use a purchased money fund at Schwab for that same 4.3%. It's a slight bit more work, but not really.

For me, both Vanguard and Fidelity did weird things. Vanguard neglected to put the actual shares I'd bought into my account despite the transaction confirmation saying it was completed and Fidelity withheld 25% when I rebalanced a 529. It wasn't a withdrawal and only changing investments so why withhold 25%.

Vanguard and Fidelity both got things sorted eventually. Schwab answers quicker than Vanguard ... I guess they are using the revenue from cash holdings to good use (...again use a purchased money fund)!

Anyway, everyone has different experiences. That is mine.

They all (and E-trade) have guarantees against fraudulent access. That's probably the most important thing to me, so I am careful to not to violate the terms (by sharing password with an aggregator).

It's the golden age of investing!! Several great choices to choose from!!!
jbogler wrote: Wed Feb 01, 2023 7:29 pm Are we just talking Chevy vs Ford?
Pretty much but only if we are talking trucks and throw Chrysler (RAM) into the ring too because Fidelity can't be dismissed either.
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jbogler
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Re: Vanguard vs Schwab

Post by jbogler »

radiowave wrote: Wed Feb 01, 2023 7:39 pm OP does it matter to you if you have a local Schwab branch that you can go to and actually talk to someone or willing to do all support online/phone (Vanguard)?
not at all. online for me.
billaster
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Re: Vanguard vs Schwab

Post by billaster »

typical.investor wrote: Wed Feb 01, 2023 7:52 pm
inverter wrote: Wed Feb 01, 2023 7:33 pm Schwab makes a significant amount of their money from net interest income, i.e. the spread between what they get on your money and what they pay you. Vanguard does not, and their settlement fund is at 4.30% versus Schwab at .45%.
It's not difficult to use a purchased money fund at Schwab for that same 4.3%. It's a slight bit more work, but not really.
But keep in mind that the Schwab and Vanguard funds are not equivalent. The Schwab (and Fidelity) funds with that yield are not government funds like Vanguard. They are Prime funds which means that they hold higher risk commercial paper.

You have to incur higher risk investments at Schwab and Fidelity to get the same yield as Vanguard government funds. This is because the Schwab and Fidelity money market funds have expense ratios that are three to four times that at Vanguard.

This may or may not be important to you but you should at least be aware of it.
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jbogler
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Re: Vanguard vs Schwab

Post by jbogler »

inverter wrote: Wed Feb 01, 2023 7:33 pm Schwab makes a significant amount of their money from net interest income, i.e. the spread between what they get on your money and what they pay you. Vanguard does not, and their settlement fund is at 4.30% versus Schwab at .45%.

Schwab is a for profit company with shareholders, Vanguard is not.
jbogler wrote: Wed Feb 01, 2023 7:29 pm A few years in, looking at Schwab, they are "cheaper". Their IRA's and most accounts have 0 fees, whereas Vanguard charges you $20-$25 (I am assuming a year), Their Total US Stock/Bond Index funds are lower than vanguards by .01%.
I'm unaware of Vanguard charging an annual fee. Schwab's index funds are likely a loss leader to try and get you to pay for advisory services.
I did see the note about signing up for e-deliver to waive fees, but then read this below that statement: $20 for each Vanguard mutual fund. The fee is waived if you have at least $1 million in qualifying Vanguard assets. (which i dont)
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yatesd
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Re: Vanguard vs Schwab

Post by yatesd »

I’ve switched everything over to Schwab and have been happy so far. Last week we had a simple question on a Saturday night and an agent got it addressed via chat very quickly. Today received a $100 check and did a mobile deposit with my phone.

Took a while to get setup but I find Schwab to be 300% better than Vanguard for customer service.
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typical.investor
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Re: Vanguard vs Schwab

Post by typical.investor »

billaster wrote: Wed Feb 01, 2023 8:31 pm
typical.investor wrote: Wed Feb 01, 2023 7:52 pm
inverter wrote: Wed Feb 01, 2023 7:33 pm Schwab makes a significant amount of their money from net interest income, i.e. the spread between what they get on your money and what they pay you. Vanguard does not, and their settlement fund is at 4.30% versus Schwab at .45%.
It's not difficult to use a purchased money fund at Schwab for that same 4.3%. It's a slight bit more work, but not really.
But keep in mind that the Schwab and Vanguard funds are not equivalent. The Schwab (and Fidelity) funds with that yield are not government funds like Vanguard. They are Prime funds which means that they hold higher risk commercial paper.

You have to incur higher risk investments at Schwab and Fidelity to get the same yield as Vanguard government funds. This is because the Schwab and Fidelity money market funds have expense ratios that are three to four times that at Vanguard.

This may or may not be important to you but you should at least be aware of it.
Yeah, I see the Schwab Government Money Fund yields a little less at 3.95%.

That's perhaps a good point for people who keep a few years expenses or maybe a house purchase liquid.
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Re: Vanguard vs Schwab

Post by techinvestor23 »

yatesd wrote: Wed Feb 01, 2023 8:50 pm I’ve switched everything over to Schwab and have been happy so far. Last week we had a simple question on a Saturday night and an agent got it addressed via chat very quickly. Today received a $100 check and did a mobile deposit with my phone.

Took a while to get setup but I find Schwab to be 300% better than Vanguard for customer service.
Yes, +1 for Schwab customer service. I have been using Schwab for 12 years now and never had an issue. I have had to call a couple of times during these years and they were easily accessible and extremely helpful.
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Re: Vanguard vs Schwab

Post by Northern Flicker »

When expense ratios differ by 1bp, it is hard to know which fund is cheaper because not all expenses are accounted for in the expense ratio.
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nps
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Re: Vanguard vs Schwab

Post by nps »

jbogler wrote: Wed Feb 01, 2023 8:35 pm I did see the note about signing up for e-deliver to waive fees, but then read this below that statement: $20 for each Vanguard mutual fund. The fee is waived if you have at least $1 million in qualifying Vanguard assets. (which i dont)
Vanguard does not charge fees for mutual funds held in brokerage accounts if signed up for e-delivery, so you might not have a Vanguard brokerage account. If you move to Schwab you will definitely have a brokerage account.
Wrench
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Re: Vanguard vs Schwab

Post by Wrench »

Choosing a broker is no different than any other consumer purchase. Do you drive a Chevy, Ford, BMW or Tesla? Why? The car you chose had the right features for you at a price you were satisfied with. You will find strong advocates for each one of those brands. The exact same thing is true for financial firms. I've had accounts at all the major brokerages (and some smaller ones too over that past 40 years). Every one has had some advantages and some disadvantages. Not one of them was perfect, and not one of them was horrible (none of the stole my money! :happy ). FWIW, here are my assessments of the "big 3", Vanguard, Schwab and Fidelity:
Vanguard
Pluses: lowest cost provider, you are owner of company if you hold mutual funds, wide range of investing options, philosophy of investing matches mine (low cost indexing), I like and appreciate how the company is run (I have a relative who works there), Settlement account automatically invests in MM fund.
Minuses: Mobile app not good; technologically, the least up-to-date of the big three, customer service is arguably the worst of the big three if you need phone support, No true trading app - if you are a trader, you don't want to use Vanguard as your brokerage; no local offices, no real banking functions or cash management accounts
Schwab
Plusses: Superior customer service, 24/7, wide range of Schwab low cost funds available; technologically, excellent with good mobile app and web site, acceptable trading app (Street Smart Edge), local offices near most major metropolitan areas
Minuses: The biggest one to me: Settlement fund in low cost bank (cash) that pays essentially no interest (you can move to MM fund, but have to do it manually, which is PITA); For profit company that makes its money by using my cash (without really being terribly up-front about that, e.g.,they just settled suit and distributed penalty $s to users about improper disclosure of use of cash in their Intelligent Portfolio accounts )
Fidelity
Pluses: Excellent web site with lots of research tools; Full-View so you can track all accounts, even those not at Fidelity (all three have this, but Full-View is best IMHO); local offices in many areas; Cash management account available; 2% cash back credit card (if you deposit in fidelity account) a nice extra; Good (but maybe not quite as good as Schwab) customer service, acceptable range of low cost funds, including some that are "zero" ER
Minuses: For profit company that will try to sell you services if (when?) you become wealthy enough; privately held so not very transparent about how company works

That's just my list based on my experiences. Yours might be different. And that doesn't even count other things. For example, I have a buddy who buys a lot of municipal bonds. He swears by eTrade because he says they have a superior collection of those compared to Schwab or Fidelity (he has not used Vanguard). For traders, particularly options, TDAmeritrade has the best platform in Think or Swim (TOS) IMHO. But TDA has been purchased by Schwab and the future of TOS is unclear, at least to me.

Bottom line: do some research and choose the company that best fits your needs with the most positives for your situation with the fewest negatives. What do I do? I have accounts at all three, but right now, all my money is split between Vanguard and Schwab. I like having two major accounts so I can take advantage of the good features of both, and in case something goes bad at one (can't access, gets hacked) I have the other to fall back on. YMMV.

Wrench
Edit: correct Schwab "minus" that should have been a "plus"
Last edited by Wrench on Fri Feb 03, 2023 3:48 pm, edited 4 times in total.
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galawdawg
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Re: Vanguard vs Schwab

Post by galawdawg »

Wrench wrote: Thu Feb 02, 2023 6:02 am Schwab
Plusses: Superior customer service, 24/7, wide range of Schwab low cost funds available; technologically, excellent with good mobile app and web site
Minuses: acceptable trading app (Street Smart Edge), local offices in many higher population areas, banking available so can make company one-stop shop for all your finances if you wish
Minuses: The biggest one to me: Settlement fund in low cost bank (cash) that pays essentially no interest (you can move to MM fund, but have to do it manually, which is PITA); For profit company that makes its money by using my cash (without really being terribly up-front about that, e.g.,they just settled suit and distributed penalty $s to users about improper disclosure of use of cash in their Intelligent Portfolio accounts )
Fidelity
Pluses: Excellent web site with lots of research tools; Full-View so you can track all accounts, even those not at Fidelity (all three have this, but Full-View is best IMHO); local offices in many areas; Cash management account available; 2% cash back credit card (if you deposit in fidelity account) a nice extra; Good (but maybe not quite as good as Schwab) customer service, acceptable range of low cost funds, including some that are "zero" ER
Minuses: For profit company that will try to sell you services if (when?) you become wealthy enough; privately held so not very transparent about how company works
Did you mean for the highlighted portion to be "minuses" about Schwab? If so, can you explain why those are not advantages/positive things?
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Re: Vanguard vs Schwab

Post by alexbogle »

Schwab's customer service has continually impressed me. If I had to choose one place, it would be Schwab for that reason. I'd have to manually purchase SNSXX for cash but so be it if I truly only wanted a one-stop shop.

Fidelity's customer service isn't bad, but it's not as good. There are longer wait times and I've gotten the occasional unhelpful representative. Still a lot better than Bank of America or Comcast experiences though!

But I don't mind having my banking and my investing segregated. It actually makes me feel safer. So I use Schwab for investing and Fidelity for my banking. At Fidelity, I keep my cash 100% invested in SPAXX in the brokerage account. I don't want a fund with potential redemption gates or liquidity fees in case there is a crisis. I write checks and ACH out of the CMA and let cash manager auto-liquidate the SPAXX in the brokerage account.

EDIT:

Actually, I just decided to go ahead and actually read the SPAXX prospectus and it seems they reserve the right to impose liquidity fees. I thought I had read here on bogleheads that SPAXX had the benefit of not having redemption gates or liquidity fees compared to SPRXX, but now I realize I need to read a bit more and reevaluate.

Okay, for anyone reading, I can confirm that I was misreading the prospectus. Fidelity lumps SPAXX and SPRXX together in the same document and I was reading the liquidity fees clause about SPRXX and getting confused. These two pages also confirm no liquidity fees or redemption gates on SPAXX: https://www.fidelity.com/mutual-funds/f ... nds-manage https://www.fidelity.com/mutual-funds/m ... rket-funds
Last edited by alexbogle on Thu Feb 02, 2023 8:06 am, edited 2 times in total.
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Re: Vanguard vs Schwab

Post by tunafish »

I have accounts at Vanguard and Schwab. I would drop Vanguard in a nanosecond if I weren't concerned about having all my eggs in one basket.

Vanguard's website has become close to unusable, customer service has limited hours and the reps are often ignorant or wrong. They charge $20 a year for paper statements.

I have thought about moving my Vanguard account to Fidelity, but I fear Vanguard would sell my CDs regardless of what they say.
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Re: Vanguard vs Schwab

Post by tonyclifton »

We have nearly all of our brokerage accounts at Schwab (Roth IRA, taxable, and rollover IRA). Our HSA is at Fidelity. Some pluses for Schwab that haven’t been mentioned are a no-foreign transaction fee debit card and no atm fees debit card. The Schwab app allows same business day check deposits. A major plus for Fidelity is they allow fractional ETF share purchases for any ETF. At Fidelity you can buy or sell exact amount of dollars and not worry about selling whole shares which might be more than you want/need. I do not like the Fidelity user interface but I only need to use it a few times a month for HSA related activities.
PatrickA5
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Re: Vanguard vs Schwab

Post by PatrickA5 »

We have almost everything at Fidelity (his/hers TIRA and Roths, brokerage, CMA, credit card). We moved everything from VG a few years ago and have been pleased, so far. Also, an office is available if we need to meet in person.

DW is in the process of getting an inheritance from T Rowe Price and Vanguard. T. Rowe worked flawlessly in just a few days. Vanguard's process reminds me of why I left VG. Website didn't work. First adventure with an inheritance representative was worthless as when we called asking the status, the 2nd rep said there was no signs that the first rep did anything - at least not anything that stayed in the system. We'll be transferring the funds as soon as they're in our account to Fidelity. No telling when that will be.

As far as Schwab, I've thought about maybe opening an account there to test drive. There's a shiny new office practically next door to Fidelity. Might try to hit them up for a transfer bonus. I'm thinking about splitting our money between Retirement accounts remaining at Fidelity and all taxable accounts at Schwab.
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Yesterdaysnews
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Re: Vanguard vs Schwab

Post by Yesterdaysnews »

???? just hold ur Schwab cash in SWVXX

Schwab gave me $14k total bonus in 2021 to move my accounts over from vanguard.

I’m a fan of CS.
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Re: Vanguard vs Schwab

Post by alexbogle »

Yesterdaysnews wrote: Thu Feb 02, 2023 11:07 am ???? just hold ur Schwab cash in SWVXX

Schwab gave me $14k total bonus in 2021 to move my accounts over from vanguard.

I’m a fan of CS.
Nice. How much did you move over?
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jbogler
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Re: Vanguard vs Schwab

Post by jbogler »

Thank you for all the great feedback. I will sum it up as "it depends". Depends on what your needs are, as there are quite a number of factors. I will digest all this information and make a decision
billaster
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Re: Vanguard vs Schwab

Post by billaster »

alexbogle wrote: Thu Feb 02, 2023 11:12 am
Yesterdaysnews wrote: Thu Feb 02, 2023 11:07 am ???? just hold ur Schwab cash in SWVXX

Schwab gave me $14k total bonus in 2021 to move my accounts over from vanguard.

I’m a fan of CS.
Nice. How much did you move over?
That's fine if you don't mind paying triple the expenses of a Vanguard money market fund and holding commercial paper instead of government guaranteed assets.
Mike Scott
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Re: Vanguard vs Schwab

Post by Mike Scott »

One reason to be at Vanguard is if you want to use one or more of the Vanguard specific mutual funds. I do and I'm OK with Vanguard's service and website. You can certainly make Schwab or Fidelity work if that's what you prefer. I use all three for various reasons.
nalor511
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Re: Vanguard vs Schwab

Post by nalor511 »

billaster wrote: Thu Feb 02, 2023 12:19 pm
alexbogle wrote: Thu Feb 02, 2023 11:12 am
Yesterdaysnews wrote: Thu Feb 02, 2023 11:07 am ???? just hold ur Schwab cash in SWVXX

Schwab gave me $14k total bonus in 2021 to move my accounts over from vanguard.

I’m a fan of CS.
Nice. How much did you move over?
That's fine if you don't mind paying triple the expenses of a Vanguard money market fund and holding commercial paper instead of government guaranteed assets.
Anyone who isn't spending the money "this month" could also just buy a 4wk TBill in about 30 seconds (once you know the process) and not pay any expenses, nor any state taxes, and earn the same nice 4.5x% at any broker. So getting hung up on expenses and risk for the ~$1000 that I keep liquid is sort of missing the point.

Vanguard has no customer service after hours, weekends, or via chat. Schwab/Fidelity both have live chat, and if I have to call (yuck) I get to a human in about 60 seconds. And if something really goes bonkers, I have physical offices for both Schwab and Fidelity less than 15 minutes away. Do I love calling and visiting offices? No I do not, but maybe my heirs will actually need to speak to a human or get an in-person signature for some reason.
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ruralavalon
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Re: Vanguard vs Schwab

Post by ruralavalon »

jbogler wrote: Wed Feb 01, 2023 7:29 pm When I first found the boglehead philosophy, I chose Vanguard and Vanguard funds. I did this because it is the Jack Bogle philosophy that drives this site, and correct me if I am wrong, was the first to offer low cost index funds.

A few years in, looking at Schwab, they are "cheaper". Their IRA's and most accounts have 0 fees, whereas Vanguard charges you $20-$25 (I am assuming a year), Their Total US Stock/Bond Index funds are lower than vanguards by .01%.

I understand the difference in price is very small but are there any other advantages/disadvantages from using Schwab vs Vanguard? Are we just talking Chevy vs Ford?

I am about to set up some new accounts and I will always take the lower cost option (schwab) just wondering if there is anything i might be missing by going with Schwab over Vanguard.
Schwab money market funds have lower yields, they lack a total international stock index fund, lack a small-cap value index fund, have fewer muni bond funds, and a shortage of balanced funds.

Any advantage in lower expense ratios is trivial.
Last edited by ruralavalon on Thu Feb 02, 2023 12:57 pm, edited 3 times in total.
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Yesterdaysnews
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Re: Vanguard vs Schwab

Post by Yesterdaysnews »

alexbogle wrote: Thu Feb 02, 2023 11:12 am
Yesterdaysnews wrote: Thu Feb 02, 2023 11:07 am ???? just hold ur Schwab cash in SWVXX

Schwab gave me $14k total bonus in 2021 to move my accounts over from vanguard.

I’m a fan of CS.
Nice. How much did you move over?
$4M taxable account - gave me 10k
1.7M Trad IRA - gave me 4K
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Yesterdaysnews
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Re: Vanguard vs Schwab

Post by Yesterdaysnews »

billaster wrote: Thu Feb 02, 2023 12:19 pm
alexbogle wrote: Thu Feb 02, 2023 11:12 am
Yesterdaysnews wrote: Thu Feb 02, 2023 11:07 am ???? just hold ur Schwab cash in SWVXX

Schwab gave me $14k total bonus in 2021 to move my accounts over from vanguard.

I’m a fan of CS.
Nice. How much did you move over?
That's fine if you don't mind paying triple the expenses of a Vanguard money market fund and holding commercial paper instead of government guaranteed assets.
If one feels so strongly it’s very easy to buy treasury bonds on CS.
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Yesterdaysnews
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Re: Vanguard vs Schwab

Post by Yesterdaysnews »

Yesterdaysnews wrote: Thu Feb 02, 2023 12:57 pm
billaster wrote: Thu Feb 02, 2023 12:19 pm
alexbogle wrote: Thu Feb 02, 2023 11:12 am
Yesterdaysnews wrote: Thu Feb 02, 2023 11:07 am ???? just hold ur Schwab cash in SWVXX

Schwab gave me $14k total bonus in 2021 to move my accounts over from vanguard.

I’m a fan of CS.
Nice. How much did you move over?
That's fine if you don't mind paying triple the expenses of a Vanguard money market fund and holding commercial paper instead of government guaranteed assets.
If one feels so strongly it’s very easy to buy treasury bonds on CS.

CS is superior to vanguard in most ways and you don’t have to buy anything outside of vanguard ETFs if you don’t want to.

Physical office I don’t ever use, but told my wife in the event of my untimely demise to visit the office.

Never been up sold either by CS. I think even my $6M plus account is small potatoes for them. Never get even a phone call, which is what I like. But they always seem to solve my issues when they arise very well.

Sure, it’s a for profit business, but there are positives to that also - they have better everything for the most part and one can minimize how much they contribute to CS bottom line.

To be honest, after the bonus they gave me, they probably lost money on my accounts. I don’t trade much, buy almost all VG products on there and hold cash in Tbill rather than let it sit in the sweep account.



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beyou
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Re: Vanguard vs Schwab

Post by beyou »

OP, your comment that Schwab has a lower ER, is true for a handful of funds.
Vanguard has many more funds to offer, and if your needs ever change there may be choices where Vanguard has a superior option.
For instance, if you want muni bonds funds, Vanguard has some state specific ones that beat any and all fund managers in ER.

That said, you can buy most funds from most brokers, so the ER should generally NOT be the reason to select a BROKER (reason to select a fund).
Only caveat is that some fund managers require you buy SOME funds only from their own brokerage.
Fidelity has some zero fee funds you can only buy there.
Vanguard has some very low fee funds that you can only buy from their broker (Admiral class of multi-class funds, where only the Investor higher ER version is available at other brokers like Schwab).

If you stick with a 2 or 3 fund portfolio, probably any broker would do, using ETFs from any of Vanguard, ishares or Schwab funds.

Default sweep pays better at Vanguard than anywhere, for cash, but close enough at Fidelity and as other said you can buy mmkt funds without using default sweep at other brokers like Schwab and Etrade.
Northern Flicker
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Re: Vanguard vs Schwab

Post by Northern Flicker »

Since mid-Dec. 2017, VGIT and SCHR have tracked the same index. SCHR has an ER 1 bp lower than VGIT. But is total cost lower? Hard to know, but VGIT has had a 4bp/yr higher performance in the years the two funds tracked the same index.

https://www.portfoliovisualizer.com/bac ... ion2_2=100

Also of note is that Vanguard does not do securities lending with fixed income funds. Bonds are for safety.
Doctor Rhythm
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Re: Vanguard vs Schwab

Post by Doctor Rhythm »

Have retirement and/or taxable funds at Schwab, Fidelity and Vanguard - and don’t have a strong preference between them. Like many others here, I disliked Vanguard’s new mobile app when it rolled out, but I’m more meh about it now. I don’t pay any fees at any of these brokerages, and recommend you don’t either (for Vanguard, this was accomplished by relinquishing printed statements).

I wouldn’t switch for 1-2 basis point difference in ER. Even after decades, the difference won’t be more than one average day’s market change.
toddthebod
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Re: Vanguard vs Schwab

Post by toddthebod »

ruralavalon wrote: Thu Feb 02, 2023 12:55 pm Schwab money market funds have lower yields
Current yields are 4.27 for SWVXX vs 4.30-4.32 for Vanguard's funds.
they lack a total international stock index fund
VXUS
lack a small-cap value index fund,
VBR
have fewer muni bond funds,
Don't care since I don't make half a million dollars a year.
and a shortage of balanced funds.
How many do you need?
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ruralavalon
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Re: Vanguard vs Schwab

Post by ruralavalon »

toddthebod wrote: Thu Feb 02, 2023 4:21 pm
ruralavalon wrote: Thu Feb 02, 2023 12:55 pm Schwab money market funds have lower yields
Current yields are 4.27 for SWVXX vs 4.30-4.32 for Vanguard's funds.
they lack a total international stock index fund
VXUS
lack a small-cap value index fund,
VBR
have fewer muni bond funds,
Don't care since I don't make half a million dollars a year.
and a shortage of balanced funds.
How many do you need?
But OP may care about those things, OP was "just wondering if there is anything i might be missing by going with Schwab over Vanguard."
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
UpperNwGuy
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Re: Vanguard vs Schwab

Post by UpperNwGuy »

Northern Flicker wrote: Thu Feb 02, 2023 1:38 pm Since mid-Dec. 2017, VGIT and SCHR have tracked the same index. SCHR has an ER 1 bp lower than VGIT. But is total cost lower? Hard to know, but VGIT has had a 4bp/yr higher performance in the years the two funds tracked the same index.
How did VGIT compare to SPTI?
drzzzzz
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Re: Vanguard vs Schwab

Post by drzzzzz »

All three are good - they all have their pluses as noted in the thread - it so depends on what is important to you. You can purchase an identical three or four fund portfolio using the same ETFs at any of the the three brokerage firms mentioned. So what matters is what you need after that - have accounts at all three and Fidelity and Schwab are way better for telephone times, responsiveness, capable reps, follow-up on issues, offices if you need something done in person, bonuses for transfer of funds, and very knowledgable reps. Decide what is important to you.

We also keep in touch with our rep at both Fidelity and Schwab since it is nice to directly call a person if you need something done - I have the reps direct dial number and have used them to assist with signature guarantees, needing help with transfers that were being held up by another institution, explaining treasury bond buying and other items that I didn't understand, and reimbursement of fees that I have incured from my own stupidity (once with an ATM charge, once with margin that I forgot about, etc; they also usually reimburse for any fees that a transferring institution might charge you). Both firms also gave us time (gratis) to talk with lawyer/estate planners to discuss estate planning while Vanguard refused or stopped offerring this service. And each gave us bonuses for transferring accounts to them.
Northern Flicker
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Re: Vanguard vs Schwab

Post by Northern Flicker »

UpperNwGuy wrote: Thu Feb 02, 2023 4:43 pm
Northern Flicker wrote: Thu Feb 02, 2023 1:38 pm Since mid-Dec. 2017, VGIT and SCHR have tracked the same index. SCHR has an ER 1 bp lower than VGIT. But is total cost lower? Hard to know, but VGIT has had a 4bp/yr higher performance in the years the two funds tracked the same index.
How did VGIT compare to SPTI?
If State Street does securities lending with bond funds, SPTI likely will have a higher return.
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typical.investor
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Re: Vanguard vs Schwab

Post by typical.investor »

Northern Flicker wrote: Thu Feb 02, 2023 5:57 pm
UpperNwGuy wrote: Thu Feb 02, 2023 4:43 pm
Northern Flicker wrote: Thu Feb 02, 2023 1:38 pm Since mid-Dec. 2017, VGIT and SCHR have tracked the same index. SCHR has an ER 1 bp lower than VGIT. But is total cost lower? Hard to know, but VGIT has had a 4bp/yr higher performance in the years the two funds tracked the same index.
How did VGIT compare to SPTI?
If State Street does securities lending with bond funds, SPTI likely will have a higher return.

It's not though....

Sep 2010 - Jan 2023 (life of SCHR) $10k invested

VGIT $12,022 CAGR 1.49%
SCHR $11,976 CAGR 1.46%
SPTI $11,555 CAGR 1.17%

That's nominal. Real returns are:

VGIT $8,843
SCHR $8,809
SPTI $8,499

https://www.portfoliovisualizer.com/bac ... ion3_3=100
Last edited by typical.investor on Thu Feb 02, 2023 6:15 pm, edited 1 time in total.
Northern Flicker
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Re: Vanguard vs Schwab

Post by Northern Flicker »

VGIT tracked a different index until Dec 2017. VGIT started as a govt bond index, and was changed to track a pure treasury index in 12/2017.

https://www.portfoliovisualizer.com/bac ... ion3_3=100

Probably my biggest criticism of Vanguard with respect to index funds is the number of index changes that have been made to funds.
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ruralavalon
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Re: Vanguard vs Schwab

Post by ruralavalon »

In my opinion Vanguard, Fidelity and Schwab are all good choices. It's largely a matter of personal preference.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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jbogler
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Re: Vanguard vs Schwab

Post by jbogler »

Yesterdaysnews wrote: Thu Feb 02, 2023 1:02 pm Physical office I don’t ever use, but told my wife in the event of my untimely demise to visit the office.
This is a very good point and useful to my situation, as my wife would need the in-person help to learn how to manage everything.
FinancialSnowboarder
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Re: Vanguard vs Schwab

Post by FinancialSnowboarder »

+1 for Schwab.

I've had all three and found Schwab to have much better customer service. There's also a physical branch about 10 minutes away from where I live, but I hardly go in-person. I've never had to wait on the phone for more than 10 minutes.
jgman
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Re: Vanguard vs Schwab

Post by jgman »

Im all in at Schwab.....the customer service is fantastic. Never have long waits on the phone and the provided info is always helpful and accurate. I just closed my local bank account and now have everything (banking and brokerage) at Schwab.
Northern Flicker
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Re: Vanguard vs Schwab

Post by Northern Flicker »

Schwab customers seem to be happy with Schwab brokerage services. I'm not particularly enamored with their bond fund products (though about 1% of our portfolio nonetheless currently is in a Schwab bond ETF).

Some Schwab bond index mutual funds and ETFs fairly consistently seem to underperform slightly other products tracking the same index despite the Schwab product having an equal or lower ER. Examples:

Intermediate TIPS
https://www.portfoliovisualizer.com/bac ... ion2_2=100

Intermediate Treasuries
https://www.portfoliovisualizer.com/bac ... ion2_2=100

Short-Term Credit
https://www.portfoliovisualizer.com/bac ... ion2_2=100

Intermediate-Term Credit
https://www.portfoliovisualizer.com/bac ... ion2_2=100

Total Bond
https://www.portfoliovisualizer.com/bac ... ion2_2=100

I will give them credit for clearly not just using securities lending to ensure they always have a slightly better return than competitors, taking more risk as needed to accomplish that. Schwab also deserves credit for starting the low commission price wars that brought down retail transaction costs from what used to be ridiculous levels.
Wrench
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Re: Vanguard vs Schwab

Post by Wrench »

galawdawg wrote: Thu Feb 02, 2023 7:28 am
Wrench wrote: Thu Feb 02, 2023 6:02 am Schwab
Plusses: Superior customer service, 24/7, wide range of Schwab low cost funds available; technologically, excellent with good mobile app and web site
Minuses: acceptable trading app (Street Smart Edge), local offices in many higher population areas, banking available so can make company one-stop shop for all your finances if you wish
Minuses: The biggest one to me: Settlement fund in low cost bank (cash) that pays essentially no interest (you can move to MM fund, but have to do it manually, which is PITA); For profit company that makes its money by using my cash (without really being terribly up-front about that, e.g.,they just settled suit and distributed penalty $s to users about improper disclosure of use of cash in their Intelligent Portfolio accounts )
Fidelity
Pluses: Excellent web site with lots of research tools; Full-View so you can track all accounts, even those not at Fidelity (all three have this, but Full-View is best IMHO); local offices in many areas; Cash management account available; 2% cash back credit card (if you deposit in fidelity account) a nice extra; Good (but maybe not quite as good as Schwab) customer service, acceptable range of low cost funds, including some that are "zero" ER
Minuses: For profit company that will try to sell you services if (when?) you become wealthy enough; privately held so not very transparent about how company works
Did you mean for the highlighted portion to be "minuses" about Schwab? If so, can you explain why those are not advantages/positive things?
Good catch. I will edit my original post to correct. Thank you.
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Wiggums
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Re: Vanguard vs Schwab

Post by Wiggums »

jbogler wrote: Wed Feb 01, 2023 7:29 pm I am about to set up some new accounts and I will always take the lower cost option (schwab) just wondering if there is anything i might be missing by going with Schwab over Vanguard.
If you are a buy and hold investor, all of the major brokers are fine.
As a retiree, a simple portfolio and very few accounts is most important to US. If your spouse is not interested in managing the portfolio, having a plan that you can implement “now” would be a priority from my perspective — especially for taxable accounts.

My FIL is no interest in finances and his spouse too care of it all. Now that she is deceased, my FIL still has no interest in finances. It doesn’t matter which broker that he uses.
"I started with nothing and I still have most of it left."
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