- INVESTING
- BROKERS
The two industry giants offer very different online investing approaches
Our editors independently research and recommend the best products and services. You can learn more about our independent review process and partners in our advertiser disclosure. We may receive commissions on purchases made from our chosen links.
Charles Schwab and Vanguard are two of the largest investment companies in the world. Schwab has 35.4 million active brokerage accounts, 5.4 million corporate retirement plan participants, 1.9 million banking accounts, and $8.85 trillion in client assets. Vanguard is even larger, with more than 50 million investors and $8.6 trillion in global assets under management.
Founded in 1971, Charles Schwab helped revolutionize the brokerage industry just four years later when it became one of the first firms to offer discounted stock trades. Today, the company offers multiple trading platforms and an array of tools and services designed to appeal to all investing levels. The biggest change Schwab has seen in years is the integration of TD Ameritrade's thinkorswim trading platform and app into the Schwab offering. Vanguard was introduced in 1975 by its late founder, John C. Bogle, who is credited with creating the first index fund in 1976. Interestingly, the fund was ridiculed as "un-American" and "a sure path to mediocrity." Today, the fund (now Vanguard 500 Index Fund) is one of the industry's largest.
In our 2024 Best Online Brokers reviews, Charles Schwab earned higher scores than Vanguard in almost every category we ranked and was chosen as Best for Beginners. Still, that doesn't mean Charles Schwab is a better option for every investor. Overall, we found that Schwab is a great choice for self-directed investors and traders who want access to multiple platforms, plenty of tools, and full banking capabilities. Vanguard works well for buy-and-hold investors who may not be as tech-savvy and who want access to professional advice. We'll dig deeper into these two giant brokerages to see which is a better fit for your portfolio needs.
- Account Minimum: $0
- Fees: $0/stock and ETF trade, $0 plus $1 per contract for options
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0.65 per contract for options
Usability
Charles Schwab offers two web-based platforms: Schwab.com and thinkorswim web (its premier trading platform), the latter of which is a slightly less customizable version of the thinkorswim downloadable desktop platform. Two mobile apps—Schwab Mobile and thinkorswim Mobile—round out its offerings. It's easy to open and fund an account, and you can do so online, via mobile app, by phone, or in person at one of its 300-plus branches.
You can open an account online with Vanguard, but there is a several-day wait before you can log in. And like most brokers, if you want to trade options or have access to margin, you have to fill out more paperwork. The website is a bit dated compared to many large brokers, though the company has modernized dashboards and trade flows in recent years. You can trade stocks, ETFs, funds, and some fixed-income products online, and you can call a broker to place orders with Vanguard's other available asset classes.
On the mobile side, Charles Schwab offers a choice of a straightforward, intuitive investing app in Schwab Mobile or a trading app in thinkorswim mobile. You can only trade futures and forex on the thinkorswim app, and mutual funds and fixed income are only available on Schwab mobile. With thinkorswim mobile, you can even place conditional orders and enjoy much more in terms of charting features. Vanguard's mobile app is simple to navigate, and it's easy to enter buy and sell orders. It's light in terms of features and seems to work best for buy-and-hold investors who want to check positions and enter simple trade orders.
Usability Verdict: Charles Schwab
Charles Schwab offers a wider user experience through multiple platforms. Vanguard is still easy to use, but its features and look and feel are a step behind Schwab.
Trade Experience
Desktop Experience
Schwab's trading experience has improved with the integration of thinkorswim web and desktop. There are now key indicators like a volume-weighted average price (VWAP) tool and excellent charting tools. The customization possible through thinkorswim is clearly aimed at trading, and you are able to trade directly from charts and stage orders for later entry. The Schwab.com experience is a more standard investor experience but still has key features like a real-time data stream and the ability to turn screens into watchlists.
Vanguard's platform is basic in comparison, but keep in mind that it's meant for buy-and-hold investors, not active traders. The data streams in real time and it is easy to create screens to select investments. There are no technical analysis-type screeners with Vanguard, as it skews to investing, not active trading. Overall, the trading platform works for buy-and-hold investors, but it falls predictably short for traders and investors who would want a robust, customizable experience.
Desktop Trading Experience Verdict: Charles Schwab
Charles Schwab has a robust, customizable trading platform that vastly outstrips Vanguard's capabilities. Traders will feel right at home with thinkorswim. Even for simple investing, Schwab's web platform is slicker in terms of trading than Vanguard's more stripped-down approach to online investing.
Mobile Experience
Schwab provides robust mobile apps that offer streaming real-time quotes, trade tickets, multiple order types (including conditional orders), in-app research, and charting—including indicators and drawing tools. You can trade the same asset classes on the mobile offerings, but there are gaps in that thinkorswim has forex and futures, while Schwab mobile is the only way to trade mutual funds and fixed income.
Vanguard offers a mobile app, too, but it's outdated and light in terms of features compared to Schwab's. You won't find any options for charting, but quotes stream in real time. The app is enough for buy-and-hold investors in that you can monitor your positions, analyze your portfolio, read the news, and place basic orders.
Mobile Trading Experience Verdict: Charles Schwab
Charles Schwab's mobile app covers more assets than Vanguard and works well, but the real edge in this category comes from the thinkorswim mobile app. Vanguard has no equivalent to offer for traders on the go to manage positions and enjoy top-notch charting tools.
Range of Offerings
Charles Schwab offers all the investments you'd expect from a large broker, including equities, bonds, futures, forex, options, and access to cryptocurrency (through Bitcoin futures and funds only). Vanguard's offerings are comparatively limited, but they should be adequate for most buy-and-hold investors.
Range of Offerings Verdict: Charles Schwab
Charles Schwab offers a wider range of assets than Vanguard does. We should note that we are looking at the broker's range of investments, not the quality of funds. Vanguard deservedly has a reputation for offering some of the best low-cost ETFs in the business, but you can access these same funds through Schwab's wide selection of assets.
Compare Range of Offerings
Order Types
Schwab supports a wide variety of orders on the website, thinkorswim, and mobile, including conditional orders such as one-cancels-the-other and one-triggers-the-other. You can stage orders for later entry and select the tax lot when you close part of a position (e.g., average cost, FIFO, LIFO, etc.). Vanguard, predictably, only supports order types that buy-and-hold investors typically use: market, limit, and stop-limit orders. It doesn't support staging orders for later entry; however, you can select specific tax lots (including partial shares within a lot) to sell.
Order Types Verdict: Charles Schwab
Charles Schwab has a clear edge when it comes to order types. Again, this is by virtue of catering to a wide range of investors, including heavy traders using the thinkorswim platform.
Trading Technology
Charles Schwab uses a proprietary wheel-based router for order management purposes, such as handling exchange outages, performing real-time execution quality reviews, and handling volatile markets. Most stock and options orders are routed to third-party wholesalers (this balances execution quality with Schwab's cost savings). Quarterly information regarding execution quality is published on Schwab's website. Schwab reports that 97.5% of orders (500-1,999 shares) are filled at prices better than the National Best Bid and Offer (NBBO). Schwab calculates that an average order size of 882 shares of SandP 500 stocks sees $22.84 in price improvement and an execution speed of 0.03 seconds.
Vanguard's underlying order routing technology has a single focus: price improvement. The company reports price improvement on stock orders of $0.017 per share—a decent figure but below Schwab's reported price improvement by a few tenths of a cent. Only Schwab offers a trade simulator or supports backtesting capabilities.
Trading Technology Verdict: Charles Schwab
Charles Schwab has the edge when it comes to trading technology in terms of execution, price improvement, and capabilities.
Costs
Charles Schwab and Vanguard offer $0 commissions for online equity, options, and ETF trades for U.S.-based customers, with per-contract options fees of $0.65 and $1, respectively. You will pay more at Schwab to buy mutual funds outside the no-fee list (up to $74.95 versus Vanguard's $20). Broker-assisted trades are $25 with Schwab and between $0 and $25 (depending on your account balance) at Vanguard.
On the downside, Vanguard has added an account closure fee and will charge an account maintenance fee to investors under a certain balance who haven't yet opted in for the e-delivery of documents. When it comes to margin rates, Schwab is slightly cheaper at 13.575% for $10,000 to Vanguard's 13.75%.
Costs Verdict: Charles Schwab
This category was the closest. Schwab may have some high fees if you are purchasing from the outside of the no transaction fee list, but otherwise, it has the edge when it comes to costs.
Compare Costs
Account and Research Amenities
Charles Schwab offers flexible screeners to help you research your next trade, including an ETF screener with more than 150 criteria, including asset class, fund performance, distribution yield, Morningstar category, regional exposure, and top 10 holdings. You'll also find calculators, idea generators, and a set of technical analysis charting tools. On top of this, thinkorswim includes a wide selection of research, technical studies, and a deep toolset.
Vanguard offers basic screeners for stocks, ETFs, and mutual funds, and you can view fixed-income products in a sortable list. All research is proprietary, and market news is provided by MT Newswires and the Associated Press. There are several tools focused on retirement planning. Charting is limited, and no technical analysis is available, which is expected for a broker that focuses primarily on buy-and-hold investing. With either broker, you can sweep your cash into a money market fund to get a higher interest rate, but Vanguard's stands out as being much higher.
Research and Research Amenities Verdict: Charles Schwab
The variety and depth of Charles Schwab's account and research amenities gives the broker a wide edge in this category.