Beginners Guide to Investing through Vanguard

Vanguard is synonymous with investing. But if you haven’t heard of them before or if you’re not too sure what they do and how they work, here is our beginner’s guide.

What is Vanguard?

Vanguard is one of the largest investment companies in the world with over 30 million investors globally. The company was founded in the USA in 1975 and branched out to Australia in 1996. In Australia, they currently have $164 billion assets under management and over 80 funds you can invest in.

Initially, Vanguard was known for its index funds, as its founder John C. Bogle is credited with creating the first index fund. Today, however, they are one of the largest providers of managed funds and ETFs.

Vanguard’s investment products:

Managed funds

If you’re time poor or just prefer a hands-off approach, you may be interested in managed funds. A managed fund is an investment where your money is pooled together with other people’s money and is invested in a common investment goal by a professional fund manager. The fund manager will actively manage and oversee your investments and will do all the decision making in regards to your fund. There aim is to outperform the relevant market index. Managed funds can invest in a range of assets including: shares, bonds and property.

The majority of the managed funds that Vanguard offer are index funds which seek to track the index (rather than outperform). They also offer a smaller but growing range of actively managed funds.

Exchange Traded Funds (ETFs)

Similar to managed funds, ETFs are a pooled investment option. But most ETFs are ‘passively managed’ in that they’re designed to move in line with an index or commodity, such as the S&P/ASX 200 or the gold price. This is in contrast to many managed funds, which are often ‘actively managed’. Therefore, ETFs can have significantly lower management fees than an actively managed fund. ETFs are often easier to access than managed funds as you can trade them on an exchange such as the ASX.

Vanguard is actually the largest ETF provider in Australia, so you can expect a broad range of ETFs on offer, investing across many different assets and sectors.

How can you invest in Vanguard

With Vanguard’s Personal Investor you will have access to a broad range of investment products and you will have the ability to buy and sell managed funds, ETFs and ASX direct shares. If you open a Vanguard Personal Investor account you will also get a Vanguard cash account, which is used for trading shares. The money you have in the account will also earn interest. The minimum amount that you need to get started investing with Vanguard is $500.

You can also access their range of ETFs through a broker or online share trading platform.

Who can invest with Vanguard?

To open a Vanguard Personal Investor account you will need to:

be 18 years or older
be an Australian resident
be an Australian tax resident
have an Australian residential address
have an Australian bank account
have an Australian mobile number that will be used for ongoing security authentication

What are Vanguard’s fees?

Vanguard will soon be changing its fees across most popular offerings. Here we have included what their fees currently are and what they will be changing to.

Account fees:

	Fees at the time of writing
Vanguard Cash account	Nil
Vanguard Managed Funds	Nil
Vanguard ETFs	Nil
ASX direct shares	0.10% per annum

Brokerage fees:

	Fees at the time of writing
Vanguard Managed Funds	Nil
Vanguard ETFs	$9 per trade
ASX direct shares	$9 per trade

While the account and brokerage costs will likely make up the bulk of fees you will incur, you should always check the PDS to get a full picture of the fees involved.

Provider	Fee for $15K trade*	Ongoing fees^#	Trade with live prices^
	$15.00	Yes	Yes
	$7.50	Yes	Yes
	$14.98	Yes	Yes

View all Canstar rated Online Share Trading products. View Disclosures.

* Online brokerage fee for a $15,000 trade based on the number of transactions specified in the search inputs
# Ongoing fee for the account. There may be waivers and discounts subject to account use
^ The ability to view and trade on live prices

Cover image by: Dennis Diatel/ Shutterstock.com

Thanks for visiting Canstar, Australia’s biggest financial comparison site*

Marissa Hayden

Content Producer

Marissa is the Content Producer for the Wealth team at Canstar, and specialises in investment content. She enjoys simplifying complex financial concepts and jargon for the ‘everyday’ Australian investor. Follow Canstar Investor Hub on Facebook.

In this article