By TJ Porter, WCI ContributorVanguard and Schwab are two major providers of financial services and investments. If you’re looking to open your first investment accounts or simply want to try a new broker, these two companies are likely to show up during your search. If you’re stuck deciding between the two, it’s important to compare and contrast their offerings to determine which will be a good fit for you.
Vanguard Overview
Vanguard is only about 50 years old. The company was founded in 1975 by John Bogle, but it has become a household name due to the pioneering of index funds, which make it easy for investors to buy shares in a huge number of companies at a low cost.
Vanguard focuses primarily on investment services, offering brokerage accounts, retirement accounts, mutual funds, ETFs, and financial advising.
Schwab Overview
Schwab is slightly older than Vanguard, having been founded by Charles R. Schwab in 1971. Today, it’s a major multinational financial services company.
Like Vanguard, Schwab has a selection of mutual funds for investors and offers services such as brokerage and retirement accounts. Schwab also has some banking services, including checking and savings, home loans, and credit cards.
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Pros and Cons of Vanguard
Vanguard Pros
- Low cost: Vanguard is the pioneering company behind index funds, and all of its services are aimed at being similarly low-cost. It’s easy to invest through Vanguard without paying additional fees while keeping your money in inexpensive index funds.
- Strong reputation: Vanguard has trillions of dollars under its management and has a reputation for stability in the industry.
- Focus on long-term investors: Vanguard’s offerings and services are focused on long-term investors rather than day traders and speculators, making it a good fit for people who are looking for long-term wealth building.
Vanguard Cons
- Long-term focus limits trading tools: If you want advanced trading tools, such as charting and powerful investment filters, Vanguard’s focus on long-term investments means you won’t find those here.
- No crypto: Investors looking to buy crypto will need to use a different broker, as Vanguard does not offer crypto investments.
Pros and Cons of Schwab
Schwab Pros
- Wider variety of services: Vanguard focuses almost exclusively on investing services, while Schwab offers investments plus basic banking and lending.
- More advanced trading tools: Schwab offers some trading tools that will appeal to more frequent traders through its thinkorswim platform.
Schwab Cons
- Fewer funds than Vanguard: Schwab states that it has more than 50 no-load, no-transaction fee funds. Vanguard, for comparison, has more than 250. Schwab does offer some funds from other fund companies with no transaction fees.
How Is Vanguard Different from Schwab?
Vanguard and Schwab are both major companies in the same field: financial services. That means that they’re both very similar companies.
One key difference between the two is that Vanguard is almost exclusively focused on long-term buy-and-hold investing. You can certainly do the same through Schwab, but Schwab also offers tools that will appeal to the active trader.
Schwab also has some financial services that Vanguard does not, such as checking and savings accounts, mortgages, and credit cards.
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Vanguard vs. Schwab Comparison
Here’s a rundown of how Vanguard and Schwab compare in some key areas.
Cost/Fees
Vanguard’s name is practically synonymous with low-cost investing, and that’s hard for Schwab to beat. Still, Schwab does a good job of trying to match Vanguard, with a host of no-load, no-transaction fee funds that have competitive expense ratios. For example, Vanguard’s total stock market index fund has an expense ratio of 0.04%, while Schwab’s has an expense ratio of 0.03%.
Investment Offerings
Schwab and Vanguard have very similar investment offerings, with a number of low-cost mutual funds and ETFs. Vanguard edges out Schwab here thanks to its wider variety of mutual funds.
Performance
The investments offered by both companies have similar performance, which makes sense given the fact that they generally offer funds that aim to track market indices rather than beat them.
For example, as of July 25, 2025, Schwab’s total market index fund had a 5-year return of 15.69% while Vanguard’s had a 5-year return of 15.85%.
Security
Both Schwab and Vanguard have reputations for strong security practices and follow industry-standard practices to help keep your money safe. Both are insured by the Securities Investor Protection Corporation (SIPC), offering up to $500,000 in insurance coverage to investors.
Customer Service and Digital Account Management/Technology
Both Vanguard and Schwab offer a number of options for getting customer service, including sending messages through a secure online messaging system or phone-based support.
When it comes to technology, Vanguard does not have the best reputation, with many considering its app and online interface to be lacking. However, Vanguard has made some strides in this area, and its app is perfectly functional.
Schwab’s online platform and app can also be a bit complicated to learn, but many people consider the thinkorswim platform to be more intuitive and easier to use, so some investors may prefer Schwab to Vanguard when it comes to technology experience.
529 Plan Vanguard vs. Schwab
529 plans are tax-advantaged accounts that you can use to save for the cost of higher education.
Rules and tax incentives vary based on the state in which you live. For example, some states may give you a tax break when making contributions but only if you use your state's plan, which may be tied to a specific broker.
Vanguard’s 529 is sponsored by Nevada, while Schwab’s is sponsored by Kansas. Check your state’s 529 rules and tax code to see if choosing one or the other is a better choice for your situation.
Vanguard vs. Schwab Index Funds
Both Schwab and Vanguard offer index funds, though Vanguard has a wider variety of funds to offer. If you want to focus on a specific industry or particular index, you’ll want to compare both companies’ offerings to see if one or the other offers a fund that fits your needs.
For example, Vanguard offers an international bond index fund while Schwab does not.
Pricing on index funds is competitive between the two.
Is It Better to Invest with Vanguard or Schwab?
As with anything related to personal finance, there is no single answer to this question. The answer is personal. You’ll have to consider your financial situation, investment style, and goals to decide whether Vanguard or Schwab is better for your needs.
How to Choose Between Vanguard and Schwab?
Which broker is better to invest with depends on your personal situation and goals. Long-term investors who want to buy shares in a few basic mutual funds will do well with either company. Each company offers funds with similar expense ratios.
Schwab may be a better fit if you want a checking account tied to your brokerage account. It can also be good for those who want to take a more active role in managing their portfolio, thanks to its thinkorswim platform.
Vanguard, on the other hand, is a better fit for people who are true buy-and-hold investors with its wider variety of mutual funds.
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Which Is a Better Choice for the WCI Investment Philosophy?
There are a lot of ways for people to invest, but the WCI investment philosophy is generally focused on buy-and-hold investing rather than more active trading and following the market.
While both Schwab and Vanguard can be a good fit for this type of investing, Vanguard has a very clear focus on long-term, buy-and-hold investing, making it the better fit of the two if you want to follow the WCI philosophy.
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