It’s one of Clark’s favorite discount investment brokerages…and it’s growth is off the charts!
Vanguard has now crossed the $4 trillion asset threshold for the first time ever. That makes Vanguard the second largest financial house behind Blackrock, trailing them by roughly $1 trillion in assets.
So what makes Vanguard so special? What are they doing right?
Read more: Nearly 25% of Americans are making this costly money mistake
Vanguard’s customers are its shareholders
Vanguard is like a co-op for investing that’s owned by its shareholders, similar to how a credit union is a co-op for banking.
At Vanguard, they’ve managed to offer better returns on money because everything they do is to hold down expenses for their customers. They charge one-sixth the management expenses of the industry average. That means paying 18 cents in management fees per $100 invested in Vanguard products vs. paying $1.23 for the same $100 invested in competitor’s actively managed funds, according to independent investment research firm Morningstar.
Vanguard’s business model is an unusual one for Wall Street to stomach. Many on Wall Street have long brushed them off as that cutesy little place in Pennsylvania saying, ‘Oh, they’re not really Wall Street.’
Clark finds himself amused at that kind of attitude.
‘Thank goodness they’re not Wall Street because every choice they make is about you as their customer and shareholder-owner!’ the consumer champ laughs.
If you like using fee-only financial planners as Clark has talked about, many of them will heavily do your investing with Vanguard to hold your costs down. It makes them look better because your performance over time with their guidance will be a whole lot better!
And in case you’re wondering, Clark’s other favorite low-cost investment houses include Fidelity, T. Rowe Price and Charles Schwab.
Read more: 5 great reasons not to borrow from your 401(k)
Clark’s favorite investment picks with Vanguard
Targeted retirement funds
Invests in a combination of stocks, bonds and cash equivalents
Years available: 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, 2055, plus the Target Retirement Income Fund for those already in retirement
Expense: 0.13%
Minimum investment: $1,000 minimum to open an IRA or general account
Index funds
Invests in approximately 3,400 companies
Expense: 0.16% (other fees may apply)
Minimum investment: $3,000 minimum to open an IRA; $3,000 minimum to open an investment account
Invests 40% in bonds and 60% in stocks using a basket of Vanguard funds
Expense: 0.34%
Minimum investment: $1,000 minimum to open an IRA; $1,000 minimum to open an investment account
