Vanguard UK review | SIPP and stocks and shares ISA review - Finder UK

Vanguard UK review

Find out the pros and cons of Vanguard's investing platform, plus its products and charges, in our review.

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We say
★★★★★
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You say
★★★★★
Customer satisfaction
Low fees
Slow onboarding process
Whether you’re an experienced investor and want to build your fund yourself or a beginner who’s looking for a ready made portfolio – Vanguard might have options available that could suit you. It’s got an individual savings account (ISA), junior ISA, general investment account and a self-invested personal pension to choose from. Find out what features it has and what we thought.

What is Vanguard?

Vanguard is an investment platform with 30 million investors worldwide. It has over 75 funds to choose from, pooling money from lots of investors and using it to buy hundreds of different shares and bonds. There are two ways to invest with Vanguard: choosing a ready-made portfolio and building your own portfolio (think ready made meal vs cooking it up yourself). In February 2020, Vanguard launched a self-invested personal pension (SIPP) in the UK, heralding this as a low-cost option.

What accounts are available with Vanguard?

With Vanguard you can choose from:

  • Stocks and shares individual savings account (ISA). Invest up to your annual allowance (£20,000 for the 2020/2021 tax year) without paying any tax on your profits.
  • Junior ISA (JISA). Invest in your child’s future up to the JISA allowance for the year (£9,000 for the 2020/2021 tax year)
  • General investment account. Invest without any limits, good for those who have used up their ISA allowance for the year.
  • Self invested personal pension (SIPP). Invest in your retirement and benefit from tax relief on your contributions.

Vanguard stocks and shares ISA

A stocks and shares ISA is typically a good place to start if you’re new to investing as there are tax benefits that you don’t get with general investment. All investments up to £20,000 in the 2020/2021 tax year are tax-free.

  • Choose which funds go into your stocks and shares ISA from 75 different options or go with the ready-made options.
  • If you’re not sure what to invest in just yet, you can add money for the time being and choose which funds to go with later.
  • No charges to switch holdings, deal, make payments or exit.

Junior ISA

The junior ISA (JISA) allows you to invest in your children’s future. You can invest £100 per month or transfer an existing junior ISA over to Vanguard.

  • You can invest up to £9,000 in the 2020/2021 tax year tax-free.
  • While only a parent or legal guardian can set it up, friends and family can contribute money to the ISA – great for those over-enthusiastic aunties or grandparents.
  • The child will get full access when they turn 18.
  • Choose a ready-made portfolio or build it yourself.
  • As with the stocks and shares ISA, if you’re not sure what to invest in just yet, you can add money for the time being and choose your funds later.

Vanguard general investment account

The general account is a good option if you’ve used up your ISA allowance for the year or have ISAs elsewhere within the current tax year. There isn’t a limit to how much you can invest but, of course, your profits are taxable.

  • Choose which funds go into your general investment account. You can choose a ready-made portfolio or DIY it.
  • As with the other accounts, you can add money to the account, then invest it later if you want to.

Self-invested personal pension (SIPP)

Vanguard’s SIPP allows you to save for retirement. You can choose to invest £100 per month, start with a £500 lump sum or transfer pensions that you already have with other providers. The account fee is 0.15% a year, capped at £375.

  • You can choose from over 75 funds including the ready-made portfolios designed specifically for retirement – we explore these below.
  • As with all pensions, there are tax benefits such as tax relief on your contributions.
  • Enjoy the savings when you are 55 years old.

What fund options does Vanguard have?

With Vanguard, you have a choice between ready-made portfolios and building your own portfolios.

Ready-made portfolios

As the name suggests, ready-made portfolios are already made. They’ve already been assembled, ready for you to pop them in the microwave… I mean, start investing. Ready-made portfolios get you access to thousands of bonds and shares and help you spread your money across several different investments to manage risk. There are two different types of ready-made portfolios: the LifeStrategy fund and the Target Retirement fund.

Vanguard LifeStrategy fund
This fund is for those that don’t fancy the faff that comes with building and managing portfolios. Those new to investing tend to go with these funds until they learn more about building portfolios as they’ve already been made up for you.

With the LifeStrategy fund, your investments are spread out so if some go up, some go down and some stay the same then they generally balance out (or hopefully are worth more!). This is how Vanguard reduces risk, but there’s no guarantee that it will make a profit.

If you decide to go with the LifeStrategy fund then you simply pick the one that best fits your investment goals and attitude to risk.

Each of the five funds has a different ratio of shares and bonds. As shares tend to have a higher risk and a higher potential return and bonds have the opposite, Vanguard measures the risk of its portfolios by the percentage of shares (sometimes called equities) that you’ll be investing in.

Shares %20%40%60%80%100%
Bonds %80%60%40%40%0%
RiskLower riskLow/medium riskMedium riskMedium/high riskHigher risk
Timescale3 to 5 years3 to 5 years5+ years5+ years10+ years

Vanguard Target Retirement funds
Vanguard’s ready made retirement portfolios are quite unique. As with most pre-made portfolios, it consists of thousands of individual bonds and shares in one package, which spreads the risk out.

Vanguard creates a balance between risk and stability, taking steps to preserve your savings with its retirement funds. This is done by reducing your investments in shares and increasing your investments in bonds as you get closer to retirement.

All you need to do is choose the fund that matches the year (or around the year) that you plan to retire. This means that your investments are always changing, depending on how close you are to retirement. For example, if you plan to retire in 2060 then you choose the 2060 fund which is 80% shares and 20% bonds. As you get closer to retirement your shares will decrease and your bonds will increase to add more stability to the money you have saved up.

How do I choose which fund to go with?
Instead of picking a random one, consider the following:

  • What’s your attitude to risk? Are you adventurous or cautious? Those who quite fancy a bit of risk might go for more shares while those who are a bit more cautious may prefer to go with more bonds.
  • How long do you plan to invest for? Investing is a long term game, so don’t expect your money to grow overnight. If you’ve got a bit of time on your hands then you can ride the tumultuous waves that come with shares. If time isn’t on your side then the stability of bonds might be more suitable. You don’t have to choose 100% shares or 100% bonds, though. It’s possible to have a mix of the two.

DIY portfolios

Not everyone wants a ready-made portfolio. Some people like to do it themselves. If that takes your fancy then this is an option available with Vanguard. You have a choice between five types of funds to build your portfolio from, with over 75 funds in total.

The funds are well presented on the website, showing you the ongoing charge (the cost of the fund), asset allocation (ratio of shares to bonds) and risk (marked from 1 to 10, helpfully colour coded).

You can look at graphs that tell you about the past performance of each fund – although this isn’t a reliable indicator of future results and they’re a little more complicated than is arguably necessary.

One of our favourite things about Vanguard is the choice between a detailed view and an overview in this section. The detailed view has a lot of information which can be overwhelming for new investors, so the default view as an overview helps you to see the more important information, while keen investors can take a peek into the details if they want to.

The detailed view gives information on the market value, the latest changes and details of past performance, alongside all of the information offered in the summary.

The website is set out like a menu, just tick the boxes of the funds you want to invest in and check out.
The five types of fund are:

What funds are available with Vanguard?

Vanguard fees and charges

Account fees

Fee nameInvest up to £250,000Invest over £250,000
Account fee0.15% per year capped at £375No charge
Transferring out, switching funds, withdrawing money and closing your accountNo chargeNo charge

Fund management costs

Fee nameLife Strategy and Target Retirement FundsIndividual funds
Ongoing costsBetween 0.22% and 0.24%Between 0.06% and 0.78%
Fund transaction costsBetween 0.02% and 0.06%Between -0.05% and 1.63%
Fund entry charge, fund exit charge and performance feesNo chargeNo charge

ETF costs

Fee nameFee amount
One-off costsBetween 0.02% and 0.23%
Quote and deal service£7.50 per trade

There are additional costs and charges detailed on the Vanguard website, including a breakdown of costs for each individual fund.

Is Vanguard safe?

Vanguard is authorised and regulated by the Financial Conduct Authority (FCA).

Your investments are covered up to £85,000 by the Financial Services Compensation Scheme (FSCS). You are covered if Vanguard were to go bust (but not if you lose your money because your investments don’t go to plan).

Pros and cons of Vanguard UK

Pros

  • Built for new and experienced investors
  • Start with a £100 monthly direct debit or a £500 lump sum
  • Choice of ready-made portfolios and DIY portfolios

Cons

  • No option for share trading
  • You can only invest in Vanguard funds

Vanguard customer reviews

Vanguard customers found it quick and easy to set up their account with Vanguard and find that its prices are reasonable. Those who needed to contact its customer service found its staff to be helpful and informative.

Vanguard UK: our verdict

Vanguard seems like it was designed with both inexperienced and experienced investors in mind. It has options that would suit both parties, allowing beginners to invest based on their approach to risk and experienced investors to create their own portfolio.

Its main downside is that you can only invest in Vanguard funds. With many other investment platforms, you are able to buy Vanguard funds as well as others. This isn’t a major downfall if you only intend to do so, but if you want to invest in others, there are options available that still allow you to invest in Vanguard funds.

Compare alternatives

Table: sorted by promoted deals first
Data updated regularly
Name Product Price per trade Frequent trader rate Platform fees Brand description
Fineco
UK: £2.95
US: $3.95
EU: €3.95
N/A
£0
Your first 100 trades are free with Fineco (T&Cs apply)
Fineco Bank is good for share traders and investors looking for a complete platform and wide offer. The minimum deposit with Fineco is £0. Capital at risk.
eToro Free Stocks
£0
N/A
£0
Capital at risk. 0% commission but other fees may apply. The minimum deposit with eToro is $200.
Hargreaves Lansdown Fund and Share Account
£11.95
£5.95
£0
Hargreaves Lansdown is the UK's number one platform for private investors, with the depth of features you'd expect from an established platform. The minimum deposit with HL is £1. Capital at risk.
Degiro Share Dealing
UK: £1.75 + 0.014% (max £5)
US: €0.50 + $0.004 per share
N/A
£0
Degiro is widely seen as one of the best low-cost share brokers, for people who are looking to trade regularly. The minimum deposit with Degiro is £0. Capital at risk.
interactive investor Trading Account
£7.99 (with one free trade per month)
N/A
£9.99 per month
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. The minimum deposit with ii is £0. Capital at risk.
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Data updated regularly
Name Product Minimum deposit Maximum annual fee Price per trade Brand description
Moneybox stocks and shares ISA
£1
0.45% and £1 monthly subscription fee (free for first 3 months)
£0
Moneybox offers a smart and simple way to invest. Sign up in minutes and start investing with £1 via their award-winning app. Capital at risk.
interactive investor stocks and shares ISA
Any lump sum or £25 a month
£119.88
£7.99
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. Capital at risk.
Nutmeg stocks and shares ISA
£100
0.75%
N/A
Nutmeg offers three types of portfolios. Choose the one that goes with your investment style. Capital at risk.
Hargreaves Lansdown stocks and shares ISA
£100
0.45%
£11.95
Hargreaves Lansdown is the UK's biggest wealth manager. It's got everything you'll need, from beginners to experienced investors. Capital at risk.
InvestEngine stocks and shares ISA
£100
0.25%
£0
Offer - £50 welcome bonus for new customers. Subject to minimum investment. T&Cs apply. Capital at risk.
Moneyfarm stocks and shares ISA
£1500
0.75%
£0
Moneyfarm helps you meet your investment goals with fully-managed portfolios designed around you. Capital at risk.
Fidelity Stocks and Shares ISA
£1000 or a regular savings plan from £50
0.35%
£10.00
Fidelity is another good all-rounder, offering a good package at a decent price. Not suited for trading shares. Capital at risk.
Legal & General stocks and shares ISA
Legal & General stocks and shares ISA
£100 or £20 a month
0.61%
N/A
Legal & General is a big financial services company which offers insurance, lifetime mortgage, pensions and stocks and shares ISAs. Capital at risk.
AJ Bell Stocks and Shares ISA
£500
0.25%
£9.95
AJ Bell is a good all-rounder for people who to choose between shares, funds, ISAs and pensions. Capital at risk.
Saxo Markets stocks and shares ISA
No minimum deposit requirement
0.12%
£8.00
Saxo Markets offers a wide access to a range of stocks, ETFs and funds. Capital at risk.
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Data updated regularly
Name Product Minimum investment Choose from Fee for a £50,000 pension pot Brand description
Interactive Investor Pension
Any lump sum or £25 a month
Over 3,000 funds
Annual fee: £239.88, fund fees: £50-500
interactive investor is a flat-fee platform, which makes it cost effective for larger portfolios. Capital at risk.
Moneyfarm Pension
£1,500 (initial investment)
7 funds
0.35%-0.75%
Moneyfarm has pensions that are matched against your risk appetite, goals and planned retirement date. Capital at risk.
AJ Bell Pension
£1,000
Over 2,000 funds
Annual fee: £125, includes fund fees
AJ Bell has two different pension options, a self managed pension and one that is managed for you. Capital at risk.
PensionBee Pension
No minimum
9 funds
Annual fee: £250-475, includes fund fees
Pension Bee is a newbie in the pension market. It helps consolidate your pension plans into one place. Capital at risk.
Hargreaves Lansdown Pension
£100 or £25 a month
2,500 funds
Annual fee: £225 (£200 cap if holding shares), fund fees included
Hargreaves Lansdown is the UK's biggest wealth manager. It's got three different retirement options. Capital at risk.
Saxo Markets Pension
Saxo Markets Pension
£10
Over 11,000 funds
No annual fee
Saxo Markets gives flexibility and control over your investment strategy. Capital at risk.
Penfold
Penfold
No minimum
4 portfolios
Annual fee: £375-455, fund fees included
Moneybox Pension
£1
3 funds
Annual fee: £225, fund fee: £60
Manage your money with an easy-to-use Moneybox app. Capital at risk.
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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

Frequently asked questions

Share dealing platform ratings

★★★★★ — Excellent
★★★★★ — Good
★★★★★ — Average

Our customer satisfaction scores ("Customers say") are based on a survey of 752 customers carried out in December 2020.

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