Vanguard UK review

Our verdict

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.

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
• No app

★★★★★

User survey

★★★★★

Finder score

Vanguard is a fund provider that lets you build your own portfolio with its fund selection, as well as invest in a ready-made portfolio that is managed by experts. With Vanguard you can invest in an individual savings account (ISA), junior ISA, general investment account and a self-invested personal pension. Find out what features Vanguard 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: you can choose a ready-made portfolio or you can build your own portfolio (think ready-made meal versus 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 2023/2024 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 2023/2024 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 accounts. All investments up to £20,000 in the 2023/2024 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 2023/2024 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 paid into ISAs elsewhere within the current tax year. There isn’t a limit to how much you can invest in a general investment account 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.
• Any profit you make over £6,000 in each tax year is taxable.

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.

Ways to invest with Vanguard

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

• Ready-made portfolios. These are off-the-shelf portfolios, managed by Vanguard experts.
• DIY portfolios. Choose between 75 funds and build a portfolio yourself.

Vanguard 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 who 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, 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.

Vanguard Target Retirement funds

Vanguard’s ready-made retirement portfolios are quite unique. As with most pre-made portfolios, they consist 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.

Vanguard 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).

The five types of fund are:

• Index funds

  These allow you to get a whole market in a single investment. They’re diversified, which means that they hold hundreds or thousands of shares or bonds to help to reduce your risk. If you invest in index funds then you buy shares in every company listed on the index it is tracking, or if it isn’t cost effective or practical to buy all of them, you’ll buy a representative sample of shares or bonds.

• Active funds

  These allow you the chance to “beat the market”. They aim for extra performance, which means you take on more risk than you would with index funds with the hope of then getting more as a reward. Vanguard has over 40 years of experience in managing active funds.

• Exchange traded funds (ETFs)

  Exchange traded funds are diversified, which means they hold hundreds of shares or bonds. You can buy and sell ETFs in real time and they come at a lower cost to other investment options. ETFs usually track a specific market, similar to index funds, but they are traded on the stock market. We have a handy guide on ETFs if you want to know more about them.

• Money market funds

  Money market funds are a low-risk diversified investment to hold your savings while receiving interest. Because of their lower risk, you have a lower potential return, making it a good place to put your money while making decisions on what to do with it.

• Factor funds

  These are investment drivers based on characteristics called “factors”. Investing in factor funds with Vanguard gives you a choice of four ETFs that focus on value, liquidity, momentum and minimum volatility. These can be at a low cost, but they have a higher risk and might be more suitable for experienced investors.

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.

Vanguard fees

Account fees

Fund management costs

ETF costs

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).

Vanguard customer reviews

Customers who took part in Finder’s 2023 customer satisfaction survey were very positive about Vanguard, with many highlighting its “excellent” customer service and value for money.

One customer said: “I get good returns from my investments. I’ve been given good advice and can choose from a range of low and high risk trading options”

Vanguard scored of 4.5 out of 5 for customer satisfaction. 80% of customers would recommend the brand to a friend.

Pros and cons of Vanguard UK

Our verdict: Is Vanguard any good?

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.

If you like Vanguard, get started by visiting its website and opening an account. Still not sure? Compare all platforms with our best trading apps 2023 shortlist.

Frequently asked questions

• How much can I start with?

  You can start investing from £100 per month. You can also start with a £500 lump sum.

• How do I withdraw my money?

  This will depend on whether the money you plan to withdraw is invested. If it’s not, you can withdraw it on your portfolio page. Select “Money out”, then choose “Withdraw cash”.
  If it’s invested, you need to select “Sell” from the “Portfolio options” menu on the Secure Account page.

• Does Vanguard offer advice?

  On the best coffee shop in London? If you ask nicely, maybe. Financial or investment advice? No. Vanguard is not authorised to give investment or financial advice.

• Does Vanguard offer a junior SIPP?

  No, this is not a product that Vanguard offers at the moment.

• Does Vanguard provide a tax statement?

  Yes. Vanguard can provide an annual tax statement and a summary of your investments. This can help you fill out your tax return for investments that aren’t in an ISA.

• Does Vanguard offer annuities?

  No, Vanguard does not offer annuities.

• Can I transfer my ISA to Vanguard?

  Yes. Vanguard does offer a transfer service for ISAs – get in touch with Vanguard to find out more.

• Can I transfer my pension to Vanguard?

  Yes. Vanguard can receive transfers from other UK registered pension schemes.

• Is Vanguard good for beginners?

  Yep, Vanguard is a good provider for beginners. It has a series of ready-made portfolios for beginners to choose between, and if you decide later that you want to try making your own portfolio, you can do that too.