Is Vanguard good for beginners stock market investors in UK
Starting a journey in stock and share can be daunting for beginners. Is Vanguard good for you as a beginner who is just starting in investing in stock and shares? Please stay with me as I take you through some very useful points about Vanguard UK.
Less is better
Vanguard mainly has its own products which are not too many. You can easily scan through the Vanguard list of funds without getting confused.
If you compare Vanguard with other major stockbrokers in the UK. You will quickly see the difference.
It can be good to have a lot to choose from. However, for most beginners, that can get you confused.
It is like walking into Tesco and seeing multiple brands of bathroom cleaner spray which gets you confused on which one to buy.
But instead, if you are in Lidl or Aldi, you might just see a couple and it’s easier for you to pick one without getting too confused. By the way, I am not saying Aldi or Lidl is better than Tesco as a brand, this is just an example.
For example, Vanguard UK has about 76 funds to choose from. The other major stockbrokers in the UK have on average 5000 funds, stocks, and shares.
| Stock Broker | Number of Products |
|---|---|
| Vanguard | About 76 funds |
| Freetrade | Over 5,000 funds, stocks |
| Hargreaves Lansdown | Over 8,000 funds, stocks and shares |
| Trading 212 | Over 10,000 funds, stocks and shares |
Low risk
One of the most important things to be careful of in-stock and shares investing is losing money. All stockbrokers do have a statement that summaries as this,
“The value of your investments can go down as well as up, so you may get back less than you invest.”
In some cases, they will clearly state that ‘your capital is at risk’. It is normal for them to make that clear because that is the nature of investing in anything. Nothing is a guarantee when it comes to investing.
As a beginner, it makes sense to reduce your risk exposure and this is why investing through Vanguard is good for beginners. Vanguard offer low risk investing through their Index Fund and Exchange Traded Funds (ETF).
I will explain more about Index Fund and ETF in another article which you can read after this one. It is a very useful article. The link is below.
Basically, investing in one company (individual stocks and shares) is riskier than investing in a fund that invests in a variety of companies.
With vanguard, their funds are low risk. They are ETF and index funds which means they invest in a bit of everything and that reduces the risk.
Low fees
If you compare Vanguard fees to other brokers you will quickly notice how low their fee is.
They offer one of the cheapest fees for a UK online brokerage.
All Vanguard accounts have a 0.15% annual account management fee. Fees on funds also average about 0.20%. Vanguard fees are actually very transparent.
It is however important to know that they charge periodic one-off bid-offer spreads on certain trades. The good thing is that the fees are so small they are almost negligible.
As an investor in the stock market, you have to be careful of how much fees you pay because fees can significantly reduce how much money you make in the stock market.
Vanguard is a reputable company with integrity that you can trust.
User-Friendly Platform
Vanguard platform is beginner and user friendly. The simplicity of their platform makes it easy to create an account and start investing without any complications and confusion.
There are brokers out there who make things too complicated for beginners. Vanguard gets this right.
Vanguard UK website’s home page is very informative and easy to navigate.
The website is fully mobile-friendly.
Good Customer Service and Support
Customer support is one of the most important factors that you must put into consideration when investing in the stock market.
You want to deal with a company that is reachable and approachable. Vanguard offers its customers world-class support.
You can easily reach them via email or phone call. They are swift to deal with any issues or concerns you have.
Vanguard Account Types
One of the factors that make Vanguard beginner-friendly is the fact that they have a variety of account types. The most important one is the Stocks and Shares ISA which is a tax-efficient account in the UK.
As a beginner, this is the account type you should be considering when starting with Vanguard.
As well, Vanguard has the Junior ISA which is very good for people who have kids and want to teach their children to invest at an early age.
Vanguard Personal Pension account is also an option. And, the last one is the General Account which you might not need as a beginner except if you have already put in the maximum amount in your ISA account.
Vanguard ISAs
Vanguard ISAs are stocks and shares ISAs that allow you to invest on a tax-deferred basis for retirement.
In 2021, ISAs have a £20,000 annual contribution limit.
You must be at least 18 years old to be eligible to make an ISA. But there is a clause which I will talk about.
This Vanguard option has a 0.15% annual account fee. You don’t get charged extra for things like payments, deals and the likes.
The regular ISA and Junior ISA are identical. The difference is that Junior ISA is managed by the beneficiary’s parents or guardian. You must be a legal guardian before you can open this account in their name. Full control of the account will be transferred to them once they turn 18.
Self-Invested Pension Plans (SIPPs)
I like to call this the full package plan. the reason is simple. Vanguard SIPPs gives you every option you can require from a pension plan.
Tax-deferred growth, tax-free inheritance, and tax relief go to your retirement funds.
With this account, holders have a huge amount of flexibility in the makeup of their portfolio.
They also have a low 0.15% account fee capped at £375 per annum.
You can also transfer SIPPs from other providers to Vanguard.
General Investment Account (GIAs)
This account is Vanguard’s flagship product. The account gives you the ability to invest in one of the 75+ funds that Vanguard offers.
With GIAs, you can invest in as many funds as you wish. Though you have to keep in mind that you are eligible for income taxes and capital gain taxes.
GIA accounts have a low 0.15% annual account fee capped at £375 per annum.
You can start investing in GIA for as little as £100.
Like the SIPPs plan, you can also transfer GIA from other providers to Vanguard.
Is Vanguard Legit? Will My Money Be Safe With Them?
Vanguard is very much legit and safe to use. It is one of the popular and well-used wealth management companies in the world.
They are responsible for managing trillions of pounds in wealth. They are also the single largest fund provider in the world.
Vanguard has some of the wealthiest people on its roaster.
Vanguard has various security measures in place to protect its user’s accounts. Some of them are time-out features, additional security codes for transactions, encrypted online withdrawals.
They also protect your personal and financial information with standard bank-level.
Vanguard is also regulated by the Financial Conduct Authority (FCA) and the Financial Services Compensation Scheme.
There is also a contingency measure in place for up to £85,000 of your investments to be protected in case the company goes under.
These are just some of the measures in place to ensure your money is secure. There are still several account security features you can explore.
Final Thoughts
Vanguard is a tested and trusted investment platform. As such, it is very good for beginner investors.
With over 75+ investment options, it is one of the best options for beginner investors.
There are however a couple of disadvantages to using the vanguard. But they are overall negligible issues.
The first is that you can only invest in funds run with Vanguard. That doesn’t make it a flexible option.
The second issue is that the Vanguard platform doesn’t have a large research library for beginner investors. But Vanguard’s global popularity means a quick search on search engines should fix this for you.
When it comes to passive asset management, Vanguard is probably the best option out there. It’s however not a great choice for interactive investors.
