Vanguard vs InvestEngine: Best Cost Effective Option?

This Vanguard vs InvestEngine comparison takes in to account all the features linking to investment decision making. We will try to analyze how both of these platforms perform and which one is best for what type of investment needs. I will also review the platform’s investment options, fees, and whether it is really the best broker platform for your needs. We will also look at the pros and cons associated with InvestEngine and Vanguard.

vanguard vs investengine

Vanguard Vs InvestEngine: Which is Right Option for me?

Is Vanguard Good to Go? – An Overview

Vanguard’s brokerage online platform focuses on long-term investors who want to buy and hold. Vanguard’s investing philosophy is John C. Bogle’s. This includes active trading do not give much benefit, fees should be low and new comers must have lots of guidance.

Vanguard might be the right choice for you if all you want in an online brokerage platform to supplement 401k plan or you just want to grow funds in a taxable brokerage account. Moreover you also want to be pain free about market changes.

In some aspects Vanguard may seem a bit outdated even for investors looking to buy and hold. This includes slow process to open an account. Although the application can be completed online, but you will need a manual review for approval and to activate your account.

Vanguard’s platform is not designed to allow for fast, and smooth trading. Overall, it seems that the company doesn’t want to compete with modern brokerages which hare offering full range of tools required for frequent trading.

Vanguard might be a good fit for someone who has a clear understanding of their long-term objectives. And are just looking to know how funds will performs after investment in one option or another. This type of investing is more slow-paced than active stock trading.

Is InvestEngine Good to Go? – An Overview

Despite InvestEngine is a new entrant but it stands out with its strategy in DIY investment products. InvestEngine aims at bringing together the best of a range from existing market competitors. The features you can get with InvestEngine include zero platform fee on DIY portfolios, Zero exit fees, and of course one-click re-balancing. This will ensure that it gains goodwill with both novice and expert investors. Moreover, its low cost model is a strong competitor to other established robo-advising platforms like Nutmeg and Hargreaves Lansdown.

Although InvestEngine is imperfect in some areas as it do not offer direct shares trading, pension investment option, but it is still a great platform for people want to deal in ETFs only. One can explore the investment portfolios by a simple account registration It won’t matter if you invest or not. It is best for both novice and passive investors looking for a portfolio that is managed for them but with expert knowledge. On the other side, it also caters experienced investors looking to manage and make their own portfolio with DIY option.

Products and Offers: InvestEngine vs Vanguard

What Vanguard Offers

Stocks and ETFs are long-term; short sales limited.

Mutual funds include 130 Vanguard funds and 14,000+ non Vanguard, of which more than 3,100 are free to trade online.

Bonds include Corporate and Municipal, Treasury, and CDs.

OTCBB (Penny Stocks).

Options which include both Multi-leg and single leg

You will also get access to Vanguard Personal Advisory Services & Vanguard Digital Advisor but at very minimal cost.

International Exchange: You must use a live broker to purchase shares on international exchanges. But you will not get it from Vanguard Platform.

What InvestEngine Offers

InvestEngine solely deals in ETFs, with more than 150 investment options available. It covers a variety of bonds stock markets, and commodities. The Look Through feature on the portal allows you to break down your either an individual ETFs or whole portfolio by using different filters i.e. asset type, geographic location, or company. Bonds are the prime component in managed portfolio while keeping in mind the income and low risk aspects.

Fees and Pricing: InvestEngine vs Vanguard

Vanguard Fees and Rates

Vanguard’s is renowned for its transparency, and low fees. Vanguard offers a detailed explanation of all fees as well as the total cost of investing before you make a decision to invest with them. There will be fees that vary depending on type of investment you decide to initiate with.

Vanguard does not charge commissions for ETF, OTCBB, or online equity trades. The base commission remains same for any number of shares that you trade. Options trades are not subject to a per-leg commission. The commission for one options contract is $1. Obviously this is significantly on higher side than other competitors. i.e.  If you are dealing with  70 options contracts it will cost $70

If you have less than $1,000,000 in Vanguard ETF or mutual fund assets then transaction fee is $20 for mutual fund trade and it is $25 when using broker-assisted feature. On the other hand if you have $1-5 million in Vanguard ETF or mutual fund can enjoy $0 fee for first 25 trades, and $8 fee/trade thereafter. Similarly, if you have $5 million+ in Vanguard ETF or mutual fund can enjoy $0 fee for first 100 trades, and $8 fee/trade thereafter. Vanguard charges a $25 per trade if you use live broker. Live brokers are available for free with accounts worth more than $1million.

Margin interest rates subject to change you must verify it before any trade decision. However, for now it starts from 8.5% on a $10,000 balance then goes upto 7% on over $100,000.

Vanguard accounts below $10,000 funds have an annual fee of $20. This fee is waived if you choose to receive statements electronically. Vanguard charges no fees for account inactivity, account closing or account transfer, exercise/assignment, wires receiving, checking, paper statements, and trade confirmations.

Outgoing wires are subject to a $10 surcharge, both for domestic and international.

InvestEngine Fees and Rates

INvestEngine pricing is quite straightforward and is divided in to sub-categories Managed portfolios and DIY portfolios. Managed Portfolio fees will depend on type of investment. If you choose to go with income portfolio the rate will be different, and it will be different for growth portfolio.

InvestEngine Managed Portfolio Pricing

For income portfolio investors, you have to pay a platform fee of 0.25% and an average ETF fee is 0.25%. While an average ETF spread fee is 0.07%. This totals to 0.57% in terms of annual fees for Income portfolio.

Even lower fees are charged for growth portfolios. The platform fee is 0.25% as usual, while an average ETF fee is 0.15%, and an average ETF spread fee is 0.07%. This totals to 0.47% in terms of fees for a growth portfolio.

DIY portfolios do not have any annual fees, but investors have to pay ETF fees and market spread costs.

You don’t have to pay any set-up, dealing or withdrawal fees for either the managed portfolio or the DIY portfolio service. This means you can save your profits in terms of lower fees, and it can also help you achieve your financial goals faster.

InvestEngine DIY Pricing

Portfolio Comparison: InvestEngine vs Vanguard

Vanguard Portfolio

It offers different types of portfolios for different types of investors ranging from income, balanced to growth mindset. It all depends on how much you want to invest, and what are your goals and risk acceptance levels.

Income portfolio is basically a dividend paying portfolio, it consists mainly of coupon-yielding bonds and stocks which pay dividends. This approach is suitable for those who are comfortable with low risk and have a short to medium term investment. Remember that dividends and returns may be taxable depending on which Vanguard account you are dealing with. In income portfolio you have the option to invest in either 100% bonds, 20% Stocks:80% bonds, 30% Stocks:70% Bonds.

Balanced Portfolio is the next option for investors. To reduce volatility, a balanced portfolio will invest in stocks and bonds. The approach hidden in this type of investment requires that you are able to accept short-term price fluctuations and overall moderate growth. Similarly, the investment term ranges from mid to longer periods.​  In balanced portfolio you have the option to invest in either 40% stocks:60% bonds, 50% Stocks:50% bonds, 60% Stocks:40% Bonds.

Growth portfolio primarily aims to achieve higher income in long term investment. Moreover, this portfolio is a mix of stocks having higher chances to appreciate in foreseeable future. It also takes into consideration short-term volatility and the possibility of large price swings. This portfolio is best for investors who are willing to take on high risks and have a long term investment mind with no short term income goals. In growth portfolio you have the option to invest in either 70% stocks:30% bonds, 80% Stocks:20% bonds, 100% Stocks.

InvestEngine Portfolio

InvestEngine managed portfolios are fully managed with robo-advisors just like other competitor. It will ask few questions to understand your level of risk acceptance and appetite. Two options are available Growth portfolio and Income portfolio for people looking towards fully automatic options.

Growth portfolios aims to achieve capital growth as the primary objective. In other words the prime aim is to increase stock value. Portfolios that include growth companies mostly focuses to reinvest their profits in future development, such as acquisitions or research. 

 Income portfolio is designed to provide periodic income on quarterly or annual basis. The profit you earn is usually available into your linked bank account. The amount you earn depends on dividends you have earned from your portfolio’s ETFs. 

The DIY option allows you to pick and choose the ETFs in which you would like to invest. There are over 150 funds available, which include ESG and thematic options. After choosing which ETFs you are going to invest in you can then select how they will be balanced. Which means investment ratio is also in your control for each type of ETF.

Moreover, InvestEngine provides one-click rebalancing option, a unique feature but quite feasible. This helps your portfolio to remain balanced regardless of the market up downs. Specific ETF trades need not be set up manually, buying and selling can be done on the basis of portfolio weights.

Account Options: InvestEngine vs Vanguard

Vanguard Account types

Vanguard offers different types of accounts for different types of investment needs; you have to decide which account is suitable for your needs. If you are not self employed and want to start saving for retirement then opt for IRA either Roth or Traditional. While on the other side, if you are self employed or own small companies then simplify your retirement plan with individual 401(k), SEP-IRA or SIMPLE IRA. If savings are not for retirement purpose then you can open an individual account for an emergency fund or any other type of need including house fund.

Are you looking to save for education no matter for yourself, your child, grandchild or for anyone else then opt for 529 plan, UGMA/UTMA account.

Vanguard also offers organization and trust accounts to cater the needs of large entities.

InvestEngine Account Types

Personal account by InvestEngine is a general investment account for an individual. To start with this account you will just require £100, just like the other accounts. You may have to pay income tax on profits greater than £12,300. Both managed and DIY personal accounts are available. While personal accounts cannot be tax exempt, but withdrawals are free of charge.

InvestEngine ISA allows you to use your annual ISA allowance for tax-free investments. An allowance is available for each tax year up to a limit on which there is no need to pay tax on profits. ​ This account allows you to invest up to £20,000 per year. Good news is that capital gains and dividends are tax exempt. Currently, only managed portfolios are available under this, but DIY ISAs will soon be available. You can withdraw at any time by transferring an existing ISA to broker. However, sometimes delays adversely impact allowance.

Business account is also available to entities having money to invest and earn extra income on surplus money while having it readily available when it is needed. There is no limit on how much you can invest in the business account per tax year. Moreover, both capital gains and dividends are subject to tax depending on your business category. For business accounts, both managed and DIY portfolios are available for investments.

Who is Winner Vanguard or InvestEngine?

You may have read the above all and most likely be able to make a decision about which platform is best for you. But it all depends on your needs and requirements along with your investment goals. You will need to decide whether you prefer a managed portfolio or a DIY option. You will also need to determine what type account you want, such as an ISA/pension account, or Vanguards’ ETFs.

Both Vanguard and InvestEngine offer the lowest fees for managed portfolios. On the contrary, currently InvestEngine is offering the best rates for DIY ETFs in UK.

With the low fees combined with the vast array of ETFs that are available and the additional features on the platform, InvestEngine is best option to go with.