In the past, you could only buy Vanguard’s Index funds within an ISA wrapper from a different platform (eg, the Hargreaves Lansdown ISA). Now, investors can open an ISA directly through the Vanguard UK Investor platform.
And as with everything Vanguard, costs have been driven down to a market-beating rate. Nice.
The platform charges an annual account fee of 0.15% on balances up to £250,000. Anything over £250,000 and the annual fee is waived, meaning you pay a maximum platform fee of £375 per year.
By comparison, Hargreaves Lansdown, one of the most popular UK investment platforms, charges an annual fee of 0.45%. On a portfolio worth £250,000 this would equate to £1,125. That’s a whopping £750 saving and we know that driving down fees has a hugely positive impact on your balance over the long term.
However, there’s no such thing as a free dinner and Vanguard’s market-beating rate comes at a price. Your investments are limited to their own Vanguard index funds only. Great if you are solely a passive index fund investor, but not so much if you’re looking to add Tesco or Amazon to your portfolio.
For investors starting out and looking to build their first £1,000, £10,000 or £20,000 etc, low-cost passive investing is a great way to start accumulating a nest egg. You can set up a monthly direct debit into one of Vanguard’s UK index funds and forget about it for a year.