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Vanguard ISA Review 2020 | Is It A Good Investment?

Vanguard hosts a huge number of financial products and services. We look at some of their most popular ISAs in this review...
Kane Pepi
Author: Kane Pepi
Last Updated: March 17, 2020

Vanguard company logo

If you’re on the search for the very best ISAs fo 2019 and beyond, you might be browsing through a number of traditional banks and building societies to find the best deal. However, did you know that a number of investment brokers are also involved in the space? While in most cases you won’t be able to find a Cash ISA on the table, you will have access to a highly comprehensive Stocks and Shares ISA.

If this sounds like something you want to explore further, then we would suggest reading our in-depth Vanguard ISA Review. Within it, we explore what ISAs the investment house offers, what sort of fees you should expect, and most importantly – how safe your funds are.

The ISAs available at Vanguard are only suitable to those of you that are planning to invest in the financial markets. Essentially, you will have access to a fully-fledged stocks and shares platform – albeit, you’ll avoid paying tax up to your annual ISA allowance.

Pros and cons of Vanguard ISAs

The Pros

  • Perfect if you’re looking to invest in stocks and shares
  • Permits the full 2019/20 annual ISA allowance
  • One of the most established investment houses globally
  • Thousands of assets to choose from
  • Heavily regulated institution

The Cons

  • Does not offer traditional Cash ISAs

Vanguard ISAs: What ISAs are offered?

Vanguard company logo featuring ship with masts

Vanguard is a global investment broker that allows both retail and institutional clients to buy and sell thousands of financial assets. At the same time, they allow UK investors to shield their capital gains from tax – up to £20,000 per year. As such, you won’t be able to obtain a Cash ISA at the platform that generates a guaranteed rate of return. Nevertheless,  below we have outlined the two ISAs available at Vanguard for you to consider.

1. Vanguard Stocks and Shares ISA

First and foremost, if you’re familiar with how a Stocks and Shares ISA works, then you’ll probably know that they are largely the same regardless of which institution you obtain one from. In a nutshell, a Stocks and Shares ISA is a specific account held at a bank, building society, or stockbroker that allows you to shield some of your capital gains tax from HMRC. In fact, you will be able to utilize your full £20,000 allowance for the 2019/20 tax year, which is great.

With that being said – and unlike a more conventional Cash ISA, you won’t receive a fixed rate of interest. On the contrary, the money that you make (or lose) will be entirely dependent on how your chosen stocks and shares perform. As such, there is no guarantee that you will actually see your money grow, not least because the value of your stocks could just as easily go down. Nevertheless, if you do have an interest in building an investment portfolio, then it is well worth considering doing this through Vanguard.

This is because the platform is home to thousands of financial instruments, including but not limited to stocks and shares, ETFs, and mutual funds. In terms of the fundamentals, you will need to pay a super-low annual fee of 0.15% with Vanguard, which is more than reasonable. You can get started from just £100 per month, or a lump sum of £500 or more. Furthermore, the entire application and account management process can be facilitated online, which makes it really convenient. Finally, and perhaps most importantly, you can withdraw your money out whenever you see fit.

Key Points:

✔️ Access to thousands of financial instruments

✔️ Open and manage the account online

✔️ Get started with a lump sum of £500 or £100 per month

✔️ Utilize your entire 2019/20 ISA allowance of £20,000

✔️ Choose your own investments or a pre-packaged plan

✔️ Withdraw your funds whenever you see fit

2. Vanguard Junior Stocks and Shares ISA

Are you looking to start putting some money away for your children? If so, the safest way to do this is via a conventional Junior Cash ISA. However, with interest rates so low, you might want to consider the merits of a Junior Stocks and Shares ISA. In its most basic form, this operates in much the same way as the aforementioned Stocks and Shares ISA, insofar that your returns will be based on your chosen investments.

As such, it is important that you understand the risks associated with putting your child’s future pot into a Stocks and Shares ISA.  If this is something you are looking to do, then you have the option of investing up to £4,368 in the 2019/20 tax year. As is the case with its adult counterpart, you can get started with a lump sum investment of £500, or alternatively, commit to a monthly investment of £100.

In terms of accessing the money, this won’t be possible until your child turns 18. However, you will have the option of transferring the funds to an external Stocks and Shares ISA. If you do, you’ll need to transfer the entire balance. The Junior Stocks and Shares ISA at Vanguard also comes with an annual fee of 0.15%, although the most that you can pay is £375 in a single year.

Key Points:

✔️ Access to thousands of financial instruments

✔️ Open and manage the account online

✔️ Get started with a lump sum of £500 or £100 per month

✔️ Utilize your entire 2019/20 ISA allowance of £4,368

✔️ Annual fee of 0.15% – capped at £375 per year

✔️ No access to the funds until your child turns 18 – but free to transfer to another ISA provider

What is Vanguard?

Vanguard shares and stock ISA page with a woman smiling in the background

Vanguard is one of the largest investment houses globally. Launched in 1975, the US-based institution now has over $5 trillion dollars worth of assets under management. Vanguard allows both retail and institution clients to purchase a range of asset classes, which includes traditional stocks and shares, ETFs, and funds. The provider recently entered the UK ISA space, subsequently offering both Stocks and Shares ISAs and Junior ISAs.

Are my funds safe at Vanguard?

Investing your money with Vanguard is as safe as it gets in the online investment space. On top of its many banking licenses, Vanguard is covered by the Financial Services Compensation Scheme (FSCS). This means that were the institution to collapse, you would have your money protected by the UK government. Take note, this only amounts to the first £85,000 held at Vanguard. As such, were you to invest £100,000 at the platform, £15,000 of this figure would not be protected.

Vanguard juniors ISA page

On the other hand, you do need to remember the underlying risks of placing your hard-earned money into a Vanguard Stocks and Shares ISA. While Cash ISAs will always guarantee you a long-term rate of return, these guarantees do not exist in the Stocks and Shares ISA arena. The reason for this is that your gains are based on how well your chosen investments perform in the open marketplace. Always bear this in mind.

FAQs

Can I access my money at any time with a Vanguard ISA?

This will depend on the specific ISA you opt for. If opting for a Stocks and Shares ISA, then you can make a withdrawal at any given time. Alternatively, if opting for a Junior Stocks and Shares ISA, you will only be able to access the funds when your child turns 18. However, you will be able to transfer the funds to another Junior ISA provider at any time.

Does Vanguard offer a Cash ISA?

Vanguard does not offer a conventional Cash ISA. Instead, you'll only be able to invest in a Stocks and Shares ISA or a Junior ISA.

Is it safe to invest with Vanguard?

Yes. Your funds will be covered by the FSCS, meaning that the first £85,000 is protected by the UK government.

How much can I put into a Vanguard ISA?

This depends on the specific ISA you decide to open. If you opt for the Stocks and Shares ISA, then you can place your entire £20,000 allowance in it for 2019/20 tax year. However, if you opt for a Junior Stocks and Shares ISA, then you can only deposit £4,368 in the 2019/20 tax year.

How much does a Vanguard ISA cost?

Vanguard charges 0.15% per year on its ISAs. If you opt for the Junior Stocks and Shares ISA, then the annual fee is capped at £375.

What is the minimum investment that I can put in a Vanguard ISA?

You will either need to invest a lump sum of £500, or commit to a monthly investment of £100.

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Kane Pepi

Kane holds academic qualifications in the finance and financial investigation fields. With a passion for all-things finance, he currently writes for a number of online publications.