[Gavin]

Calling Vanguard investors!
I recently chose Vanguard for my first ever investment. It’s an index fund with an OCF of 0.20% and I set up a monthly payment.

After the first payment was taken, Vanguard sent me a ‘Ex-Ante Costs and Charges’ document which showed that the combined Account Fees and Fund Management Costs came to 0.21% – perhaps just above the OCF of 0.20% because of rounding, and I wasn’t concerned about that.

Then I made a small one-off investment in the same fund by debit card – I just wanted to try it as I would like to make occasional one-off payments alongside my monthly payment.

After making this payment, I was sent another ‘Ex-Ante Costs and Charges’ document for the small debit card payment, but in this document both the Account Fees and Fund Management Costs were around double the percentages that were charged for my monthly payment and the total came to 0.45% instead of 0.21%.

I asked Vanguard why, and I thought they would say that one-off payments attract higher fees or that my debit card payment was under a minimum amount, but instead I got quite a long answer that didn’t allude to any differences in the costs of the two transactions and now I’m just confused.

Does anyone who invests with Vanguard understand why I might have been charged higher fees for the smaller debit card payment?

Is there a minimum investment below which the fees are higher?

I was hoping Vanguard would give me a simple answer like this, but they’ve sent me two replies so far and neither of them have helped me to understand why the fees were different for the two transactions.

[Amy]

It sounds like you’re paying Vanguard to manage your money for you. If you’re just getting started with investing you don’t need to be paying for management.

You can invest on your own by transferring money into your brokerage account from your bank to buy index funds.

[Prasad]

Not sure what OCF means. I assume it’s the fund fee.
I have only invested $ via Vanguard by linking my bank account directly to the brokerage account.

Sometimes I just transfer into the settlement fund, and sometimes set up auto investment into VTSAX for a fixed dollar amount each month and they pulled directly from the bank.

Never ran into any issues.

[Jasmine]

Not sure what some of these things are, but this sounds more complicated and costly than it needs to be.

I suggest linking a regular bank account, transferring money over to your Vanguard account (by default the funds will go into VMFXX), then using those funds to buy whatever you want to buy (presumably VTI or similar).

FYI, many folks prefer Fidelity to Vanguard. I use both and they’re both fine for my purposes.

However, I have found Fidelity to be much more proactive about building relationships with their customers.

[Author]

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