Vanguard Digital Advisor is a low cost, retirement savings planning tool designed to help you grow your money. Vanguard Digital Advisor helps you by investing your retirement savings so you can focus on other matters. The minimum investment is $3,000, which is quite affordable.
In addition, you’ll pay no advisory fees for the first 90 days. After that, the fee is up to 0.15%, which is very low comparing to other robo advisors, like Acorns and Betterment.
The types of accounts Vanguard Digital Advisor manage include personal investment accounts, eligible 401k retirement accounts, traditional IRAs, Roth IRAs, and Rollover IRAs. The Vanguard Advisor offers access to high-quality investments consisting of Vanguard ETFs.
It also connects you to your other non-Vanguard accounts so you can have a whole picture of your financial life. Lastly, while the Vanguard Digital Advisor focuses on helping you build retirement savings, it also includes a debt payoff tool and other financial planning tools.
Those are what set Vanguard Digital Advisor apart from other robo-advisors.
Overall, Vanguard Digital Advisor manages and automatically invest your money for you, so you don’t have to do a thing. In other words, you just set it and forget it. So, if you are a busy person, Vanguard Digital Advisor will do the job for you.
In this article, I will explain what the Vanguard Digital Advisor is, how it works, the minimum deposit, the fees and how it invests your money.
Need more hands-on investment management? A financial advisor can help you with retirement planning, tax strategy, estate planning and other financial goals.
KEY TAKEAWAYS
- Vanguard Digital Advisor is a low-cost money management tool to assist you in your retirement goals.
- Fund fee of 0.15% makes this type of account very appealing, especially to younger investors.
- Its main focus is investing for retirement planning.
- The required minimum to open the account is $3,000.
- The fund invests in mostly Vanguard’s large pool of ETFs.
Vanguard Digital Advisor: Overview
| Account Minimum/deposit | $3,000 |
| Account Management Fee | 0.15% annual net advisory fee, although actual fee will vary depending on the specific holdings in each enrolled account. The net advisory fee is waived for new clients’ first 90 days. |
| Goal Setting | Retirement, general investing |
| Interest Paid on Cash Balances | Dividends |
| Customizable Portfolio | No |
| View Portfolio before Funding | Yes |
| Customer Service | Yes, via phone or social media |
| Financial Advisor Available | No |
| Cash Management | Money market, CDs, short-term bond ETFs |
| Tax-Loss Harvesting | Not offered |
| External Account Sync/Consolidation | Limited, for goal-planning purposes only |
| Mobile App | Android, iOS |
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Vanguard Digital Advisor Fees and Minimum
Minimum
To enroll in Vanguard Digital Advisor, you will need at the very least $3,000 in a Vanguard brokerage account. This can be new money you have transferred from a checking account or money rolled over from an existing Vanguard account.
However, if you’re using an existing account to have the minimum $3,000 requirement, there are a few things to consider, because not all types of investment can be rolled over.
Regardless, your Vanguard Brokerage Account must have at least $3,000 held in the Vanguard settlement fund. My article, Understanding The Vanguard Settlement Fund, explains what is a Vanguard settlement fund. This account minimum is higher than some of its competitors. There are other robo advisors with no minimum or minimum less than the Vanguard Advisor.
Fees
The cost for Vanguard Digital Advisor is very low. You can expect to pay up to 0.15%. For example, for a $3,000 in your account, you will pay no more than $6 a year. That is extremely low comparing to other robo advisors out there.
Opening Your Account:
Opening your account is very easy and simple. They will ask you some questions regarding your investment goals to customize your portfolio that best suits you. They consider the following factors:Â
- Age (note that you have to be at least 18 years old to enroll. Or, at least 19 in Alabama or Nebraska and at least 21 in Mississippi.)
- Target retirement age
- Risk tolerance
- Loss aversion
- Marital status
- Single stock exposure
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How & Where Does Vanguard Digital Advisor Invests Your Money?
After your enrollment, Vanguard Digital Advisor invests your money in Vanguard’s exchange traded funds (ETFs). These ETFs include:
- Vanguard Total Stock Market ETF (VTI), expense ratio 0.03%
- Total International Stock ETF (VXUS), expense ratio 0.08%
- Vanguard Total Bond Market ETF (BND), expense ratio 0.035%
- Vanguard Total International Bond Market ETF (BNDX), expense ratio 0.08%
How much money is allocated in these funds depend on your risk tolerance and risks. To understand your risk tolerance better, Vanguard Digital Advisor will ask you a few questions when you open your account.
It will offer you several scenarios with an interactive slider so it can assess your risk tolerance. From there, you’ll provide a range of when you expect to retire.
Over the course of your investment, Vanguard Digital Advisor automatically rebalances the funds should you end up owning too much of a particular asset class.Â
Vanguard Digital Advisor: Pros and Cons
One of the main advantages of Vanguard Digital Advisor is its low operating fee. Unlike other robo advisors and competitors, the platform charges no more than 0.20% of your investment. This low fee will allow you to grow your savings faster over time thanks to compounding interests. In other words, having low fees keeps more money invested. therefore, your assets can grow over time.
However, a big disadvantage is the minimum account required to open an account. This robo advisor requires $3,000 to invest. Beginner investors, with very little money, may not have $3,000 to begin with. This minimum makes other competitors more appealing.
For example, competitors like Acorns requires only $5 to start. Others do not even require any minimum deposit to set up an account.
Other advantages of this service is the fact that they have excellent retirement planning tools and have a very simplified approach to investing. In addition, the platform allows you to have a hands-off approach to investing.
If you are not fazed by a do-it-yourself approach, then the Vanguard Advisor is for you. It provides an affordable and personalized portfolio with automated investment management. Moreover, there is a free trial. You will not pay any fees for the first 90 days.
Who is It For?
Vanguard Digital Advisor is right for you if you:
- Have at least $3,000 to invest.
- Are investing for retirement.
- Are not too concerned about speaking with real-life financial advisors.
Alternatives to consider
While the low cost/fee structure, Vanguard Digital Advisor may be not be the right robo advisor for you. A $3,000 minimum requirement can be a lot to some. If that is the case, a possible alternative to consider is Acorns, which only requires a $5 minimum to open an account.
Acorns is a tool that allows you to save and invest your spare changes. The app rounds up your purchases up to the nearest dollar and puts the spare change into the stock market for you. Acorns can help you save without even thinking about it.
Acorns invests the money for you, allowing you to grow your savings without you studying stock prices or trades. The app is $1 a month, and you’ll get a $5 bonus when you sign up. Every dollar you invest with Acorns is diversified over 7,000 stocks and bonds. Once the spare change hits $5, Acorns will invest it for you into ETFs.
Vanguard Digital Advisor: Bottom Line
In conclusion, Vanguard Digital Advisor is a robo-advisor, an all-digital financial planning and investment management. It is designed help you grow your retirement savings goal and can adjust for your other goals as well. To join Vanguard Digital Advisor, you must have a Vanguard Brokerage Account with a balance of at least $3,000 held in the Vanguard settlement fund. In addition, the fee you pay is very low–you’ll pay no more than 0.15%.
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