Vanguard recently wrapped up a cross-country tour that they dubbed “The At-Cost Café” to extol the virtues of low-cost investing – and quite appropriately – sell coffee at-cost ($0.26) to those who crossed their path.
I would have loved to say hello, but wasn’t able to make out to one of the tour stops.
However, because I am a Vanguard customer, they emailed me about sending some coffee and a mug a few months ago.
I had completely forgotten about the exchange, and was pleasantly surprised to find a package waiting for me when I opened my mailbox hatch last Saturday with a sender label from Vanguard.
I rushed inside to open it and found:
- a whole lot of purple packaging confetti
- a small package of coffee that says, “If you’re counting beans, this coffee is for you.”
- and a coffee tumbler-like mug that says “Caution: The contents of this mug are extremely cost-effective.”
Tee hee hee. Is it too personal-finance-geeky to want to strut around with a Vanguard-branded coffee mug at every opportunity? I am officially a Vanguard fanboy – and no, this is not a sponsored editorial (although that mug did inspire me to finally write this post).
Now, I’m typically not one to be labeled as a sucker for corporate promotion. If you’ve followed the blog for any length of time and seen my Comcast hate diatribes, you know this. The reality is – I think most corporations have one singular goal at the expense of everything else: more profit. Most…
But I don’t think Vanguard is one of them. In fact, quite the opposite.
Many well-loved companies eventually bend to unending shareholder pressure to raise prices and lower costs (in a bad way) in the name of profit. For example: Apple, Amazon, Netflix. And those are just a small sampling of the well-loved ones…
Vanguard? They’ve been dropping prices since before I ever started investing. You’d be hard pressed to find any non-Vanguard ETF or index fund with lower prices than the comparable Vanguard offering. And if you did, it was probably just a temporary blip and Vanguard will beat it – or the company is using the fund as a loss-leader to win new customers and then gouge them on their other products.
Don’t believe me? The Vanguard fund average expense ratio is 0.19% vs. the industry average (1.08%).
We’re not talking pocket change here. We’re talking about an order of magnitude of 5X
This is not just clever marketing. Structurally, there are two things that set Vanguard apart from just about every other investment firm on the planet:
- Vanguard provides its services to the Vanguard funds at-cost. Their funds cost investors what they cost them to run.
- Vanguard is client-owned. As a client-owner, Vanguard investors own the funds that own Vanguard. The only “shareholder” Vanguard has are its customers. They are not a publicly traded institution, driven by financially incentivized shareholder greed.
Anecdotally, I can also personally attest that the two best customer service interactions I’ve ever had (and zero bad ones) were with Vanguard. Their customer service reps were extremely knowledgeable, well-spoken, well-trained, and empowered. It’s a stark contrast from the profit-driven, cheap, un-empowered, inexperienced customer service we’ve all become accustomed to.
In fact, much of what they do is in contrast to the profit-driven capitalist pitfalls we’ve all become accustomed to.
So while there are some other decent investment funds out there that Vanguard does not replicate and some investment brokerages offer lower cost stock/bond/non-Vanguard fund trading (I do maintain brokerages elsewhere for this purpose) – if you strictly want low-cost passive investing (the kind that not even the pros can consistently beat), all roads lead to Vanguard.
When I highlighted 3 low-cost Vanguard S&P 500 index funds not long ago, I think I might have put the cart before the horse a bit. This post serves as the horse, if not a comprehensive Vanguard review.
Why should you love Vanguard? Bottom line: Vanguard gives the average amateur investor like you and I a fighting chance at investing success.
Thanks for the mug, guys.