What is the New Vanguard Fee?

Last week Vanguard sent an email to all of its customers with an upcoming change to their fee structure. Historically, Vanguard charged 0.15% for a DIY investment portfolio which was one of the lowest rates going and was always a great platform for beginner investors.

From 31 January 2025, this fee is increasing to £4 per month for invested balances of £32,000 or lower which may not seem like a lot, but for smaller portfolios this is substantial. For example, a beginner investor’s Vanguard portfolio of £500 invested would see a charge of 9.6% if they didn’t contribute any more over the course of the year.

This would massively eat into any gains, and could even wipe out any possible gains available for the smaller portfolios.

Balances above £32,000 will continue to have their fees charged at 0.15% (£4 per month works out at 0.15% on a £32k balance for reference).

Why have Vanguard Increased Their Fees?

Whilst there isn’t anything concrete to confirm it, it very much seems that Vanguard aren’t interested in “small investors” which blows my mind. As a platform that used to be great for beginner investors, newer investors, and even investors who put away a small amount each month, to wave goodbye to all those customers seems crazy to me.

But it is what it is, and if you have less than £32,000 invested with Vanguard I would suggest considering how much you will be spending on platform fees per year going forwards.

Good Vanguard Alternatives

Fortunately, there are many other options for investing platforms available that can replace Vanguard. I could list a number of options. However, Trading 212 is the main platform I use other than Vanguard.

I do also use Nutmeg whose fees are considerably higher but only use them for my Stocks & Shares Lifetime ISA as providers are limited. InvestEngine is another good option fee-wise (charging similar to Trading 212 but I do not use it so do not want to provide guidance on something I don’t know.

Trading 212 - No Fees?

Get a free share worth up to £100 here.

I have often been asked “is Trading 212 better than Vanguard”, and from a usability perspective - absolutely, the app is easy to use and doesn’t mess around with anything.

I have been using Trading 212 since early 2020 and have held a 5-figure Stocks & Shares ISA with them for years. Earlier this year, they even launched and continued to maintain the UK’s highest paying Cash ISA and have been featured on MoneySavingExpert and numerous other news articles.

Trading 212 offer access to thousands of stocks, and index funds including many of Vanguard’s own funds such as:

• Vanguard S&P 500

• Vanguard FTSE All-World

• Vanguard FTSE Emerging Markets

Trading 212 charge zero commission when you buy and sell shares and index funds, meaning you will pay the fund fee which you would be paying through Vanguard anyway.

They do also charge 0.15% in foreign exchange fees but if you are buying Vanguard funds these are all in GBP anyway so this wouldn’t be relevant.

Trading 212 Free Shares

The Bank Engine is partnered with Trading 212 because I love the platform so much and have used it for years so I do need to disclose this as an AD. However, if you sign up to Trading 212 using my link you can get a free share worth all the way up to £100 when you deposit just £1. If you don’t like the platform, you can withdraw your free share 30 days later.

Capital is at risk when investing and the value of your money could go down as well as up.

My Trading 212 link and code also work all year round, unlike many others you may see online.

Should you move from Vanguard?

This is the real question, and certainly depends on how much you have in your Vanguard account (across ISAs, SIPPS, etc.) but generally for small accounts you will probably find better alternatives to hold your hard-earned money where it isn’t diminished by fees.

How to move money from Vanguard?

If you have maxed out your ISA allowance (£20k per tax year) for the year or plan to do so, then do not withdraw these funds from your ISA as you will end up losing the tax-free status of that money. However, if you have maxed it out, or plan to, chances are the Vanguard fee changes don’t apply to you?

If you have, say, a few thousand in the account and don’t plan to get anywhere near maxing out your ISA allowance for the year, you might as well withdraw the cash from Vanguard and pay it into a new provider’s ISA as you won’t exceed the allowance and get in trouble!

If you did want to protect your ISA allowance you can transfer your ISAs from one provider to another but just be cautious that some providers do charge a fee for this as there is quite a bit of admin involved sometimes. If you aren’t sure on this, feel free to drop me a message and I’m happy to read up on the T&Cs for you.

The information provided above does not constitute financial or investing advice and does contain affiliate partnership information. Please do your own research. The Bank Engine and its partners are not responsible or liable for your financial decisions.