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Fidelity vs Schwab vs Vanguard: Which Broker Wins

Three brokers control the majority of US retail investment assets. Fidelity manages $14.1 trillion in customer assets. Schwab, post-TD Ameritrade merger, manages $10.8 trillion. Vanguard oversees $9+ trillion. All three offer commission-free stock and ETF trading, low-cost index funds, and robust retirement account options. The differences that matter are not in the headline features but in the fine print: cash sweep yields, money market rates, options pricing, platform quality, and how each firm actually makes money from your account. Your optimal broker depends entirely on how you invest.

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Why Vanguard Is Cheap: The Business Model Edge

Vanguard's total US stock market index fund charges 0.03% annually. Fidelity's equivalent charges 0.015%. Schwab's charges 0.03%. At these levels, expense ratios are a rounding error — a $100,000 portfolio pays $30 per year at Vanguard versus $15 at Fidelity. The real question is not which fund is cheapest but why Vanguard pioneered the race to zero and whether its structural advantages still matter. The answer requires understanding something most investors overlook: Vanguard is not a normal company. It is owned by its funds, which are owned by their shareholders. This mutual ownership structure eliminates the profit motive that drives every other asset manager, and it explains both Vanguard's relentless fee cuts and its deliberate refusal to compete on flashy features.

investingexpense ratiosindex funds