As a consultant dedicated to helping entrepreneurs grow their small businesses, I‘m often asked if Vanguard is a good place to invest excess profits. With over $7 trillion in global assets under management, it has become one of the world‘s largest investment firms. But how did it reach such scale and is it a viable investing partner for small business owners?
In this comprehensive guide, we‘ll take an in-depth look at what Vanguard offers and whether it makes sense to entrust them with your hard-earned business growth capital.
Vanguard‘s Meteoric Rise
Since its founding in 1975, Vanguard has experienced exponential growth, now managing over 17 times more assets compared to just 20 years ago:
| Year | Assets Under Management |
|---|---|
| 2000 | $413 billion |
| 2020 | $7.2 trillion |
This meteoric rise demonstrates that Vanguard is clearly doing something right to earn investors‘ trust. As a consultant whose livelihood depends on advising clients accurately, I always look rigorously at any firm‘s track record over extended periods of time. Vanguard‘s four decades of consistent, rapid growth speaks loudly about their capabilities as an investment manager.
Benefits of Vanguard‘s Unique Structure
Unlike most other investment companies, Vanguard is structured as a mutualized fund company. Instead of being publicly traded or having outside owners, the company is owned by its mutual funds, which in turn are owned by investors. This sets up a unique alignment where Vanguard as a firm acts in the interests of its own investor-owners.
How does this actually benefit investors though? For one, this ownership structure allows Vanguard to operate at cost rather than trying to maximize corporate profits. The result is some of the lowest fund expense ratios in the entire financial sector. And as any consultant will tell you, minimizing fees is hugely impactful in building wealth over decades.
Finding the Right Level of Investment Advice
In my experience advising small companies, the business owner often lacks time to properly manage investments themselves. But handing over control to a human advisor isn‘t always the best solution either. That‘s why Vanguard offers an innovative middle ground with Vanguard Digital Advisor Services.
Vanguard‘s robo-advisor platform builds and monitors diversified portfolios automatically using advanced algorithms. So you receive professional investment management tailored to your goals without the high account minimums and fees of traditional advisors.
- Over 140 ETFs to choose from, covering a wide range of asset classes
- $3,000 minimum investment
- 0.15% annual fee
- Automatic rebalancing and tax optimization
For those with more complex situations or larger balances, Vanguard Personal Advisor Services provides dedicated human CFP professionals to customize your plan. But for most small businesses, the robo-advisor delivers the ideal blend of sophistication and affordability.
The Verdict: Vanguard as a Partner for Entrepreneurs
Given Vanguard‘s consistent performance over 47 years, proven fund ownership structure, and flexible advisory solutions, my verdict is that Vanguard merits strong consideration for entrepreneurs looking to invest capital for the long-term.
The only major limitation is that Vanguard lacks extensive tools for picking individual stocks. But even active traders would benefit from Vanguard‘s ultra-low cost index funds as core portfolio holdings.
With its retirement planning support, Vanguard enables business owners to transform excess profits into securing their own financial freedom. For these reasons, Vanguard remains my #1 recommendation for where entrepreneurs should start when building long-term personal investment plans.
