Vanguard vs. Merrill Edge: Comparing Top Online Brokerages

By Jordan Wathen Markets Fool.com

Times are changing. Vanguard isn't just a mutual fund manager, and Merrill Edge isn't an old-school stock brokerage. When you're ready to take the first step toward investing by opening a brokerage account, these two companies might be high on your list for potential suitors. Here's how the two compare on the details -- commissions, research, mobile apps, and more.

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Trading costs and commissions

It's become downright cheap to make a trade at most discount brokers, and Vanguard and Merrill Edge are no exception to this rule. We've compiled the commission prices both brokers charge to trade some common investments.

Broker

Stocks/Options

ETFs

Mutual Funds

Vanguard

Stocks: $7 per trade

Options: $20 + $1 per contract

$7.00 per trade

$35.00 per purchase

Merrill Edge

$6.95 per trade + $0.75 per options contract

$6.95 per trade

$19.95 per purchase

Data source: company websites.

Some investors may pay more or less depending on their particular habits. Vanguard offers lower rates to investors who invest more money into its mutual funds and ETFs. Merrill Edge rewards large account holders with free trades every month. Of course, there are also some enticingspecial offers for Individual Retirement Accounts that can further reduce your trading costs.

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Commission-free ETFs and NTF Funds

If your portfolio has more funds than individual stocks, you might want to pay close attention to how you can score free trades in ETFs and mutual funds. Brokers increasingly advertise commission-free ETFs and no-transaction-fee (NTF) mutual funds that their clients can trade without paying a fee for every transaction.

Broker

Commission-Free ETFs

NTF Mutual Funds

Vanguard

55 ETFs (All Vanguard ETFs)

Thousands (including Vanguard mutual funds)

Merrill Edge

None

5,833

Data source: company websites.

Vanguard favors its own, opening up all of its ETFs for commission-free trades while also offering thousands mutual funds (which includes its mutual funds) in a no-transaction-fee format. Merrill Edge offers more than 5,800 NTF mutual funds but doesn't currently offer a list of ETFs that are commission-free.

Account minimums

Let's keep it simple: Neither Merrill Edge nor Vanguard requires a minimum deposit to open an account. You read that right -- you can open an account with the change you find between your couch cushions.

For practical purposes, it would be advantageous to start out with a little more than mere pocket change. After all, to make an investment, you'll need enough capital to be able to afford a single share of a stock, ETF, or mutual fund as well as the commission price for the trade.

You can open an account at either broker with the balance in your change jar. Image source: Getty Images.

Trading platform

We're generally big fans of getting style points, but when it comes to trading platforms, we don't get all that excited. As infrequent traders who buy and hold, The Motley Fool doesn't spend enough time checking out our brokerage accounts to have a particularly strong opinion.

If you want to make the infrequent trade, you can do that easily with Vanguard or Fidelity. If day trading is your thing, we'll refer you to countless discussion boards that have years-long debates about which platform is better. (Honestly, we think it's mostly just personal preference, anyway.)

International stocks and ADRs

Before you ask Siri how to say "limit order" in Spanish, know that you can trade American depositary receipts (ADRs) at Vanguard and Merrill Edge. If you want direct access to foreign stock markets, Vanguard can get you there, but it charges a $50 fee on top of a commission. Merrill Edge doesn't offer trading directly on international markets, however.

Research quality and tools

Merrill Edge and Vanguard both offer a wealth of research to their brokerage clients. Both provide a number of screening tools for individual stocks and funds. As far as third-party research goes, Vanguard customers get access to Standard & Poor's, Thomson Reuters, and First Call, just to name a few providers.

Merrill Edge customers get one very big perk in the form ofBofA Merrill Lynch Global Research Analysts' stock picks, but it also offers third-party research to its clients. Truly, either brokerage offers plenty of research that can help individual investors make informed investment decisions.

Mobile app

Here's how each brokers' users and clients rated their mobile capabilities on iOS and Android, as of Dec. 6, 2016.

Broker

Apple App Store

Google Play

Vanguard

2.0 stars

4.0 stars

Merrill Edge

4.0 stars

4.0 stars

Data source: Relevant app stores.

Vanguard vs. Merrill Edge: The bottom line

If you want to trade directly on international stock markets and have a preference for Vanguard's funds, Vanguard might just win your heart. Investors who prioritize lower-cost trades on individual stocks and funds might give Merrill Edge the... uh, edge.

Realistically, long-term investors will find that either broker could be a good pick based on their individual needs. To be clear, The Motley Fool doesn't endorse any particular brokerage. To compare many different brokerage options, check out Fool.com's Broker Center, which compares leading discount brokers and compiles some of the best special offers for people who open a new account.

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