John Bogle, who founded the giant U.S. money management firm Vanguard, passed away earlier this month at age 89.
Bogle’s firm, which ultimately grew to have an astounding $4.9 trillion under management, was built on a belief that, over the long term, most investment managers cannot outperform the broad stock market averages.
Bogle leaves behind a legacy of hugely successful lessons for investors. A few pieces of his advice:
Hold. Long-term investors must hold stocks even though the market can prove volatile, because they are still likely to produce better returns over the long-term than their alternatives.
Do not trust the experts. Instead seek out low-cost index funds that provide diversified portfolios that are index based, as opposed to more actively-traded funds that seek to outperform these indices and typically fail.
Eliminate emotion from your investment program. “Have rational expectations for future returns and avoid changing those expectations in response to the ephemeral noise coming from Wall Street.” Bogle advised.
Own the entire stock market. “The US market is a safer bet than other markets as U.S. companies keep being innovative and entrepreneurial,” he once said.The S&P 500 is an excellent proxy for the board U.S. market.