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John Bogle’s 6 Teachings for New Investors

John Bogle died in 2019, at the age of 89. You might not have heard of him, but he was a successful investor. The founder of Vanguard was also known as the father of index funds. He could have been a billionaire quite easily, but he was more interested in the upliftment of others rather than himself.

He is no longer with us, but his advice for investors will always be helpful, especially for newcomers to the investment market. So, here are some of the best tips from the Vanguard founder.

1. His Advice About Stock Market

John Bogle said, owning the stock market for the long term is the secret to win. However, you should not try to beat the stock market at its game, Here are some best stock trading apps uk.

It means that if you are investing in the stock market, you will gain benefits but only if you invest for a long time. He warned people who think that they will make a quick buck from stocks that they should not try to do so. It would cause more harm than good.

2. His Advice to Fund Investors

The man famously said, “Fund investors are confident that they can easily select superior fund managers. They are wrong.”

A lot of investors think that they understand the market better than the fund manager. However, these investors desire to find a better manager does not mean higher profits. Most of the time, the search for a better manager leads to a smaller sum at the time of retirement.

As a result, you should listen to the manager as he or she has experience, and his estimate of returns is based on various factors. Replacing the manager will not change those factors.

3. His Opinion About Past Performance of An Asset

Mr Bogle stated that people who buy funds by looking at their historical performance are making a huge mistake. This mistake is made by a lot of newcomers to the mutual funds market. If a fund made 25 percent gain during the previous year does not necessarily mean that it will make 25 percent profit this year as well.

Markets have ups and downs and if you want the best results, you need to wait patiently.

4. Invest in Low Cost Assets for High Returns

It is not only the advice of Mr. Bogle but other successful investors as well. The motto of the market is buying cheap, sell high. Take an example of two funds A and B. A charge you 1 percent fee and costs $100. B costs $200 and charges 2 percent. X invests $200 in A, and Y spends $200 in B.

After one year, the market grew by 10 percent. Now, X has made $20 and pays 1 percent fee. Y makes $20 and pays 2 percent fee. At the end, X makes an $18 profit, whereas Y makes a $16 profit.

5. Opt for Simple Solutions

He advised that the simplest solutions are the best ones. A lot of people think that they need to know all the things about the stock market to make profit. However, the simple and better solution is to take expert advice. An expert might charge a fee but would give you better results than you can achieve on your own. With time you will automatically learn enough to make your own decisions.

6. He Said, “Don’t Look for the needle, buy the haystack”

This advice fits with the idea of index funds. The assets with small returns are like the haystack. You can either choose the ones that offer the best returns and buy them in large numbers, or just buy all of them in small quantities. You might not make as much money as you might have made by buying the best stocks. However, the time you saved by not looking for the best option, is more than enough to help you make the difference.