12 Investing Rules from Jack Bogle

This week, we will be revisiting some of our previous posts on John “Jack” Bogle, who passed away today. R.I.P Jack.

Jack did more for American investors as a whole than any individual I’ve known.

If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value. In his early years, Jack was frequently mocked by the investment-management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.

-Warren Buffett

Below is a post we originally published in 2013, looking at an interview Bogle did with Men’s Health Magazine:

What are the secrets to long term investing success? No one better to ask than Jack Bogle, founder of Vanguard, creator of the index fund and orator of my favorite investing quote, which can be viewed from an old CNBC interview, here:

Bogle Comments on the Markets from CNBC.

“Don’t just do something — Stand there!”

The following is in the May 2013 edition of Men’s Health magazine:

1. Forget “the market”

Bogle says: “When we speak of ‘the stock market,’ it’s meaningless. It’s merely the value investors put on all those securities, thousands of different stocks with a value of $15 trillion. It goes up and it goes down, but in the long run it goes up. The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.”


2. Understand your role

Bogle says: “Your job is to capture as much of the market return as possible for as long as possible. The only way to start investing for a lifetime is to buy a broad-market index fund. Don’t pick an actively manage mutual fund. Don’t pick stocks. Don’t pick hedge funds. In the long run, I believe in owning the stock market, not having a manager own little pieces of it for you.”

Our take: For those of you who have signed up for our newsletter and received our free eBook, you have seen the numbers. A majority of mutual funds lose to the general market. For most investors, owning the broad based index funds is not only the easiest option available, but the best!

3. Don’t kid yourself

Bogle says: “I ask people: what is the intellectual basis for indexing? Reduce costs and you maximize your fair share of the market return. What is the intellectual basis for active managing or stock picking? It’s basically ‘I can do better’. Is that an intellectual basis? No! It’s a hope, it’s a brag, and it has no chance of ever being realized in the long run.”


4. Seek Boredom

Bogle says: “I look at indexing is being simple and, sad to say boring. Be bored by the process but elated by the outcome. In Vegas, it’s the opposite. You elated by the process, by the moment, but you’re bored by the outcome because you know exactly what it’ll be. The more you bet, the more you lose. Investing shouldn’t give you a rush.”

Our take: The Vegas analogy is one we have used before here on Begin To Invest. If you want excitement, take your money to Vegas. Remember if an investment can make you rich in a day, it can also (and will probably) make your broke in a day.

5.Think ahead. Way ahead

Bogle says:
” It’s foolishness think you can beat the market. There are only two things working here: How did it much cost to get into the market, and how long are you in? If you’re investing for a lifetime – and you should be, saving for retirement and educating your kids along the way- if you’re 20 years old now, you should be thinking 60 or 65 years as your time horizon.”

Our take: The magic of compounding interest works best the longer you give it. Remember, you are saving now for money to spend decades down the road in retirement. Don’t worry about what the value of the account will be tomorrow.

6. Forget “the Number”

Bogle says:“There used to be a company reported to tell you ‘the number’ [how much you need to retire]. It’s more complex than that. It’s what those dollars are worth and 30, 40, 50 years. Everyone is looking for the answer, and there really isn’t an answer except save. Save more. Invest for the long term, get cost out of the equation, and get diversified to the nth degree.”

Our take:  I have  talked about “the number” several times here on Begin To Invest. I think its important to have an idea of money that you will need during retirement based on estimated expenses. Don’t don’t get infatuated with that number, especially early on.

7. Invest. Don’t trade

Bogle says:
“All the trading back and forth each day and called financial pornography. Paying attention minute to minute, hang on every word, this is not investing. This is trading on what you think other traders will do. How can you tell who’s right and who’s wrong? It’s a casino. Whether it’s Wall Street, the lottery, or Las Vegas, ‘hope’ is not a good investment strategy.”

Our take: Amen. Just in our last post we talked specifically about what some people call “investing” is really nothing more than “betting”. Don’t bet your life savings, invest it.

8.Do some math

Bogle says:
“Should the market return 7%, and you’re paying 2% to managers and brokers to get that seven, you get five. [The rest] goes to the croupiers on Wall Street, the managers, the traders, the speculators.”

Our take: (Insert graph of 7% return vs 5% return here) Fees add up over time. A one time $1,000 investment today that grows at 7% will become nearly $30,000 50 years from now. Compare that to a reduced 5% return over 50 years, which becomes only $10,000. That’s $20,000 you are giving to Wall Street instead of keeping for yourself.

9. Keep it simple

Bogle says:
“The rules are simple. If you don’t save, you will have nothing. Guaranteed. Not investing is not an alternative. I have an age-based rule of thumb: have a bond position that equals your age. If you’re 25, have 25% in bonds, the rest in an index fund. Today, bond yields are so low, this doesn’t work quite as neatly as it worked for a long time. But it simple.”

Our take: This sort of goes with rule number 4 – seek boredom.

10. Don’t Peek at Statements

Bogle says:
“This is one of the most important rules of investing. If you never peek from the age of 20 to the age of 70, you’ll rip that first 401K statement open at age of 70, and I recommend you have a doctor on hand because you’ll go into a dead faint. Your heart might even stop. You’re going to have an amount of money you can’t even imagine.”

Our take: This might be a little extreme for most. Although it is most certainly true, just investing a small amount leads to a large sum over long periods of time.

11. Know your limitations

Bogle says:
“Sometimes the market is valued way higher than the growth line, and sometimes it’s valued way lower. If you could forecast that, you’d sell at the high and buy the low. But here’s the thing I don’t know how to do it. I don’t know anybody who knows how to do that. And I don’t know anybody who knows anybody who knows how to do it. It’s a fool’s game.”

Our take:

12. Don’t panic, be cool

Bogle says:
“In this decade, the heavy lifting will have to be done by stocks. If stocks deliver 7%, you’ll have 100% return in 10 years. And there will be bumps! I don’t want to be deceiving anyone. I can guarantee there will be at least two or three 20 to 30% bear markets in that time frame. Just assume them. When I happen, just say, “I knew that.””

Our take: “Don’t just do something – Stand there!”

Fund Spotlight Series – Emerging Market Funds


Emerging market stocks have had a rough decade. 3 year annual returns are flat and even long term 10 year annual returns are barely over 1.5%. But there is new life appearing in the emerging markets. This year the FTSE Emerging Market Index is up 18%, breaking a long term downtrend:

Emerging Market ETFs

Are emerging markets turning the corner?

What’s the best way to invest in emerging markets? We take a look at a few options:

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How Do You Beat Your Benchmarks Over the Long Haul? – A look at Dimensional Fund Advisors



This week we have been looking at one of the fastest growing companies in asset management – Dimensional Fund Advisors (DFA). Our Quote of the Week looked at the CEO’s key principal for successful investing, our Chart of the Week looked at DFA’s outperformance. Today we look and see how they do it. [continue reading…]

Quote of the Week: Inheriting Volatility and Your Dollar Weighted Investing Returns

quote of the week dollar weighted returns market volatility

This week, we are looking at the effects of volatility on your portfolio. But not in the effect of just how much the value of your portfolio changes – but in how you ACT due to that volatility and how much it hurts your long term performance.


Last week, I was reading the annual report for a fund that I own, Vanguard Dividend Appreciation Index Fund (Ticker: VIG), and at the end of the Chairman’s (William McNabb III) letter found this quote:  [continue reading…]

Our Quote and Chart of the week: Want a free $15,000? The timing of your IRA contribution can make all the difference.

IRA procrastination post image


This week on Begin To Invest, we are all about setting up 2015 to be the best year possible. Here’s one thing you can do tomorrow to improve your long term returns: Contribute to your IRA! (Before April of 2016)


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Fund Spotlight Series: Investing In Rental Property? There is an ETF (and a Motif!) For That


Fund Spotlight Series - Investing in Rental Property


The concept of owning rental property looks great on the surface. Borrow money to buy a home (or condo, or townhouse), rent out that property to someone else, and have them effectively pay your mortgage while you build up equity in the property and it (hopefully) appreciates in price.


Simple right?


Unfortunately as many rental property owners will tell you, there can be a fair amount of headaches in the process. Do you do all the work and maintenance, answer the 2 a.m. phone calls and market the property yourself? Or do you give up 10-15% of your rental income to have a property management company do the hard work?


Then there is the potential risks. There is a huge potential hidden liability in owning a rental house. When the roof needs work, do you have $5,000 ready to fix it? When the HVAC goes out, can you fork over another $5,000? The number of big ticket items that can break in a house is a bit scary.


And with the median home price at about $204,000, investing in rental property without taking out a mortgage is out of reach for most individual investors.


But Wall Street has made a much easier, and much less scary way of investing in rental properties. Today we look at one such exchange traded fund: iShares Residential Real Estate ETF – Ticker: REZ. – Then we show you a new, even better way to investing in rental property with Motif Investing. [continue reading…]

Want to Make Your Own ETF? Now You Can With Motif Investing – Here’s Our Review

content_motif-logo_newLong time readers know my usual thought on choosing a stock broker – it hardly matters.

Most are almost all the same.

I typically recommend something along the lines of Vanguard or Fidelity, because of the access to commission free, low cost ETFs that those brokers provide.
I have been mostly invested with Vanguard for a few reasons: They provide a ton of lost cost mutual funds and ETFs that account holders can buy commission free, which makes small monthly investment feasible without commission taking huge chunks out. Vanguard also offers dividend reinvestment and partial share ownership for individual stocks and ETFs. Vanguard is still an excellent broker – and I will certainly continue to use them, But…

There is a new player in town which is a game changer for investors, whether you are a stock picker OR pure indexer.

And what’s best? New investors can take advantage of a special offer – up to $150 for those who create a new account today. Offer details are at the bottom of this post!


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Chart of the Week: Millennials Favorite Investment is Also the Worst Performing


Bankrate.com is out this afternoon with results of their monthly financial survey. One of the questions Bankrate asks is: “What is your preferred method of investing money that you don’t need for at least 10 years.” [continue reading…]

Weekend Reading 10/7/13

Here are some articles that caught my attention this past weekend. Topics include; Asset Allocation, and doing dumb things with your investments in a government shutdown.

On a side note, after a quiet couple of weeks posting should be back to regular, more frequent intervals at BeginToInvest…Thanks for your patience!

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My Mistakes: Here’s The First Mutual Fund I Ever Bought – And How It Cost Me $8,000

The whole point of Begin To Invest is to help pass on lessons I learned when I started investing to investors today.


Here was one of my first and most painful.

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Fund Spotlight Series: Vanguard vs. SPDRs Sector ETFs


Stocks from different sectors of the economy perform differently as the economy changes. During recessions, consumer staples, health care and utility stocks are often bought for their strong, stable business and/or dividend yields. During times when the market is flying high, technology stocks or consumer discretionary companies may rise faster than the general market.

Today we look at both Vanguard’s and State Street’s SPDR set of sector ETFs to determine how the different sectors perform in certain economic conditions and to determine which company offers the best funds for you. [continue reading…]

Guidelines That Keep You On Pace for Retirement


It’s hard for young investors to really visualize how much they should be saving in order to meet their needs for retirement.  But with some recent studies from Vanguard and Fidelity investors now have a few guidelines to make sure that they stay on track with saving for retirement.

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Begin To Invest Fund Spotlight Series – S&P Index Funds

Today we look at multiple funds that track the S&P 500 index. There are numerous funds that claim to track the S&P 500 index, which one should you choose?

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Begin To Invest Fund Spotlight Series – VGK


I will frequently spotlight index funds here on Begin To Invest, I think they offer beginning investors and investors of all experience levels the best possible mix of returns, low costs and protection from a serious loss of capital.


Today, we are taking a close look at Vanguard’s ETF which tracks the MSCI Europe Index – ticker VGK.

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