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CIA Insights – Lessons from John Bogle

Very recently, I was fortunate enough to have the opportunity to speak at length with John Bogle, founder and former CEO of The Vanguard Group of mutual funds. Listen to Interview.

Very recently, I was fortunate enough to have the opportunity to speak at length with John Bogle, founder and former CEO of The Vanguard Group of mutual funds. It’s not everyday that you can sit down and talk at length with someone who Fortune Magazine deems as one of the four “investment giants” of the twentieth century. Bogle is widely heralded as the father of index mutual fund investing, as he introduced the first index fund, Vanguard 500, in 1976 and pioneered no‐load mutual fund investing. I was able to speak with John from his office in Valley Forge, PA and shared several pieces of the interview on Money Matters this September.
Because many of his core philosophies have played a large role in forming my own investment beliefs, as well as those of our firm, I wanted to share them with you here in summary. Know that as we continue to work with clients over the years we will draw upon this kind of wisdom, wisdom directly from the horse’s mouth…

  1. There’s no substitute for getting the basics right to begin with, and that starts with Asset Allocation.
  2. On Asset Allocation: own your age in bonds. For example, if you are 60 years old, then approximately 60% of your investment assets should be held in bonds (that includes closed end bond funds, bond mutual funds, bond ETFs, and individual bonds). This should be used as a rule of thumb.
  3. On income: know that investing for income can be complicated. Own a variety of bond types, yields, and maturities.
  4. On fees: FEE ONLY advisors are the only appropriate way to obtain objective advice and ensure that you keep your mutual fund costs in check.
  5. On Time: anything less than a 10 year time horizon is just speculation.
  6. On inflation: TIPS are a “no brainer” and GOLD should be limited to 5% of a portfolio.

 

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