Jack Bogle's 4 Rules of Investing

Famous passive investor and founder of The Vanguard Group, Jack Bogle recently shared his four personal rules for investing, and they are worth considering.

  1. If you must rebalance, once a year is enough.
  2. Don't invest overseas (at least not directly).
  3. Diversify into bonds if you might need your money sooner than later.
  4. If you make simple portfolio choices, you'll spend less time worrying.

(source CNBC. Click here for the article).

At Blue Harbinger, we admire Jack Bogle very much for his aversion to expensive trading costs and his understanding of long-term investing.  We even agree with his four rules above acknowledging that they are slightly biased because of his interests in The Vanguard Group which is known for offering investments that exactly match his four rules (i.e. his four rules are a little bit of a Vanguard sales pitch).  However, we also realize that Bogle's passive approach isn't that different from the approach of famous active manager Benjamin Graham in the sense that they both invest for the long-term to avoid expensive Wall Street trading costs.

As long-term investors, we know that Wall Street trading costs are your enemy, and if you want to maximize your long-term success you should do your best to avoid them.  That means, for example, don't pay high sales commission to a full-service stock broker and don't pay large management fees for a mutual fund that isn't going to outperform the market after you factor in the high fees.  We know that diversified, low-cost, long-term investing is the best strategy for most investors.

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