7 Money Lessons from John C. Bogle

The late John Bogle was a revolutionary in the world of investing.

He founded Vanguard, one of the largest financial services companies on the globe.

He is also regarded as the father of index funds, having advocated for them for many decades.

Vanguards popular ETFs manage trillions of dollars of wealth, including some of mine.

As someone who had a lifetime of experience in investing, here are 7 investing lessons from John C. Bogle.

Only Invest With A Long Term Mindset

“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.”

Recent stock market crashes have made this abundantly clear.

If you’re going to invest in stocks, understand that the market drops by about 20% or more every few years. After each drop, it has always recovered and gone on to new highs.

That’s why you only want to invest with money you won’t need for at least 5–10 years.

Time In The Market Beats Timing The Market.

Owning the stock market over the long term is a winner’s game, but attempting to beat the market is a loser’s game.

As of 2019, the S&P 500 index outperformed 90% of large-cap stock mutual funds over the previous 15 years.

Only about 10% of mutual funds run by professionals are able to deliver above-average results.

This is largely due to the fees that they charge.

If there’s a lesson here, it’s that time in the market will almost always beat timing the market.

Prioritise The Fundamentals

The true investor will do better if he forgets about the stock market, and pays attention to his dividend returns and to the operating results of his companies.

In other words, be a long-term adherent of fundamental investing. Focus on the companies in which you’re a part-owner through your shares. Keep up with their progress and assessing factors such as their:

• Market share

• Profit margins

• Track record of growth

• Prospects for further growth

• Sustainable competitive advantages

• Debt and cash levels

…and so on.

Investing in the stock market is not a game of numbers.

It is a game of business.

Business means sales.

Sales means profit.

Profit means a greater share price.

Don’t Invest Based on Past Performance

Buying assets based on their past performance is not a smart move.

This is a common mistake that investors make, and stock investors make it, too.

If you see a fund that soared more than, say, 50% last year, you might jump in, wanting to collect a 50% return yourself.

Well, that’s not how it works.

Any asset can have an amazing year. Partly due to investor euphoria and optimism, or due to an impressive performance.

But it doesn’t happen every year.

When stocks and funds get ahead of themselves, they’re capable of falling back to more reasonable levels.

Focus on long-term results, and the current value of an investment in relation to what it’s truly worth.

Don’t Invest With Emotion

The two greatest enemies of the investor are expenses and emotions.

The cost of expenses is significant, especially when compound interest factors in over years of investing.

Emotion, though, is another challenge for investors to overcome.

Recent market drops lead people to panic and sell their stocks, which leads to further losses.

Market drops are actually great buying opportunities for long-term investors. But, you’ve got to learn to control the emotional side of investing.

Remember, be greedy when others are fearful, and fearful when others are greedy.

Investing Shouldn’t Be Overcomplicated

When there are multiple solutions to a problem, choose the simplest one.

Simplicity is often best in investing.

Many people think about investing and assume they need to learn:

• Commodities

• Futures

• Options

They have to become experts at reading financial statements to study many companies.

Instead, think back to Bogle’s simple index funds.

You can park money in one or more ETFs for many years and do very well — without becoming a stock market expert.

Don’t Waste Time Researching Investments

Don’t look for the needle in the haystack. Just buy the haystack!

When you invest in an index fund like Vanguards $VTI, it lets you skip looking for the most promising stocks. You just buy into all the thousands.

Like I mentioned earlier, these broad funds rarely get beaten by professionals.

There’s no need to invest your time trying to get more out of your money. You can invest into these funds, sit back and relax.

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