At the heart of Vanguard’s philosophy are 4 key investment principles: goals, balance, cost control, and discipline. Let’s take a closer look at how our investors are using them.
Every successful investment journey begins with a set of clear goals. Goals come in all shapes and sizes, from small to as large as a shed for vacation or backyard from adults like leisure or college. Anything goes!
Once you have your goals in mind, you can choose the types of accounts that support them. Vanguard investors %% – %% female and %% male – invest in only one type of account: an IRA. The 529s are a popular choice for college savings, and personal or collective accounts are good for general savings goals. If you’re not sure what your goals should be, we’re here to help you get started.
Across the board, vanguard investors believe in equilibrium অর্থাৎ that is, selecting widely diversified funds that expose them to both low-risk and high-risk asset classes. Just as it is not wise to take too much risk in your portfolio, it is also not wise to avoid it altogether.
Choosing the right asset mix – stocks, bonds and cash breakdowns in your portfolio – is the most important decision you can make as an investor. If you are not sure where to start, our investor questionnaire may offer an asset mix that is consistent with your goals, risk tolerance, and investment duration.
3. Cost control
An important part of a successful investment is understanding the commissions and fees associated with buying and selling certain investments. There is even a way to add small one-time fees, and they can eat into your investment return. We want to help our investors avoid unnecessary costs whenever possible. This way, more money is available for your investment and is matched over time (when your investment earnings create their own investment earnings).
It is important for investors to know about the most affordable way to enter the market. Index Mutual Funds and Index ETFs (Exchange-Traded Funds) can be the lowest cost options to start your investment journey.
The average vanguard investor allocates %% of their portfolio to mutual funds (%% for women, %% for men). ** If you start there, you will be in good company.
The latest but not the least discipline, which is displayed by all vanguard investors. The average length of Vanguard account ownership is 13 years for both male and female investors, with the average investor doing only 11 trades per year. **
Discipline means a few different things in the investment world. First, it means re-evaluating your goals every year or 2 so that the mix of your assets is still understandable for your life. Second, it means committing to your asset mix, even when running becomes difficult and markets become volatile (after all, what goes down can eventually come back). Ultimately, this means realizing the importance of regular savings and saving more when possible. It may seem like a no-brainer, but saving more than your original plan isn’t always easy.
The goal. Balance. Cost discipline. These policies have been driving the success and calculation of our investors for over 45 years. Want to know more about how vanguard investors work? Check out the full version of our recent research paper or dive deeper into our philosophy.
* As of December 31, 2019, the age of Vanguard retail investors in a single-member Vanguard family is 18 to 95 years.
** As of December 31, 2019, the age of Vanguard retail investors is 18 to 95 years.
All investments are at risk, including the potential loss of money you invest.
Diversity does not guarantee gain or protect from loss.
You must buy and sell Vanguard ETF shares through Vanguard Brokerage Services (we are free of those commissions) or through other brokers (which may charge a commission). See Vanguard Brokerage Services Commission and Fee Schedule For full details. Vanguard ETF shares are not redeemable in any way other than the merger of millions of dollars worth directly with the issuing fund. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or accept the current market price, which may be less than the net asset value.