Vanguard's Principles for Investing Success

Earlier this year, Vanguard published a whitepaper outlining the firm’s Principles for Investing Success. The forty-page report breaks down investing principles into four basic categories:

  • Goals: Investors should create clear investment goals that are both “measurable and attainable. Success should not depend upon outsized investment returns, nor upon impractical saving or spending requirements.”
  • Balance: Diversification is key in establishing asset allocations to avoid exposure to unnecessary risk.
  • Cost: The paper argues that lower-cost investments have typically outperformed higher-cost alternatives and, although markets are unpredictable, investors can control their level of cost  and tax burden.
  • Discipline: “In the face of market turmoil,” the paper states, “some investors may find themselves making impulsive decisions or becoming paralyzed, unable to implement an investment strategy or rebalance a portfolio as needed.” The paper argues that Investors should maintain long-term discipline and commitment to their financial plan throughout inevitable periods of market uncertainty.