Markets fluctuate, and investment trends come and go. Already in 2021, we’ve seen speculative trading and overheated trading focused on emotions rather than fundamentals around AMC and Gamestop. We believe that by ignoring patterns and concentrating on balance, discipline, and diversification, you can remain on the road to long-term financial success.
Former Vanguard CEO Jack Brennan’s latest book, More Straight Talk on Investing: Lessons for a Lifetime, is a timely antidote to today’s headlines. He demonstrates how to create a sound long-term investment programme, analyse funds and ETFs (exchange-traded funds), and handle risks and taxes in a simple, straightforward manner.
He also lays out 12 timeless concepts that have helped countless investors navigate the capital markets, including you. Here are some of the most important lessons learned from Vanguard’s crew and collaborations with clients all over the world.
INVESTMENT PRINCIPLES
You can’t monitor the markets, the economy, or an individual security’s efficiency. You may, on the other hand, give yourself the best chance of investment success by managing your finances wisely.
FINANCIAL GAME PLAN
Build a strategy to help you achieve your objectives by first establishing straightforward, attainable goals. When estimating how quickly your money can rise, be cautious. You will help keep your strategy on track by avoiding unrealistic saving or spending goals.
DISCIPLINE IS KEY
“Live beyond your means” is one of four main terms for securing a stable financial future. Make it a routine to save money. If saving money isn’t your strong suit, come up with innovative ways to make it a game. Consider what improvements you’re willing to make to put a little more money aside for the future.
MAINTAIN BALANCE
Choose an asset allocation that uses widely diversified funds and takes your priorities, time horizon, and risk tolerance into account to create a sound investment plan.
MANAGE COSTS
You have no power over the markets, but you do have control over your investment costs and taxes. The lower the cost of funds, the higher your share of investment returns. Avoid funds with high expense levels at all costs. Vanguard mutual funds and ETFs have an expense ratio that is 83 percent lower than the industry average. Consider tax-efficient investments such as index mutual funds and exchange-traded funds (ETFs) to save money on taxes. IRAs are another way to reduce the tax burden.
LOOK AT BIG PICTURE
You’ll go through both good and bad times in your life, which will cause you to feel a variety of emotions. Resist the temptation to make rash decisions. A winning strategy for all seasons is to maintain a balanced attitude that keeps you focused on your long-term goals.
