There are 4 core investing principles at the heart of Vanguard’s philosophy: goals, balance, controlling costs, and discipline. Let’s take a closer look to see how our investors are putting them into action.
Every successful investing journey starts with a set of clear goals. Goals come in all shapes and sizes, from big ones like retirement or college to small ones like a vacation or a she-shed for the backyard. Anything goes!
Once you have your goals in mind, you can choose account types that support them. 66% of Vanguard investors—68% of women and 64% of men—are invested in only one type of account: an IRA.* Saving for retirement is one of the most universal goals out there, and that’s what IRAs are built for. 529s are popular choices for college savings, and individual or joint accounts are good for general savings goals. If you’re not sure what your goals should look like, we’re here to help you get started.
Across the board, Vanguard investors believe in balance—that is, in choosing broadly diversified funds that give them exposure to both low-risk and high-risk asset classes. Just as taking on too much risk in your portfolio isn’t wise, neither is avoiding it altogether.
Choosing the right asset mix—the breakdown of stocks, bonds, and cash in your portfolio—may be the most important decision you make as an investor. If you’re not sure where to start, our investor questionnaire can suggest an asset mix that aligns with your goals, risk tolerance, and investing time frame.
3. Controlling costs
An important part of successful investing is understanding the commissions and fees associated with buying and selling certain investments. Even small onetime fees have a way of adding up, and they can eat into your investment returns. We want to help our investors avoid unnecessary costs whenever possible. That way, you have more money available to invest and compound over time (when your investment earnings generate their own investment earnings).
It’s also important for investors to learn about the most affordable ways to get into the market. Index mutual funds and index ETFs (exchange-traded funds) tend to be the lowest-cost options for starting your investing journey with the least amount of overhead.
The average Vanguard investor allocates 48% of their portfolio to index mutual funds (49% for women, 47% for men).** If you start there, you’ll be in good company.
Last but not least is discipline, which is demonstrated by all Vanguard investors. The median length of account ownership at Vanguard—for both male and female investors—is 13 years, with the average investor making only 11 trades per year.**
Discipline means a few different things in the investing world. First, it means reevaluating your goals every year or 2 to make sure your asset mix still makes sense for your life. Second, it means committing to your asset mix, even when the going gets tough and markets turn volatile (after all, what goes down may eventually come back up). Finally, it means realizing the importance of saving regularly and, when possible, saving more. It seems like a no-brainer, but it’s not always easy to save more than you originally planned.
Goals. Balance. Costs. Discipline. These are the principles that have been driving our investors’ success for 45 years and counting. Want to learn more about how Vanguard investors do things? Check out the full version of our recent research paper or take a deeper dive into our philosophy.
All investing is subject to risk, including the possible loss of the money you invest.
Diversification does not ensure a profit or protect against a loss.
You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (which may charge commissions). See the Vanguard Brokerage Services commission and fee schedules for full details. Vanguard ETF Shares are not redeemable directly with the issuing fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.