Following the principles in real life:
Easier said than done

I’m a financial advisor with Vanguard Personal Advisor Services®, but I’m also a Vanguard investor, so I experience
the same market ups and downs as my clients. At times it feels like riding the extreme roller coasters I braved as a
kid—jaw-dropping highs and lows with no end in sight. A wild ride indeed.

Wild market swings can test even the savviest investors, myself included. During the recent market volatility, I had
to continuously remind myself of the 4 principles—the things I can control—to help keep me grounded and focused
as I navigated toward my goal of buying a home.

Principle 1: Goals

We all have goals—some short-term, some long-term. One of my short-term goals was to buy a house, so I saved
aggressively for the past few years. My longer-term goal is to achieve financial independence during retirement,
which is an ongoing journey.

When market volatility hit at the end of February, I was already house-hunting. I had cash on hand that I’d saved for
this goal—and didn’t want to jeopardize it—but I saw opportunities to invest some of that money for the long term
while the market was down.

So I put pen to paper to rework my “cash plan” and realized I might be able to invest some of that money in the
market over the long term without jeopardizing my down payment (a.k.a. the “house fund”). I even factored in a
few of those new homeowner spending shocks I’d heard so much about, just in case.

As I see with my clients every day, it’s not uncommon to be saving for multiple goals at the same time. But having
clear goals in mind and being realistic about how to achieve them have kept me from making mistakes that could
have otherwise derailed them.

Principle 2: Balance

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In the midst of market turmoil, I focused on 2 aspects of my portfolio I could control: asset allocation and diversification. My asset allocation needed to support my short-term goal of buying a house while helping me save for long-term financial independence in retirement. And diversifying my assets would not only help me achieve those goals, it would also help my portfolio weather market ups and downs over time. These 2 important portfolio characteristics are the key drivers to investment success over the long run.

Maintaining a balanced portfolio (and a balanced mindset!) helped me focus on the big picture: making sure I had enough money for the down payment on my home and investing for the long term.

Principle 3: Cost

Market performance matters, but you can’t control it.

Cost matters, and you can control it—whether you’re buying your first home or investing for retirement. The lower
your cost, the greater your share of an investment’s return.

Part of managing your costs is choosing low-cost, tax-efficient investments and products. When saving for my
home, I chose a low-cost Vanguard money market fund. And when choosing investments for my retirement goal, I
focused on low-cost, broadly diversified Vanguard index funds in my employer plan. When I made contributions to
my Roth IRA, I chose diversified ETFs (exchange-traded funds) for their trading flexibility and real-time pricing.

Principle 4: Discipline

Maintaining the discipline to commit to a long-term investment plan, even through periods of market uncertainty, is
critical to achieving investing success. In my opinion, discipline is the most important pillar to achieving success.
Without it, even the best investment plan will fall flat.

This year, I experienced the challenge of staying disciplined twofold. It was hard to keep my home purchase goal in
mind when I had cash available to invest in a down market. Like other investors, I was tempted to buy low. It was
also hard for me to rebalance my portfolio by selling “the winners” and buying “the losers” in an effort to maintain
my target asset allocation.

It wasn’t easy to maintain that discipline and stay the course, but I had to tune out the noise. And that’s what I
encourage my clients to do too.

So what happened to the house fund?

Go after your goals!

With Vanguard Personal Advisor Services you get access to an advisor whenever you need one—and they’ll always act in your best interests. We’ll help you follow the 4 investing principles to get where you want to go.

I took my hard-earned savings and bought a house in the middle of a pandemic—something I’ll never forget. My stomach was in knots for weeks—and my back was in knots from moving—but I’m now a homeowner because I stuck with those 4 principles.

And even though I met one of my goals, I still have more to achieve. I continue to review my asset allocation and
diversification to ensure my portfolio is balanced and on track. I focus on cost when it matters, and I put trust in myself and others to help me stay disciplined to achieve my financial goals.

Following Vanguard’s investment principles (and having friends in the industry who make sure I practice what I preach) helped me achieve my goal of homeownership. My new home is proof that I don’t just talk about those investing principles—I live by them.

Notes:

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.

Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.

The services provided to clients who elect to receive ongoing advice will vary based upon the amount of assets in a portfolio. Please review Form CRS and the Vanguard Personal Advisor Services Brochure for important details about the service, including its asset-based service levels and fee breakpoints.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.