“If you don’t know where you’re going, you might wind up someplace else.”

Have a plan and stick to it. You can’t plan for the future until you know what you want the future to hold. Think you need $2 million to retire comfortably at age 65? Want 4 years of college tuition for your child? Write down the facts and anchor those big-picture goals in reality, estimating the steps to take to get where you want to go.

Putting your plans in terms you can measure will help you stay on course even if your goals change or the market fluctuates. It can also help you commit to saving and investing on a consistent basis.

“Don’t always follow the crowd, because nobody goes there anymore. It’s too crowded.”

Don’t chase performance. While most of us know that past performance is not a promise of future returns, it seems counterintuitive not to buy in the middle of a hot streak—or to sell in a downturn. But jumping in and out of the market based on short-term results is a surefire way to buy high and sell low.

A more trustworthy strategy? Choose appropriate investments for your goals, periodically rebalance to maintain your target allocation, and invest for the long term. You’ll be ahead of the crowd instead of chasing after it.

“You better cut the pizza in 4 pieces because I’m not hungry enough to eat 6.”

Avoid overlap. Overlapping means that your portfolio is overweighted in a particular asset class, industry, or market segment. For example, if you hold several funds that have a heavy concentration in technology or long-term bonds, you could be overexposed in those areas.

You can achieve balance and diversification (and significantly reduce your risk) by investing a percentage of your investments in at least 2 asset classes—and then keeping those percentages at a relatively steady level. An even simpler strategy is to consider an all-in-one target-date fund that automatically invests and diversifies for you.

“It’s tough to make predictions, especially about the future.”

Don’t try to time the market. Some investors keep cash assets and just wait for the perfect opportunity to buy. But predicting performance is nearly impossible. No one knows the optimal moment to invest. If it were that easy, we’d all be hitting financial grand slams on a regular basis.

A wiser approach is to take advantage of dollar-cost averaging by participating regularly in an employee plan or another automatic investment program. Contributing a set amount on a set schedule can help grow your account, and you won’t have to play the market guesswork game.

“A nickel ain’t worth a dime anymore.”

Pay attention to costs. At Vanguard, we emphasize costs a lot, and for good reason: Costs matter—a lot. Every dollar you pay in fund costs is a dollar that could otherwise earn money for you.

Vanguard research has shown that a fund’s expense ratio can also be a useful predictor of its relative performance: On average, since funds with higher expense ratios pass on fewer returns to their investors, these funds tend to underperform those with lower expense ratios.

So be sure to check a fund’s cost before you invest. With a low expense ratio, you’ll pay less to own a fund and you could keep more in return.

“I’d find the fellow who lost it, and if he was poor, I’d return it.”

(Yogi’s response when asked what he’d do if he found $1 million.)

Invest tax efficiently. You want to keep as much of your return as you can. And by maximizing your tax efficiency, you can minimize what the IRS expects you to hand over.

First, choose an appropriate mix of stocks, bonds, and cash for your portfolio, and then put your investments where they’ll benefit you the most, tax-wise. For example, hold higher-yielding or income-generating assets in tax-sheltered accounts such as employer plans and IRAs, and place tax-efficient holdings like index and tax-managed funds in taxable accounts. Positioning your investments strategically can diminish tax impact and provide the potential to add significant value to your portfolio.

You can be an all-star investor

Yogi claimed that “we make too many wrong mistakes.” But if you stick to a plan, diversify, invest for the long term, and pay attention to costs and taxes, you can eliminate some costly errors that could keep you from becoming an all-star investor.


All investing is subject to risk, including the possible loss of the money you invest.

There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Diversification does not ensure a profit or protect against a loss.

Past performance is no guarantee of future results.

We recommend that you consult a tax or financial advisor about your individual situation.

Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in target-date funds is not guaranteed at any time, including on or after the target date.