Vanguard's investment philosophy

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Vanguard provides investment guidance based on four simple principles:[1]

  1. Define clear goals,
  2. invest with balance and diversification,
  3. minimize cost, and
  4. stay disciplined over the long term.

Vanguard's investment policy is explained in the following links from the Vanguard International website:

  • Investing is for meeting long-term goals; saving is for meeting short-term goals. (Link #1)
  • Broad diversification, with exposure to all parts of the stock and bond markets, reduces risk. (Link #2)
  • An investor’s most important decision is selecting the mix of assets to be held in a portfolio, not selecting the individual investments themselves. (Link #3)
  • Consistently outperforming the financial markets is extremely difficult. (Link #4)
  • Minimizing cost is vital for long-term investment success. (Link #5)
  • Investors should know how each investment fits into their plans and why they own that particular asset.(Link #6)
  • Risk has many dimensions, and investors should weigh “shortfall risk”—the possibility that a portfolio will fail to meet longer-term financial goals—against “market risk,” or the chance that returns will fluctuate. (Link #7)
  • Market-timing and performance-chasing are losing strategies. (Link #8)
  • An investor should not expect future long-term returns to be significantly higher or lower than long-term historical returns for various asset classes and subclasses. (Link #9)

References

  1. Vanguard's principles for investing success

External links