Vanguard's investment philosophy

Vanguard provides investment guidance based on four simple principles:
 * 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)