Jan 23, 2019 3 min read

Investment Lessons from Legend Fund Manager John C Bogle

The legendary fund manager left for heavenly abode leaving back some of the greatest lessons for investors. Read to know more about them.

John C Bogle (May 8, 1929 - January 16, 2019), an American Investor, philanthropist, and a business magnate, is quite a popular name in the mutual fund industry. He has revolutionized the investing experience for the common people. In the world where stock markets were just for the rich, he introduced Index funds, thus making stocks to reach every American home. It would be wrong to say that Bogle left behind a legacy that is hard to ignore.

Today, almost all of us should be thankful to John Bogle, for he is somewhere responsible for the high returns that we are enjoying today. He greatly affected the two areas in mutual funds, where the first one was that the lower costs were central to the returns that the investors make. The second one is the widespread realization that most of the fund managers could not sustainably beat the market indexes. He set an idea with Vanguard, the mutual fund company which was founded by him where he ensured a relentless focus on lowering the fund cost globally and enhanced the returns for the investors.

Here are a few investment lessons from the legendary investor himself which can help us all improve our returns and make us a little more wiser. So, let’s get started!

1. Don’t Try to Outsmart the Market

He strongly believed that one should try and stay the course, especially during the volatile times. For him, wise investors are the ones who don’t outsmart the market. Instead, they’ll buy index funds for a long term and diversify. He advises long-term investors to hold stocks even if the volatility persisted in the markets, and in justification, he said, “they will anyway produce better returns than the other alternatives available in the market.”

2. Make Distance from Emotional Investing

If you are willing to be a successful investor, you must have the stomach for risk. It is not something for a faint of heart. He suggests investors choose a diverse range of stocks and bonds, trust in the maths behind, and stay committed to it. While investing, eliminate emotions from your system is what he told to Vanguard investors.

3.Shake Hands with Time, Wave Goodbye to Impulse

The key to choosing mutual funds is not to focus just on the returns but on the important parameters such as risk, expense ratio, and time. To make an investment success, time plays a vital role. Also, have rational returns’ expectation from your investments, and avoid chasing big numbers as there is always a change in the market cycle.

4.Beware the Experts

He became a hard critic in the later years of his life and was completely against the high cost of fund management. The instance of 2008 shocked him as he noted that most of the money managers missed all the warning signs before the crises. He questioned, “how could so many highly paid experts, skilled money managers failed to notice the toxic-filled leveraged balanced sheets of Citibank and so many other banks and investment banks?” From 2017, he waved the interest of young investors away from the financial advisors and asked them to seek help from robo-advisors.

5. Keep the Cost Low

He made several affords to make investing cheaper for the people. He was instrumental in breaking the industry tradition by offering mutual funds directly to the investors in 1977 and didn’t opt marketing them through the broker chain, bringing the cost down by around 30-40 percent in the US MF industry. He was completely against the high fee which was charged from the investors in the name of stock picking. He advised investors to opt for low-cost index mutual funds to build a diversified portfolio consisting of bonds and stocks.

Not only in investments, but he also has several life lessons for people like you and me. No matter whether you are a risk-taker or risk-averse investor, you choose to invest in SIP or lump sum, the point is that you must not restrict yourself from investing. Go with what Bogle suggested, he said, “... stick to the routine you’ve set for yourself, no matter what. It’s that routine of work that will take you where you want to go.” With this, we, at MySIPonline, pay tribute to the legend. The trailblazer in the mutual fund industry has made investment simpler, so let’s take the benefit of the opportunity he has left for us. Invest in the best mutual funds recommended by experts. You can even connect with us to seek a personalized recommendation.

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