Jack Bogle Investment Advice - 10 Rules He Always Follows (2024)

John C. ‘Jack’ Bogle was the founder of the investment firm Vanguard and is widely regarded as the father of modern index funds. He spent decades railing against active investing in general and high-fee mutual funds.

This article will look at ten pieces of investment advice from Jack Bogle that highlight his investing knowledge and philosophy. Let’s get started!

Jack Bogle Investment History

Jack Bogle’s career began at the Wellington Fund, one of the oldest mutual funds in the US, in 1955. He spent nearly 20 years at the fund before founding the Vanguard Group in 1974.

A few years later, Bogle introduced the First Index Investment Trust – the first modern index fund and a precursor to today’s index funds. The fund received a lukewarm welcome from the investment community but grew popular among public investors.

After that, Bogle spent much of the next two decades speaking out against the mutual fund industry. He saw it as costly and unable to deliver the performance it promised everyday investors.

Bogle gave up his position as the CEO of the Vanguard Group in 1996 and died in 2019. When he retired from Vanguard, Fortune named him “one of the four investment giants of the twentieth century.” His introduction of index funds is considered one of the most consequential transformations in investing in modern history.

Jack Bogle Investment Advice

Bogle’s investment philosophy focuses on long-term investing in actively managed funds. He is a strong proponent of index funds as opposed to a mutual funds. Also, he advises investors to grow with the US market.

Let’s look at ten pieces of advice Bogle offered investors over his career.

1. Buy and Hold

“Buy and hold” succinctly sums up Jack Bogle’s advice to investors. As Bogle put it, “Common sense tells us — and history confirms — that the simplest and most efficient investment strategy is to buy and hold all of the nation’s publicly held businesses at very low cost.”

So, instead of actively trading in and out of stocks, Bogle recommends simply buying into the market and adding to your investment over time. However, get accurate market data from financial institutions and study the whole market before investing and sit back and watch compound interest work its miracle.

2. Stay the Course

Bogle’s second piece of successful investing advice, to “stay the course,” follows from his buy right and hold tight investment strategy. He tells investors that they shouldn’t let “changes in the market…change your mind” and that they should “never, never, never be in or out of the market. Always be in at a certain level.”

According to Bogle, it’s essential to continue to hold even if the market is crashing and most other investors are panicking. However, find out the best Vanguard index funds, and learn about asset allocation, and other aspects of the investing world before buying and holding.

3. Don’t Try to Beat the Market

For nearly 40 years, Bogle was one of the loudest voices in the investment community speaking out against active investing and the shortcomings of an actively managed fund. “Short-term betting is not a good way to go,” he said.

Bogle believed fund managers who claimed they could consistently beat the market were untruthful. So, instead of investing with these funds, Bogle suggested that investors try to match the market and keep costs as low as possible.

4. Buy the Whole Stock Market

Instead of picking winners and losers, Bogle advised investors to buy the entire US stock market. He called the S&P 500 a “great proxy” for this purpose, and it was the index funds he introduced through Vanguard that made buying the whole stock market possible for many investors.

He also proposed the structuring of an investment portfolio to reflect the market yardstick, like the S&P 500 stock index. Most investors may not agree with this investment tip, but if they follow it, they will reap fundamental returns in the long run.

5. Investing Doesn’t Require an Expert

Bogle preached simplicity in investing. After all, buying and holding the entire stock market in index funds is about as uncomplicated as investing can get. He told investors that “unless you need a financial adviser to help you get started in that routine, you probably don’t need a financial adviser.”

Jack Bogle believed that index funds represented a vast majority of equity assets and financial professionals perform a disservice to their clients if they advise them only to buy stocks. So, to go grow your personal finance and get financial freedom, get involved in index investing and set realistic expectations. It’s all about common sense investing.

6. Keep Emotion Out of Investing

One of Bogle’s mantras was that “impulse is your enemy.” He advised investors to “eliminate emotion from your investment program” and to “avoid changing [your] expectations in response to the ephemeral noise coming from Wall Street.”

This goes back to Bogle’s investing philosophy of staying the course. No matter how exciting the market may be or how worried other investors may become, you should follow through on your plan and not let anything get in the way. Therefore, while you can listen to financial news, don’t let it influence your investment decisions.

7. Costs Matter

One of the reasons John Bogle disliked mutual funds so much is that he believed they overcharged the average investor everyday investors. One of Bogle’s goals was to keep investors ‘costs as low as possible in developing index funds and encouraging investors to buy and hold for the long term.’

As Bogle put it: “In investing, you get what you don’t pay for. Costs matter.” High fees affect your average return.

8. Look at Companies, Not Stocks

Never waste time buying individual stocks or stock funds. Bogle called the stock market “a giant distraction to the business of investing.” He meant that stock prices are simply noise – companies’ fundamentals and past performance matter.

So look for a public company that consistently delivers on its bottom lines and grows its business over time, and don’t worry about how much the shares cost. That’s the one company to invest in.

9. Keep It Simple

As we noted, Bogle believed in simplicity and low fees when it comes to investing. He told investors, “when there are multiple solutions to a problem, choose the simplest one.”

That means investing in things like low-cost index funds rather than developing a complex scheme to beat the market. The latter requires more effort. You should also choose simple investments for everyday investors to understand instead of selecting such complex assets that require a financial advisor.

10. Stick to the Plan

Bogle’s appeal to stay the course is so central to his investment advice that it’s worth reiterating. He warned investors that “the greatest enemy of a good plan is the dream of a perfect plan.”

The solution? “Stick to the good plan.”

Conclusion: Jack Bogle Investment Advice

Jack Bogle was the founder of Vanguard and is widely considered the father of modern index funds. He spent much of his career encouraging investors to match the market rather than beat it and developed Vanguard’s portfolio of index funds to make that possible.

Above all else, Bogle believed that a buy-and-hold strategy is the best course for investors and that it is essential for investors to stick to that strategy no matter what happens.