Vanguard Founder Jack Bogle's Investment Tips, 12 Years Later

(Bloomberg) -- Jack Bogle's long-lost investment advice looks pretty good with hindsight.

Back in March 2007, the late Vanguard Group Inc. founder wrote an article for a men's magazine laying out four fundamental tips. Though it didn't make it into print at the time, the editor who worked with Bogle dug it up for Barron's to publish 12 years later.

Bogle recommended a simple portfolio consisting of a bond index fund and a stock index fund, adjusted for the investor's age. A 40-year-old investor who followed his advice and did nothing would have earned an annualized 7.3 percent, turning $100,000 into $236,000 by May 1, 2019, according to Barron's. Vanguard's 2035 target-date fund returned an annualized 6.1 percent over that period, which includes the Great Recession bear market that cut stock prices in half.

Bogle's four tips? Focus on costs, diversify broadly, allocate prudently and stay the course. For anyone saying there might be better options than simply buying and holding two funds, his response was that the number of worse strategies is infinite.

“Successful investing doesn't require sophistication and complexity; all that's necessary is a healthy dose of common sense,” Bogle wrote, according to Barron's.

He wasn't as keen on the exchange-traded funds born out of his index funds. Ironically, advisers these days are making active bets through passive ETFs, straying far from the Bogle doctrine of low-cost, broadly diversified index investing, according to Barron's.

Bogle, who died at age 89 in January, brought low-cost index-based mutual funds to the mainstream, saying that most stock-picking money managers weren't worth the fees they charged.

To contact the reporter on this story: Hailey Waller in New York at hwaller@bloomberg.net

To contact the editors responsible for this story: James Ludden at jludden@bloomberg.net, Tony Czuczka, Linus Chua

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