Jack Bogle’s Must-Know Tips for Future Retirees

Not many investors are so renowned that they have a cult-following named after them, but John “Jack” Bogle, founder of The Vanguard Group and inventor of the index mutual fund,  is an exception to that rule. Bogle pioneered the concept of index investing by creating low-fee mutual funds that allow everyday investors to track the performance of the market. 

Today, “Bogleheads” are investors who are enthusiastic about following his investment principles, including sticking with simple, broadly-diversified low-cost index funds for investing and buying and holding investments for a long time. Bogle has changed the lives not just of his followers, but of countless everyday investors who now have a simple solution to gain equity exposure without becoming experts in selecting individual stocks. 

For those hoping to learn from the man who ushered in an investing revolution, here are some of Bogle’s best must-know tips for future retirees. 

“Invest you must”

One of Boggle’s most important tips comes from an essay written by Boggle for the CFA Institute. In the essay, Boggle said, “Invest you must. The biggest risk facing investors is not short-term volatility but, rather, the risk of not earning a sufficient return on their capital as it accumulates.”

If you are afraid of investing because of volatility, you limit the returns you can earn and make it much harder for yourself to end up with the nest egg you need as a retiree. If you put your money in safe investments earning 2% annual returns, like high-yield savings accounts or CDs, you won’t make compound growth work effectively for you and will have to save far more money out of your pocket than if you invest in an S&P 500 index fund and earned 10% average annual returns. 

“Time is your friend.”

In the same essay, Boggle said, “Time is your friend. Investing is a virtuous habit best started as early as possible. Enjoy the magic of compounding returns.”

This advice is also important, as the sooner you start investing, the more compound growth works for you. As you invest, your money earns returns and grows your balance. The reinvested funds then earn more returns for you, which are then reinvested again. The more time this cycle happens, the more money your investments earn for you, and the faster your nest egg will grow.

“Don’t look for the needle in the haystack. Just buy the haystack.”

Bogle had advice not just on the importance of investing, but also on what to invest in.

Many investors think that they can beat the market — but the data shows that, over the long term, very few can.  Buying individual stocks puts you at greater risk of losses if the company doesn’t perform well, and while a select few are skilled at finding companies to invest in that provide great growth opportunities, many people have a hard time finding those standout investments that are going to outperform the market.

Bogle said you don’t have to do that to become wealthy. Since we know that the market goes up over time, you’re much better off just buying the market — which, thanks to him, you can now do in the form of broad index funds that track the performance of the S&P 500 and other financial indexes. 

Stay the course

Finally, Bogle advised not to react to short-term swings but instead to be consistent with your investing – ideally, buying index funds using dollar cost averaging so you are continually investing and will sometimes buy low and sometimes buy high based on natural market fluctuations.

If you do this, the inevitable result is that you buy more shares at lower prices because your money goes further.  A financial avisor can help you to determine which index funds are right for you, as well as high to decide how much to invest in order to hit your retirement savings goals. 

Following this Jack Bogle advice will help set you on a sure path to retirement security, so it’s well worth listening to it — and maybe you’ll become a Boglehead too. 

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