While researching my article on The Best Investors of All Time, the term Bogleheads kept coming up when I was researching Jack Bogle. For a quick refresher, Jack Bogle is the founder of Vanguard, and a champion of low-cost simple investing philosophies. However, his basic principles have been extolled upon by several other mainstream finance authors, as well as thousands of other self-proclaimed Bogleheads. They have put together a website to champion this investing advice inspired by Jack Bogle here: Bogleheads.
What Do Bogleheads Follow?
Bogleheads follow several simple investing philosophies:
- Live Below Your Means
- Invest Early and Often
- Never Take on Too Much Risk, or Accept Too Little
- Diversify
- Don't Time the Market
- Use Index Funds
- Keep Costs Low
- Minimize Taxes
- Keep It Simple
- Stay The Course
How to be a Boglehead
Bogleheads invest and keep it simple by buying mutual funds or ETFs that try to mimic the entire market. Or, to build a proper asset allocation for their own individual needs, they may buy a stock mutual fund and bond mutual fund to be diversified in both asset classes. When buying these funds, they pay special attention to fees, and only invest in funds with low fees and expenses.
Taxes are also a huge consideration. To maximize tax efficiency, investment vehicles like 401ks and IRAs are the preferred mediums.
Finally, they stay the course – the stock market goes down, they keep investing. The stock market goes up, they keep investing.
What do you think of the Bogleheads? Are you one of them?
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I guess I could say I’m a Boglehead without really knowing it. I tend to fit in all/most of those categories and they’re how I approach my investing and finances.
I’ve read the Bogleheads forums and the ‘Guide to Investing’ and have very high regard for their style. It’s a very rational and effective approach. So much so, when I’m planning my investments I always think, ‘what would a Boglehead do?’
I love the WWaBD? Almost like the shirts that say WWLDD (What Would Larry David Do)?
I’m certainly not a Boglehead. I’m in favor of timing the market. It’s not that hard. Diversification is OK, but typically done so badly wrong as to be a waste of time. Simple is for tape worms.
Timing the market is tough….and done badly can be a huge waste of time and money as well. Simple is simple – it can work just as well as complex many times.
Jack Bogle has long been one of my heroes. Since he doesn’t drink the Wall Street Kool Aid, he’s never gotten the broad notoriety he deserves. But he’s done a tremendous service to individual investors through Vanguard and singlehandedly driving down fund management fees across the board.
I’m not sure. I think this is the most important investing philosophy that they espouse: “Never Take on Too Much Risk, or Accept Too Little” but it is totally ambiguous! How do you define “too much” or “too little”? It’s relative, yet the amount of risk you take is going to have more effect on your wealth accumulation than any other factor.
DC @ Young Adult Money:
Bogle himself defines it with his “Age = Bonds” rule of thumb. That is, the percentage of your money in bonds (safe money) should be about equal to your age; the rest (risk money) in stocks. As you accumulate money and run out of earning time, you gradually decrease your risk. At age 50, you’ll have considerable savings, half in bonds and half in stock, so a 50% market decline loses you only 25% of nest egg. At age 75, when you’ve saved all you’re going to, only 25% of your money is at risk in stocks.
Also, control risk by rebalancing if market movements pull your stock/bond split away from Age = Bonds — sell what you have too much of and buy what you have to little of. (This makes you buy low and sell high.) One to four rebalances a year should do it.
I am a Boglehead.
When you start off it pays being a Bogle head. The more you go inside it you start devising your own strategy. I think that should be the right approach for me.
It’s funny how people care what the academic literature says when it comes to so many things in life (like medicine), but not with regards to finance. The “Boglehead Strategy” is simple, yet sophisticated and the easiest and most reliable way to achieve financial independence.
There are a few people out there who can pick stocks and time the market. But you’re probably not one of them, so why invest that way? It’s far easier (and more likely successful) to follow the Boglehead strategy.
That’s pretty much the strategy I recommend to other doctors on my blog and I have a post coming up from one who retired at 53 by doing nothing other than invest like a Boglehead.
You wrote, “What do you think of the Bogleheads? Are you one of them?”
I think the Boglehead philosophy and community are super. And yes. 🙂
Thanks for stopping by Mike and admitting the truth!
Yes, I am a Boglehead and have been one since 1999. I met John Bogle at the second Bogleheads Reunion. From 10/17 – 10/19 we had our 11th Reunion. What is a Bogleheads reunion? It is when people who have never met before and who know each other only by their posts meet almost every year to join Mr. Bogle when he makes time in his busy schedule to meet with us. We have the opportunity to hear him speak, and sign our copies of the books he has written. If you get a chance, check out the Facebook Bogleheads site, and also Bogleheads.org Both are wonderful places to find out about the Bogleheads philosophy, and see photos from Bogleheads Reunions 1 – 11.