At Vanguard, we believe that four simple principles will help most
people to improve their chances of investment success...goals,
balance, cost and discipline.
Let’s look at goals first...We believe that successful investing begins
by setting measurable and attainable personal goals. It could be
anything. And once you know what it is you want to do.
How much money do you need to achieve your goal?
How many years do you have to reach your goal?
How much risk can you bear along the way?
How much can you invest at the start and regularly from then on?
Now what about balance? What are the right investments you need
to reach your goal? Shares are risky but offer the potential of higher
returns over the long-term. Bonds, a type of loan, may offer lower
returns but are historically steadier.
So you can use these differences to build an investment portfolio
that is best suited to helping you achieve your investment goals.
Okay, now let’s look at cost. Differences in investment costs can
seem small.
But when they are compounded over many years, these differences
can take a significant toll on your wealth. Something else to
consider – in investment, more expensive does not always mean
higher quality. On the contrary. On average, over time, higher cost
funds will tend to have lower returns.
And finally, discipline! Investing can provoke strong emotions...Fear,
greed, anger, excitement. We can all too easily give in to impulsive
behaviours.
But in our experience, investors are most likely to be best served by
sticking to their plan based on our four investment principles...
goals, balance, cost and discipline.
Following these four simple principles will help most people to
investment success.
