Boglehead principles
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The 10 principles of the Boglehead approach to DIY investing.
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Boglehead principles
- 1. 10 Principles of the Bogleheadsยฎ Investment philosophy โข Milwaukee Bogleheads โข September 11, 2017 Student Level Expertise Ages: All
- 2. Develop a Plan โข Live below your means o Have a budget o Save o Avoid excess debt โข Put it in writing o Imagine a likely scenario, make assumptions o The enemy of a good plan is the search for a perfect plan o Write down your Investment Policy Statement (IPS) so you can reference it occasionally, discuss it with advisors and family members.
- 3. Invest Early and Often
- 4. Invest Early and Often
- 5. Never Bear Too Much or Too Little Risk โข Too much risk will drive you to the wrong decisions during market downturns. โข Too little risk will lower returns significantly and allow inflation to erode the value of your savings. โข Try out a variety of tools to find the asset allocation that suits you best.
- 6. Diversify
- 7. Never try to time the market โข Typical investors buy high and sell low. Donโt be typical. โข Donโt be one of the โSmartest Guys in the Roomโ like Enron.
- 9. Use Index Funds โข Participate in the marketโs growth and dividends โข Avoid dumb investor tricks o Buying on old information that is new to you o Selling when the market dips to retreat to safety โข After the cow has left the barn โข Being out of the market for the recovery
- 10. Keep Costs Low
- 12. Minimize Taxes โข Take advantage of tax-advantaged accounts: 401K, 403b, IRAs, etc. o Use it or lose it
- 13. Invest with Simplicity โข โWhen there are multiple solutions to a problem, choose the simplest one.โ Occam's Razor explained John Bogle โข 3 Fund Lazy Portfolio: o US Stocks o Bonds o International Stocks โข Target Retirement or Life Strategy Fund
- 14. Stay the Course โข Essential to success o When the market drops, it can be difficult to follow your plan. Create an asset allocation that suits your appetite for risk. โข Tune out the chatter o โBad news sells papers.โ
- 15. Where to Get More Information โข http://www.bogleheads.org/wiki/Investment_policy_state ment โข http://www.bogleheads.org/wiki/Video:Bogleheadsยฎ_inve stment_philosophy
Editor's Notes
- Typical investors buy high and sell low. Donโt be typical. Donโt be one of the โSmartest Guys in the Roomโ like Enron.
- Looking at actual market returns, many people SOLD at the bottom and BOUGHT at the top.
- Someone who lowers costs by 1%, will have an extra $220k by retirement, which extends their retirement spending by over 10 years. US Stock Index Fund fees:
- The media is in the business of โselling papersโ not giving prudent investor advice. Tune out the chatter so you can stay the course.