“Investors should remember that excitement and expenses are their enemies.” – Warren Buffett
In Vanguard’s most recent newsletter they laid out their four timeless principles to help you reach your investing objectives. They are:
1. Goals: Create clear, appropriate investment goals.
2. Balance: Develop a suitable asset allocation using broadly diversified funds.
3. Cost: Minimize costs.
4. Discipline: Maintain perspective and long-term discipline.
These are just the basics but knowing and using these concepts will put you ahead of probably 80% of all investors these days.
Here is my favorite info graphic from the report showing the changing leadership from different asset classes over the past 15 years:
(Click to Enlarge)
The wide assortment of colors shows how market performance changes from year to year in a seemingly random pattern. This is a great illustration for the benefits of having a globally diversified portfolio (something I’ll cover in more detail in my next post).
These are just the short and sweet takeaways but the report is full of good advice and statistics so read the whole thing for more details.