5 principles to guide you on your financial journey

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“Think long-term when investing. When times are good, be grateful. When times are bad, be patient. Focusing on the long term is a winning strategy for all seasons.” Jack Brennan

You can’t control the markets, the economy, or the performance of an individual security, according to Jack Brennan, former CEO Vanguard Investments and author of “More Straight Talk on Investing”. You can, however, give yourself the best chance for investment success by taking ownership of your finances in a sensible way.

Here are 5 enduring lessons learned during Brennan’s tenure as Vanguard’s CEO:

Develop a financial game plan

First, establish clear, attainable goals and create a plan that will help you reach them. Be conservative in your projections about how fast your money will grow. By avoiding impractical saving or spending requirements, you can help keep your plan on track.

Become a disciplined saver

4 key words for building a secure financial future are “live below your means.” Make a habit of putting money away. If saving money doesn’t come naturally to you, find creative ways to make it a fun challenge. Consider what changes you’re willing to make to set aside a little more for your future.

Invest with balance and diversification

Create a sound investment strategy by choosing an asset allocation that uses broadly diversified funds and considers your goals, time horizon, and risk tolerance.

Control your costs

While you can’t control the markets, you can control your investment costs and taxes.

The less you pay for funds, the greater your share of the investments’ returns. Be sure to avoid funds with high expense ratios.

To reduce taxes, consider tax-efficient investments like index mutual funds and ETFs. IRAs are another way to mitigate the impact of taxes.

Maintain a long-term perspective

Over time, you’ll experience both good and challenging times that can evoke various emotions. Resist the urge to make impulsive decisions. Taking a disciplined approach that keeps you focused on your long-term objectives is a winning strategy for all seasons.

Markets are unpredictable and investment fads come and go. Yet, it is not difficult to develop a sound investment program for the long term that manages risks and taxes by following these 5 enduring lessons learned.

References:

  1. https://investornews.vanguard/5-investing-principles-that-are-built-to-last/

Jack Brennan joined Vanguard in 1982 and served as chief executive officer from 1996 to 2008 and chairman of the board from 1998 to 2009. Currently, he serves as chairman emeritus and senior advisor. He’s been in the investment management business for nearly 40 years.

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