Every investor should read John Bogle’s writings, the Vanguard founder and relentless advocate for the typical retirement investor, the “little guy” up against the odds, and Wall Street’s hungry sharks. Let’s learn all the important tips for investment options, but before that, let’s have a small overview of John Bogle. In this article, we’ll look at seven financial teachings from Bogle that have been proven time and over again by the market.

Overview of John Bogle

True Measures of Money, Business, and Life is one of the best, a book he undoubtedly saw as the pinnacle of his career, a legacy. It was released in late 2008, as Bogle approached 80 years old. In May of this year, he became 88 years old.

Every day must be an unexpected bonus for a man who received a heart transplant in 1996. You can forgive the man for assuming, as we all do, that time was running out.

Yet here he is today, still arguing for the little guy, making the case for low-cost investing that dates back to his Princeton thesis from 1951, the document that earned him a perfect grade but, more importantly, led to the creation of the first Vanguard index fund and, over time, hundreds of billions in extra returns for investors.

Bogle recently published an article in the CFA Institute’s Financial Analysts Journal describing his investment philosophy, which included a scathing critique of Adam Smith, the philosophical father of capitalism, and Benjamin Graham, the father of stock analysis and mentor to Warren Buffett (the source of the “hundreds of billions” estimate.)

What is John Bogle’s background?

John Bogle, the founder of the Vanguard Group and a key proponent of index investing, was a strong proponent of index investing. Bogle, sometimes known as “Jack,” revolutionized the mutual fund industry by inventing index investing, which allows investors to purchase mutual funds that track the wider market. He did so with the goal of making investing easier and more affordable for the typical investor.

John Bogle earned his bachelor’s degree in economics from Princeton University, where he focused on mutual funds. He began his career at Wellington Management before starting Vanguard Group, a mutual fund company, in 1975.

Timeless Investment Lessons From John Bogle

Never forget reversion to the mean

 A mutual fund’s strong performance is almost certain to revert to the stock market norm—and typically below it. “So the last shall be first, and the first shall be last,” says the Bible (Matthew 20:16, King James Bible).

On index funds

Bogle, the inventor of the index fund, has penned a slew of remarks, comments, and articles in support of the strategy throughout the years. Index funds were, for a long time, considered novelties. They only really came into their own after the 2008 financial crisis, with a massive increase in allocations to passive investment vehicles during the last decade. Index funds, according to Bogle, may provide investors with the market return at market risk, something that many active managers fail to do in practice:

“The index fund is a practical, cost-effective way to achieve the market’s rate of return with little work and price. Individual stocks, market sectors, and management selection are all removed from index funds, leaving simply stock market risk.”

Even value investors should consider Bogle’s core argument in favour of index funds. While we are all striving for market-beating returns, many investors aren’t. Many people who try to beat the market fail miserably. That reality is demonstrated by hedge funds’ poor performance in recent years. As a result, index funds should be considered as part of any investment strategy. They do, however, limit the scope of exogenous threats. Finding a needle in a haystack is difficult (and frequently useless), thus Bogle’s advice to “purchase the haystack” may have some merit.

On market timing

While value investors may disagree with Bogle’s theory on a number of issues, they are unlikely to disagree with his market-timing approach. Trying to time the market was, for the most part, a fool’s errand, as the guru knew all too well:

“The idea that a bell will ring to indicate when investors should enter or exit the market is simply untrue. I don’t know of anyone who has done it well and consistently in over 50 years in our profession.”

Serious value investors understand that they will never be able to time the market. This protracted bull market provides all the proof necessary to that aim. Knowing whether to buy stocks is not the same as knowing exactly when to buy them, as Warren Buffett (Trades, Portfolio) has pointed out numerous times. Despite their philosophical disagreements, Buffett and Bogle agree on several points.

On speculation versus capital formation

Bogle’s 2012 book, “Clash of Cultures: Investment vs. Speculation,” has one of his most pertinent remarks, in which he criticizes the market’s overwhelming preference for speculation over actual capital formation:

“Annual stock trading has averaged around $33 trillion in recent years, necessitating the creation of negative value for traders due to transaction costs. However, capital formation – the process of allocating new investment capital to its highest and best uses, such as new enterprises, new technology, medical advances, and modern plant and equipment for existing enterprises – amounted to about $250 billion on average. To put it another way, speculation accounted for 99.2 percent of our equity market system’s activity, while capital formation accounted for ” 0.8%”.

Speculators abound in the market, but investors are few and far between. True value creation isn’t taking place to the extent that the market would like us to believe. That is something that value investors are well aware of. Asset prices have soared as a result of the continuous bull market, making bargain hunting difficult for many. However, we believe there are deals to be found.

While Bogle was more suspicious of competent investors’ ability to spot opportunities than we are, he was indisputably correct about the hazards of speculating. And he was dead on regarding who should be investing in stocks, whether passively or actively:

“If you can’t imagine a 20% loss in the stock market, you shouldn’t be investing in stocks.”

Stay The Course 

“In investing, the winning technique is to own the whole stock market via an index fund and then do nothing”. Stick to your financial plan no matter what occurs in the marketplace. Changing your strategy at the wrong time can be one of the most costly mistakes an investor can make. (Ask investors who shifted a large percentage of their portfolio to cash during the financial crisis, only to miss out on part or even the entirety of the subsequent eight-year—and counting—bull market.) The most crucial piece of advice I can give you is to “stay the course.”

Invest you must

“The main risk for investors is not short-term volatility, but not earning an adequate return on their wealth as it grows.”

Bogle argued that simply conserving money would not be enough to help people reach their financial objectives. 

Average investors must invest in shares in order to beat inflation by a significant margin. 

While investing involves some risk and volatility in the short term, the risk of not generating a satisfactory return on your cash over the long run is far greater than any short-term market volatility.

When you consider how inflation erodes the value of your assets, it’s easy to see why he placed such a high emphasis on investment.

The most significant risk for investors is not short-term volatility but rather the risk of not earning an adequate return on their cash as it grows.

Time Is Your Friend

“Compounding is nothing short of a miracle. As a result, even little investments started in one’s early twenties are likely to grow into enormous sums throughout a lifetime of investing.”

Bogle always recommended people to begin investing as soon as possible in order to be successful. He believed that your profits will compound over time if you start early enough, and your money will expand enormously on its own.

Even modest deposits made in one’s early twenties, according to Bogle, are likely to rise into startling sums throughout a lifetime of investing. As a result, it is critical to invest time in the market. Bogle also suggests that investors should focus on spending time in it instead of trying to time the market.

Let’s pretend you start investing when you’re 23 years old. If you invest Rs. 6,100 a month in equities funds through a systematic investment plan (SIP), you can earn Rs. 5 crores by the age of 60. (Assuming a 12 percent average annual return).

If you begin investing in equity funds when you are 35 years old, you will need to make a monthly SIP of almost Rs. 26,600 to earn Rs. 5 crores by the time you are 60 years old.

Impulse Is Your Enemy

“If you can’t imagine a 20% loss in the stock market, you shouldn’t be investing in stocks.”

Bogle’s famous phrase, “Impulse is your enemy,” cautions us against succumbing to our emotions and instincts. Because they let their emotions define the conditions, investors frequently sell when markets fall and purchase when they rise.

Bogle always counselled investors to set realistic goals. In fact, he stated that investors who are unable to watch their stock investments decrease by 20% should not invest in equities. Bogle was once again proven correct when the stock market crashed in March 2020. If you buy in stocks, expect to see a 20-30% collapse every few years, followed by a recovery from those lows to reach new highs. When the Sensex went below 30,000 in March 2020, many predicted it would fall far lower, to as low as 20,000, and that it would take years to recover due to the uncertainties surrounding the pandemic.

All of these theories, however, turned out to be false. Those who sold their investment at that time missed out on the subsequent 9-month rally. This rebound can happen in a couple of months, as it did recently, but it can also take years. As a result, only invest in stocks with funds you won’t need for at least five years.

Cost Matters

“Low expenses allow lower-risk portfolios to deliver larger returns than greater-risk portfolios,.

Bogle argued that investing is about more than just risk and reward. Investors should strike a careful balance between risk, return, and cost when investing, he said, because low costs allow lower-risk portfolios to offer more significant returns than higher-risk portfolios. Investors who prefer to trade actively or who are convinced by their brokers to do so should be aware of the near-inevitability of counterproductive market timing. In such instances, investors frequently bet on sectors as they become hot and against them as they go cold. Furthermore, the high commissions and fees accrue over time, reducing the returns gained by investors.

These two enemies of the equities investor — emotions and expenditure – will undoubtedly jeopardize their fortune. Bogle believes that buying a low-cost index fund for the vast majority of investors and holding it for the rest of their lives is the best plan.

Basic arithmetic works 

The net return of your investment portfolio is just the gross return less the fees you spend. Keep your investment fees minimal, as the tyranny of compounding costs can wreak havoc on the compounding miracle.


Bogle’s index investment method and timeless investment ideas have aided millions of everyday investors in achieving their financial objectives. Bogle’s investment lessons not only protect us from complex products, but also from our deadliest enemy — our own emotions and biases.

Let the highly qualified experts at WealthBucket help you in your journey towards building wealth. We give personalized services in a vast assortment of investment alternatives. Remarkable are equity fund investmentDebt mutual fund, Large Cap mutual fund, or Multi-Cap mutual fund.

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