Bogle played a key role in making investing simple and accessible for all of us. He believed that investors shouldn’t pay fund managers high fees to pick stocks, so his business offered low-cost index funds that represented a basket of stocks (like those in the S&P 500 Index or MSCI World Index). In doing so, he made it affordable for millions to invest in the stock market. Wall Street and the City of London, which had been happy to maintain the status quo, were never the same again.

Bogle’s investing philosophy is close to our heart at Moneybox. So in his memory, here are some of his investing lessons.

1. Invest you must

Bogle believed that investing – as opposed to saving – is necessary to get a good return on your money. While investing carries risk, not earning a good return on your capital in the longer-term is a much bigger risk than any short-term market fluctuations investors may experience. This doesn’t mean you don’t need a rainy-day fund, you do. Have money saved for the unexpected – ideally 3 to 6 months of expenditure.

2. Stay the course

“Owning the stock market over the long term is a winner’s game but attempting to beat the market is a loser’s game”, Bogle said. The best thing you can do for yourself is block out the short-term noise. Regular investing, no matter what the state of the market, will lead you to capture the average, and while past performance doesn’t predict the future, over the long-term the historic average has been about 7%.

3. Time is your friend

Start investing early and you’ll enjoy the magic of compound returns. When you leave your returns to compound over time, your money can grow exponentially all by itself. The earlier you start, the longer your money has to benefit from it.

4. No one can predict the future

Bogle said “The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently.” Stick with your plan and as much as you can – ignore the headlines.

5. Keep costs down

Investing is not just about balancing risk and return. Costs can eat away at your returns too which is why Bogle was a champion of low-cost index funds (also called passive or tracker funds)

6. Keep it simple

“Don’t look for the needle in the haystack. Just buy the haystack!” said Bogle. Own the entire stock market by investing in an index fund, and don’t try and pick winners and losers. “The index fund is a sensible, serviceable method for obtaining the market’s rate of return with absolutely no effort and minimal expense.

7. Don’t get emotional

Bogle’s famous quote: “Impulse is your enemy” warns against listening to our instincts. They may lead us to sell when markets tumble and buy when they rise.  When emotions are involved, we can end up doing exactly the wrong thing at the wrong time and missing out. Now why would we want to do that?

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest.

Further reading:

Warren Buffett shared these words on Bogle in his annual letter to shareholders in 2016, see page 29.

The Little Book of Common Sense Investing, by John Bogle