by Vanguard is a company that we believe in here. One of the reasons we continue to invest in Vanguard is that they put the investor first. You might be asking, “Don’t all companies say that?”. It’s true that’s what other companies will tell you however we believe no where is it more clear than at Vanguard.
Vanguard is not a publicly traded company. They are owned by the investors. In other words they don’t focus on a share price they focus on the investors.
We get it, you still might be saying, so what does it matter. Let’s look at a few Vanguard facts from our friends over at investopedia.
“The average expense ratio of Vanguard’s funds is .10% vs the mutual fund industry average of .63%.”
A Quick Summary of Why Fees Matter
.53% might not seem like much however it adds up big over the long haul. Let’s say you invested $10,000. One fund returned 8% and one returned 7.5%. This is the approximate difference in the fees you are paying. Over 20 years that is $4,659 of your hard earned money.
Vanguard is about reducing the fees to the investor.
We cover fees in detail in other posts but that’s one of the reasons we love Vanguard.
James has said from time to time that you end up loving the funds you own. You root for them to succeed. You check on your Vanguard app and see how they have done for you recently, over the last 6 months, and even over the last several years.
So what else is there to like about Vanguard? Let’s take a look.
John C Bogle Was a Pioneer That Others Ended up Copying
We are big fans of index funds. We have them thanks to John C Bogle. Why are we fans of these types of funds? Simply put they end up following the market.
It takes a very devoted, smart, and forward thinking money manager to beat the market. Very few in fact have beat the market on a consistent basis. When you look at the long term investors who have beat the market they are names like Warren Buffet and Peter Lynch. If you look up the top 11 investors of all time you will find Bogle on the list.
The pioneer of index funds was Bogle. He created the first fund that tracked the S&P 500. We believe that everyone should have a portion of their portfolio in an index fund. By building a fund that tracked the index there was no active management. Without the active management the cost to maintain the fund could be reduced.
It was, and still is in many cases, common for mutual funds to have a 1% fee. While this seems small it adds up to a large sum over the life of an investment. Bogle wanted to make sure investors had the best chance for investment success and that is the mission of Vanguard to this day.
Vanguard Provides The Investor Options
Vanguard is the second largest mutual fund company in the world second to only Blackrock. As a result of their size they have options to provide to investors. You can have everything from 401Ks to IRAs to Mutual funds to College Savings accounts. They can be your one stop should you desire.
Is Vanguard Right for You?
This is a question that only you can answer. For the new investor some of Vanguard’s funds require minimum opening balances between $1,000 to $3,000. For the new investor this means one must have at least $1,000 to open an account while other firms might allow you to start with as little as $25.
We ultimately believe that you should investigate Vanguard and determine if they are right for your investment dollars.
