🤠 How to Keep Your Investments Simple and Effective

Day 29:   How to Go With a Winning Combo

by Edward Smith

03 Aug 2020

Going with Vanguard

If you read my last article entitled  🤠    How to Make the Ten Year Future You, Better then the Now You! you learned that I looked at my options and decided to go with investing.  In this article you'll see what I invested in.

I started with Vanguard, because I had used them years ago, and I was familiar with how they worked, and I respected their business model.

Vanguard is known around the block as being the legendary company that began selling "no load", mutual funds.   No load mutual funds can save you a lot of money, because more of your money goes into the investment and less of your money gets used to pay expensive fees, associated with employing an expensive fund manager.   

With Vanguard your fees can be as low as a few pennies, or in some cases you pay nothing at all.       

Vanguard's founder John Bogle set things up that way on purpose.   Bogle was an investing legend, but he was also highly critical of the financial system when it came to mutual funds.    He did not believe that expensive fund managers were justified, and he took great pains to prove it.    

Bogle felt fund managers, were overpaid, they complicated the process, and that their results didn't justify their salary.   Bogle believed investing could be done by common people using a simple set of trustworthy template models and tools.   He set out to prove it.

Early in his career, John Bogle, noticed that a person could simply look at the stock exchange, buy the top companies that were listed as the stock exchange winners within a given company type, and that that person's portfolio would often perform better then the competition.   Bogle's method was filled with common sense, it was understandable, and the expensive fund managers couldn't keep up with it.

John Bogle decided to take what he learned and began creating index funds that mimicked the behaviors of the major stock exchange indexes.   These same index funds exist today and still perform marvelously.  They have proven track records of high performance, and they were what I was after.    

Barrier to Entry

What I had failed to remember, was Vanguard mutual funds can be an expensive option when you are first starting out.   Vanguard funds usually require an initial deposit of one thousand dollars or more to begin.   Because I was trying to do this with some extra blow money on the cheap, I didn't have it.   

Disclaimer:   Other companies actually let you start a mutual fund for as low as a dollar, but I didn't know that.   

My original idea was to save up the money and start with a Vanguard Mutual fund.   The waiting irked me tremendously.   I didn't like that my money was just sitting in a bank account getting eaten away slowly.   I wanted to do something about it.   Then one day I noticed something.

I was looking at Vanguard's website and noticed a link that I hadn't noticed before.   The link was trying to get me to look at something called an Exchange Traded Fund (ETF).  It was some how related to the mutual fund I wanted so I decided to check it out.

For me, ETFs were perfect.

Want to Know What an ETF is and Why I Went With One?   

Click this Link and Find Out!