John Bogle was the founder of Vanguard and one of the world leaders in offering low-cost investing exchange traded funds (ETFs) to regular people.

Warren Buffett, perhaps the world’s greatest investor, once said that it was Jack Bogle (Mr Bogle went by the name Jack) who had done the most for American investors.

There are a number of Vanguard ETFs on the ASX including Vanguard Australian Share ETF (ASX: VAS), Vanguard US Total Market Shares Index ETF (ASX: VTS) and Vanguard MSCI Index International Shares ETF (ASX: VGS).

The New York Times recently shared Mr Bogle’s five most important investment lessons:

1. Stay the course

Mr Bogle always believed that stocks would produce the best long term returns, even though the market is risky. He said that stocks are likely to produce better returns than the alternatives.

He was a proponent of sticking with the same strategy, including through tough times, “If we’re going to have lower returns, well, the worst thing you can do is reach for more yield. You just have to save more.”

History has shown that recessions are the best time to buy shares, not sell them.

2. Beware the experts

Bogle noted that many leading ‘experts’ completely missed the warning signs leading up to market crashes.

Mr Bogle commented, “How could so many highly skilled, highly paid securities analysts and researchers have failed to question the toxic-filled, leveraged balance sheets of Citigroup and other leading banks and investment banks?”

He also warned against people using expensive financial advisers who were just taking their cut of people’s wealth. We are seeing the consequences of this in the Royal Commission.

3. Keep costs down

The way Vanguard operates means it is owned by everyone who invests in it, there is no profit taking. This allows the management costs to go as low as they have done.

The NYT said Mr Bogle was a harsh critic in his later years of the mutual fund industry and the high fees they charge.

4. Don’t get emotional

Humans are naturally emotional, so it’s hard for us to leave our desire to avoid harm (including financial harm) behind.

Mr Bogle said impulse is your enemy, “Eliminate emotion from your investment program. Have rational expectations for future returns and avoid changing those expectations in response to the ephemeral noise coming from Wall Street.”

5. Own the entire stock market

Mr Bogle believed that structuring your investments to mirror the performance of a market is the best way to go, such as the S&P 500 – which he called a great proxy – which we can buy on the ASX with ETFs like iShares S&P 500 ETF (ASX: IVV).

Many investors struggle to beat the market over time because they buy & sell at the wrong time, don’t hold for the long term and pay too much in fees.

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