Archives for December 10, 2014

Bogle Interview: Why You Don’t Need International Stocks, Why To Hire An Advisor

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Whenever Vanguard founder Jack Bogle speaks, I listen. He has spent more time thinking about how to help the average investor than I have been alive. I found this recent Bloomberg interview covered a lot of topics regarding portfolio construction. Here are my notes, I have paraphrased what is not in quotes:

  • “The best thing you can do for yourself is to make your choice [of a long-term strategy], keep it simple and stick with it.”
  • The traditional 60/40* balanced fund is still a fine, simple choice for a portfolio. He prefers that over a target-date fund. (*60% stocks, 40% bonds)
  • For the stocks portion, a traditional total US stock market fund is fine. You can add a little international stock exposure, but you don’t need it. The long-term returns for foreign companies will likely be similar but with increased currency risk.
  • For the bond portion, a traditional total bond fund is fine. Higher yield won’t come without higher risks.
  • Even if valuations are currently high on a relative basis, you should take the long-term view and invest now.
  • “Financial planners and advisers need to sell their value as keeping their clients from doing the wrong thing at the wrong time.” That is their value-add, and it can be significant.

Keep in mind these are Bogle’s opinions and not necessarily my own.

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