Jack Bogle’s Legacy – principles of investing and saving

To honour Jack Bogle’s life and work, this is how he compares his investment ideas with those of Benjamin Franklin …

John Bogle and Benjamin Frankin

As I consider my investment ideas in the context of those I have observed over the long sweep of history, I find, in retrospect, a remarkable le set of parallel principles that reflect the wisdom of Benjamin Franklin.  Consider this collection of his sayings and mine.

On saving for the future:

Franklin:     If you would be wealthy, think of Saving as well as Getting.  Remember that time is money.  Lost time is never found again.

Boggle:       Not investing is a surefire way to fail to accumulate the wealth necessary to ensure a sound financial future.  Compound interest is a miracle.  Time is your friend.  Give yourself all the time that you possibly can.

 

On the importance of cost control:

Franklin:     Beware of little Expenses; a small Leak will sing a great Ship.

Bogle:         Basic arithmetic works.  Your net return is simply the gross return of your investment portfolio less the costs you incur.  So minimise your investment expenses.

           

On taking risks:

Franklin:     There are no Gains, without Pains.  He that would catch Fish, must venture his Bait.

Bogle:         Invest you must.  The biggest risk is the long-term risk of not putting your money to work at a generous return, not the short-term (but nonetheless real) risk of market volatility.

 

On understanding what’s important:

 Franklin:        An investment in knowledge always pays the best interest.  Learning is to the Studious, and Riches to the Careful.   If a man empties his purse into his head, no man can take it away from him.

 Bogle:           To be a successful investor, you need information.  If information about past returns earned by mutual funds – especially short-term returns – is close to meaningless, information about risks and costs is priceless.

 

On the markets:

Franklin:        One man may be more cunning than another, but not more cunning than everybody else.

Bogle:           Don’t think that you know more than the market; on one does.   And don’t act on insights that you think are your own but are usually shared by millions of others.

 

On safety:

Franklin:        Great Estates may venture more, but little Boats should keep near shore.

Bogle:           Whether your assets are great or humble, diversify, diversify, diversify in a portfolio of stocks and bonds.  Then, only market risk remains.  Investors of modest means should be especially cautious.

 

On forecasting:

Franklin:        Tis easy to see, hard to foresee

Bogle:           It takes wisdom to know what we don’t know.

 

On looking after you own interests:

Franklin:        If you would have a faithful Servant, serve yourself.

Bogle:           You must never ignore your own economic interests.

 

And finally, on steadfastness:

Franklin:        Industry, Perseverance, and Frugality make Fortune yield.

Bogle:           No matter what happens, stick to your program. Think long term. Patience and consistency are the most valuable assets for the intelligent investor. “Stay the course.”

Yes, I freely concede that eighteenth-century Franklin had a far better way with words than twenty-first-century Bogle.  But our near parallel maxims suggest that the principles of sensible saving and investing are time-tested, perhaps even eternal.

 

 

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