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Mark Zaifman's thoughts on money, global economic trends and politics

Vanguard Mutual Fund's John Bogle Discusses Investment Risks

Mark Zaifman   |    Tue, Oct 04, 2011 @ 07:10 AM

Vanguard's Bogle Financial Markets Research Center

Bogle Discusses Investment Risk During Volatile Times

If you’ve read my past blogs on investing, you know that I’m a huge John (Jack) Bogle fan. As the founder of the Vanguard Group, I’ve always looked at Bogle’s role as that of a financial advocate for the average investor.

Through the innovative use of no-load, low-fee index funds, Vanguard has and continues to level the playing field for millions of investors. Bogle truly speaks truth to power. He’s not afraid to call out the bad actors in the mutual fund industry when needed.

Having seen his share of up and down markets, the recent interview he did with Bloomberg is very timely.

Finding the Right Mix

As millions of investors have learned over the years, making major portfolio changes based on short-term market swings or hunches about where the economy is headed can be a fool’s errand. 

Instead, regardless of the prevailing winds on Wall Street, your strategy should be guided by three factors:

1)      Your financial goals. How much money do you need, and why do you need it?

2)      Your time frame. How soon do you need the money?

3)      Your comfort level. How much market risk are you comfortable taking?

Your responses to these questions should help determine your asset allocation—that is, the mix of stocks, bonds, and cash in your portfolio. And over the long run, studies conducted at Vanguard and elsewhere confirm that your asset allocation has more impact on your investment returns than individual decisions about which securities to buy or sell. Vanguard's Investor Questionnaire can help you refine your approach and decide on the right allocation for your situation.