Vanguard, also known as The Vanguard Group, Inc. Was founded in 1975 by John Bogle. It is probably the worlds most well known investment firm. One of the biggest things that allowed Vanguard to dominate it’s sector is that it is investor-owned. Unlike it’s competitors, Fidelity, Schwab, Robinhood, etc, which are privately or shareholder owned, Vanguard is owned by the funds themselves. When they make a profit that money is used to lower your fees, and fees are one of the biggest enemies of your retirement funds and investment growth.

What Vanguard has done is reduce the fees for people invested into the Market. The Average Index fund fee for them is 0.07% that’s about $7/year per $10,000 invested. The industry average is around 0.44% and actively managed funds, like Edward Jones can be 1% of higher. Which is around $100 a year per $10,000.

VTI (Total US Market Fund) is 0.03% same as their S&P 500 fund VOO. This is what has become known as “The Vanguard Effect” which has forced asset managers across the industry to lower their fees and expense ratios to stay competitive. This is older and more studied than the similar Robinhood effect I talked about previously that removed fees from individual stock purchases.

I love the Robinhood Gold 3% match, I’ve talked about it before, and I plan to continue using it as I fund my current and future IRAs. But, Vanguard is the place to set it and forget it. Lowest fees and expenses in the business, automatic fractional purchases on your dividends. A 0.04 vs a 0.44 fee is $400 difference on $100,000. That’s key to compound growth and back by a business that has grown beyond the trial and error phase.

As this blog is about self-growth, and self-sustainment a popular term for Vanguard fans are Bogleheads. People who follow the ideals of Jack Bogle:

From their subreddit /r/Bogleheads

Bogleheads are passive investors who follow Jack Bogle’s simple but powerful message to diversify with low-cost index funds and let compounding grow wealth. Jack founded Vanguard and pioneered indexed mutual funds. His work has since inspired others to get the most out of their long-term investments. Active managers want your money – our advice: keep it! How? Investing in broad-market low-cost indexes, diversified between equities and fixed income. Buy, hold, pay low fees, and stay the course!

This is a core concept of “Mustacianism” the Bad Ass way of Mr. Money Mustache. Park your money is broad based long term investments and watch it grow. I think its a vital strategy to protect your future self from poor decision making. Similar to the the IPS (Investment Policy Statement) I talked about in Talk like an Investor.

Vanguard is the current home of my primary retirement funds, outside of my 401k, but that only helps me when I’m old enough to pull the money out, it doesn’t help build an income snowball. What it does do, is give me the peace of mind to try out riskier things for my snowball. I try to always bring receipts so here’s a capture of my Traditional and Roth IRAs at Vanguard. 401k not included.

Now the reason those allocations don’t make my IPS is because my 401k is sitting on the largest chunk of the 60% Total US Market/ S&P 500 funds. I’ll talk about that in a future post.

Now quit making excuses and go put $50, $10, $5 anything into some kind of investment account. Robinhood, Vanguard, Anything!

~~ Miniwing~~