Investing Win: Vanguard

All I can say is I wish I had found Vanguard MUCH sooner! Vanguard’s commitment to keep costs low is what makes Vanguard sail apart in a sea of investing pirates. Vanguard is also client-owned, which means that Vanguard doesn’t have outside owners. Investors /shareholders, like me, buy Vanguard’s funds and the funds own the company. What that means to me is that I get the benefits and reap Vanguard’s profits in the form of low cost funds. Low cost funds mean that, over the lifetime of my investing career, I will get to keep more of the growth that my funds return. #winning

 

The Vanguard Effect

What other companies have found out is that more and more investors are moving their money to low cost index funds for a variety of reasons:

  • Low expense ratios (low fees) as compared to actively managed funds
  • Investors are tired of paying an under-performing portfolio manager that doesn’t consistently outperform the index
  • Index funds have different flavors varying from sector to total market funds

As more investors started flocking to companies like Vanguard, other big names in the investment banking arena like Fidelity and Schwab took notice and started offering low cost index funds as well, I mean if you can’t beat ’em, join ’em!

 

In the beginning

In 1976, Vanguard created the Vanguard 500 Index Fund (VFINX) and started turning heads as investors started flocking to low cost index funds. As more investment money has flown in over the years, this fund now has over $200 billion dollars in total assets. Not only did investors start to take notice of the price of their fund’s expense ratios, and where their money was going, but other investment firms started noticing monies move to Vanguard as well. Even though some companies were late to the game, the important part is they took action.  For example, in 1988 Fidelity began offering it’s Fidelity 500 Index Fund (FUSEX) and, in 1997, Schwab began offering it’s Schwab S&P 500 Index Fund (SWPPX). I only highlight these funds to show the power that Vanguard has had on the high seas of investing titans.

 

Conclusion

Vanguard has made a name for itself and demonstrates that a vessel anchored by pleasing it’s shareholders (i.e. investors) and not outside owners will, in turn, create and grow a vessel that will endure the turbulence of unsteady waters. That is why my investments sit in the bow of Vanguard’s flagship! (<–Click here to find out how I invest with Vanguard)

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