Vanguard: $1 Trillion Saved...


Sadly, I suspect that I’m an undiagnosed ‘indexing’ obsessive. Truth be told, for years I’ve been boring clients, extolling the virtues of low-cost index investing to anyone with a pulse.

In a world of free money, soaring budget deficits and negative interest rates, it can feel like you have little or no control over your investment, superannuation or retirement portfolio. So, if you don’t have any influence over the future direction of the global economy, doesn’t it make sense to at least wrestle control over your investment costs?

There I go again, my apologies.

I’ll spare you a painful sermon. Instead, if you’d like to know more about the mechanics of indexing, I’d strongly suggest that you read this research paper, produced by Vanguard, titled ‘The Case for Indexing’. Yes, the paper is technical and a little lengthy, but I think its worth the effort as this simple investment approach (endorsed by Warren Buffett) could save you a small fortune in fees, improve your investment performance and lower your anxiety levels. You may also want to take a quick look at our performance comparison table here

Just one last interesting item that I picked-up on Bloomberg Online last night. Apparently 'Vanguard Investments' (the main 'fund manager' of index funds) has saved average investors $1 trillion in fees, trading costs, and what is called the “Vanguard Effect” (the sheer influence Vanguard has had on the fund management industry, leading the way in reducing costs). Take a closer look at the Bloomberg article here.

If you’d like to know more about indexing, or if you need a second opinion, please call me.

Rick Maggi