Offshore Investments

Offshore Investments | John C. Bogle’s Simple Investment Rules

Offshore investments: Diversified funds, cheapest costs, the power of compounding, long-term, US markets

Offshore investments: Diversified funds, cheapest costs, the power of compounding, long-term, US markets

Offshore Investments: John C. Bogle’s Simple Investment Rules

The Dow Jones Industrial Average has risen from 8,799 on June 12, 2009, to 16,776 on June 13, 2014. Which translates into a 13.8% compounded annual rate of growth [CARG]. I.e. it has grown by 90% over this period.

Has your portfolio grown by the same amount or more if you include dividends received?Net of management costs? If yes, wonderful! Keep doing what you are doing.

If not, read on.

Offshore investments: Get a free quote now by filling in the box on the right and learn the simple investment rules

Offshore investments: Simple rules for investing

John Bogle, one of the creators of the mutual fund’s industry has written some simple rules for investing and they are summarized below:

1. These rules apply to all investors. Not just defensive ones.

2. Invest in completely diversified funds. You are not a professional money manager. Almost no money manager beats the stock market over a period of 10 years.

3. Invest in funds rather than individual stocks. Diversified funds spread your risks across industries, not just companies.

4. Invest in funds with the cheapest costs. Costs compounded annually really grow. And they come out of your profits and add to your losses. So a 4% cost, when subtracted from a 10% gain, is 40% of your income!

4% sounds reasonable till you see that it is 40% of your gains.

Offshore investments: Get a free quote now by filling in the box on the right and learn the simple investment rules

5. Costs generally consist of:

a. When you invest, an Entry Load is charged. These are usually distribution expenses. You can buy the same fund at different rates depending on the channel you use. And could be 0.5% upwards.

b. One time fee is charged at the time of investment and could be nominal but adds up in percentage terms.

c. While invested there is a recurring charge. These are expenses of the funds and it’s managers. If there are continuous buying and selling of the instruments held by the fund, their expenses are higher. And could be as high as 2.5%.

d. When you exit there is an Exit or Back-end Load. This is a one time fee charged at redemption and could vary between 1 and 3%.

6. The power of compounding is very powerful. So leave your funds invested and let time do its magic. But your gains are higher if the costs are low.

After all, you are interested in the difference between your gains and your costs.

And the compounded gap widens over time as you keep your costs low.

Offshore investments: Get a free quote now by filling in the box on the right and learn the simple investment rules

Offshore investments: Recommendations

1. You will get the best success with Total Market stock Index funds [rather than just the DJIA] vs. managed funds. Hedge fund returns for investors are low over time. Yes, the hedge fund’s managers will make obscene wealth.

2. Invest in the funds with the lowest overall costs with the lowest expense ratios.

3. Invest your money and leave it there since your win will be over the long term. Keep buying into it as and when you can. Think in terms of 5 to 10 years rather than this month.

4. Decide on your objectives. Generally, stocks are for growth and bonds are for income. So decide on your percentage based on your future outlook.

5. US financial markets are huge and rule the world. Emerging markets are well represented in US markets via companies who have raised money there or have subsidiaries in Emerging markets.

So invest in the USA markets rather than elsewhere. The transparency is better. And you won’t lose on currency devaluations.

6. Always keep compounding in mind. Gains will steadily multiply. Compounded costs will drain you dramatically.

7. If you want to invest in Real Estate, do so via REITs. The above rules apply.

8. For investing in areas because of a hunch you have, keep not more than 10% of your money aside. It may or may not work out over the long term.

For more details read John C. Bogle’s The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns

Offshore investments: Get a free quote now by filling in the box on the right and learn the simple investment rules

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Offshore Investments was last modified: June 8th, 2019 by Manu Raj

Manu Raj

Has a positive attitude towards the job, is friendly and a team player.

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