Investing is not a one-way ticket to riches. Both novice and expert investors have periods of good and poor performance. Success or failure is driven largely by the markets, but how we behave also has a huge impact.

In a recent article for Financial Analysts Journal, Vanguard founder Jack Bogle summarized the rules for successful investing he developed over his 65-year career. They’ve been tried and tested through different market conditions, and we’re reproducing them here so everyone can potentially benefit.

1.) Invest you must

The biggest impediment investors face is not market volatility, but not investing in the first place. History shows that investing — as opposed to simply saving — is necessary to generate a reasonable return over the long run.

2.) Time is your friend

Investing is a virtuous habit best started as early as possible. Thanks to the “magic” of compounding (simple math, really), even modest investments made in one’s 20s can grow to surprising amounts over the course of an investment lifetime.

3.) Impulse is your enemy

Eliminate emotion from your investment programme. Have rational expectations for future returns, and avoid changing those expectations in response to the ephemeral noise coming from Wall Street. Understand that what may seem like unique insights are typically shared by millions of others. Continue Reading…