Transcript
Massy:
Will Vanguard shareholders be able to rest assured the way they’ve been in the past?
Tim:
When you…Janice should think about investing is about embracing uncertainty, you’ve got to realize uncertainty is going to be there. We face risks all the time. Some of them are familiar. Greg, think about high equity valuations, I don't know how many times I have talked about those. Some are less certain.
So we always start with asset allocation. Right, stick your asset allocation. I’ve got some bond friends to the right of me, and we know a lot of our questions are all about “Am I going to lose money in bonds?” Well, don't abandon bonds just because rates are going up. They’re your airbag. They’re your airbag for when the equity markets crash.
But if you look at all of the markets, we’ve been very accurate about what you should expect in your returns. So hold all of those markets. The other aspect, we talk about this, there are certainties in investing, but they’re very rare. There’s like two of them I can think of. One is if you have high costs, they’re coming out of your returns, so keep your costs low. That’s one element you can control. The second thing is, you’ll never regret saving more. We tell clients that, just save more. If you’re worried about the future, just save a little bit more and spend a little less. If you have a bear market, you’ll be glad you did it, and if you have a bull market, you’ll be pretty happy.
We’ve navigated market crashes, financial crises, and now a pandemic. We have witnessed firsthand the efficacy and the power of the Vanguard philosophy. It may not be the most exciting cocktail chatter to talk about diversification across asset classes and markets, keeping costs in control, rebalancing, keeping an eye on taxes. It's not going to make you popular. So Greg and I aren’t invited to a lot of places, a lot of social functions, to talk investments with people.
But we do know that it is the most effective way to hit your goals, your long-term goals. And, case in point on this, to all our clients out there: If we look at how much better off you are this year versus last year, our clients on the whole are $1.2 trillion better off right now this year than they were the last time we came to you, a year ago. So stick with that Vanguard strategy, stay healthy, and have a great 2022.
Important information
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
Investments in bonds are subject to interest rate, credit, and inflation risk.
$1.2 trillion is an estimate based on total assets under management of approximately $8.5 trillion as of December 31, 2021, compared with approximately $7 trillion at year-end 2020, and subtracting an approximate net cash flow of $300 billion.
