As a parent of older kids, it’s been a while since I’ve thought about life with toddlers… until recently when I visited friends with a little one. Their energetic—if not fully coordinated—toddler was the reason why corners were nearly nonexistent in their house (all of the tables, for example, had rounded edges). And it got me thinking about how life as adults might be safer, and happier too, if we had only protected ourselves like we protected our kids, by cutting corners.
We live in the information age, where news—particularly financial news—is readily available. And while it may be interesting, it can sometimes be harmful to your wealth.
To me, investing headlines and “insights” seem like so many corners on coffee tables, liable to do more harm than good.
Before you think that I have a grudge against both the investment media and coffee tables, let me clarify. There’s useful investment information to be had, but most of it tends to be more moderate than sensational, more or less like the middle of the coffee table. When someone places a glass on the corner of a table, someone else normally moves it to a safer place like the middle where accidents are less likely to occur. Not always useful and potentially hazardous, it does make me wonder why tables have corners at all.
Much of the punditry, marketing of recent returns, and hot investment ideas tend to reside in the corners of our “table,” and it’s these areas that get a lot of attention. More troubling, though, they can sometimes draw attention away from the useful information that occupies the moderate middle, where time-tested practices, such as Vanguard’s principles for investing success, can help build a practical investment strategy. By understanding your own investment goals, managing risk through asset allocation and diversification, minimizing investment costs, having the discipline to adhere to your strategy in good times and bad, and rebalancing when necessary, you’ll give yourself the best chance for investment success.
In our view, these principles aren’t trendy. Or maybe they are, and it’s a VERY long trend. Either way their virtues are not proclaimed loudly or frequently enough in the mass media for our liking or investors’ benefit. What about all of the noise pretending to be investment information? Maybe our investing lives would be healthier if we managed to cut these corners.
Notes: Please remember that all investments involve some risk. 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.