So just how did Vanguard [profile] do it, reach $2 trillion in assets?

MarketWatch columnist Chuck Jaffe examined the process that led to the milestone and gives us some insights.

The four big lessons include:

Costs matter
"Expenses come straight off the top; all things being equal, you’re better off paying less to the money manager and keeping more for yourself."

Fund firms can do better
"Vanguard is not infallible — far from it — but the company is a strong role model for the industry, showing that fund firms need not be greedy to build a business ..."

Patience matters
"You don’t have to go far these days to hear 'Buy-and-hold is dead,' but Vanguard was built on the idea that investors do the best when they capture the long-term trends of the market, simply owning various asset classes for years or decades."

Start small, keep expectations reasonable, persevere and big things will happen "Bogle started Vanguard small — a $2 trillion organization wasn’t in his wildest dreams. I have talked to plenty of investors over the years who have been dedicated to Vanguard, who started with nothing, worried about the costs and just plowed annual retirement-program contributions or extra cash into index funds for decades."

Read the rest of his analysis on MarketWatch. 

Edited by: Tommy Fernandez


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