You’ve probably heard about index funds and perhaps heard of Vanguard index funds but I am going to explain exactly why I love Vanguard as a company.
More people are becoming educated as to the virtues of index funds. They are extremely low cost to operate. Which means that for every $1 that you invest, more of that dollar goes to earning compound interest and less of it goes to paying the people who operate the fund.
And when it comes to compound interest, those little percentage points add up tremendously over many years.
But this post is less about the virtues of index funds themselves and more about Vanguard index funds as a unique philosophical approach to investment firms.
To my knowledge, they are the only investor owned funds in the market.
Why Being Investor Owned Matters
What this means is that Vanguard as an investment firm is owned by its own funds, and its funds are in turn owned by its shareholders, which means Vanguard is wholly owned by the people who invest in Vanguard.
That means if you invest in a Vanguard fund then you are a partially-owner of Vanguard the company.
This makes Vanguard entirely unique. It not only allows Vanguard to avoid potential conflicts of interest, but it also enables Vanguard to have industry-leading low costs in its fund management.
This is because Vanguard is not a company designed to make its fund managers wealthy at the expense of its clients, unlike many managed funds who have a strong interest in not making their funds’ operating costs low because all those fees and costs go straight into their pockets.
What Sets Vanguard Index Funds Apart
Instead, Vanguard approaches investment with an unparalleled sense of integrity and a commitment to low cost, long term investment strategy.
So while Vanguard doesn’t have the slickest mobile app or chase after all the trends of Wall Street, it is a rock solid company that common sense, rational-minded investors can count on for the long haul.
And clearly, Vanguard’s success has been unmatched. Currently, it is the largest provider of mutual funds in the world and the second-largest in exchange traded funds (ETFs)
Thanks to Vanguard funds having incredible low costs, they give its investors incredible, long-term returns.
However, Vanguard is not just a high-performing mutual fund company – it is also a rare gem in the world of Wall Street insofar as its primary goal is to help the everyday investor succeed.
And that’s why I will continue investing in Vanguard.