Margarita M. Phillips 
This is because the calculations show that it’s not just the profits that compound over time. The costs, too. Investors must be wary of themselves, unfortunately. Mr. Bogle warned that the costs of stock trading and investment fees can easily ruin your prospects for a comfortable retirement.
While the past offers no guarantee for the future, it suggests a course of action: hold stock index funds for their higher returns and bond funds for reliability and to offset the ups and downs of the portfolio. actions. How many and what types of each – the fancy name for this is asset allocation – are critical and individual questions.
An investor in her 20s, who could very well be in the workforce until 2072, might want to invest 100% of her money in a large stock index fund and just add to it year after year. Consider that since early 1976 (when Vanguard began marketing the first index fund), the S&P 500, including dividends, has returned over 18,000 percent.
I would also invest outside of the United States. Economic power is increasingly dispersed. For the remainder of this century, global investment, including allocations to emerging markets, seems essential for a truly diversified portfolio.
Over the next decade, according to Vanguard projections, neither stocks nor bonds are likely to exceed single-digit yields, in large part because most stocks are already expensive. Vanguard expects stocks outside of the United States to likely outperform domestic stocks, and bonds are expected to fall two to three percentage points a year behind stock returns.
If your horizon is short, you may need to reduce investment risks by reducing stocks. The decision is personal. My own idiosyncratic portfolio allocation is close to 60 percent stocks and 40 percent bonds.
Because I might need to mine some of that money before 2032, I’m holding onto a big dollop of bonds, even though it’s been a poor stretch for them. The iShares Core US Aggregate Bond ETF, which tracks the US investment grade bond market, lost 1.8% last year, behind the returns of the Vanguard S&P 500 ETF, which tracks the S&P 500 stock index, by 27 percentage points.
