Former CEO Of Vanguard Offers 3 ‘Tried-And-True’ Tips For ‘How You Really Create Wealth’

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Jack Brennan is the former CEO of Vanguard – where he oversaw the second-largest investment firm in the world, the largest provider of mutual funds, and a financial powerhouse that has since grown to over $7 trillion in assets. Brennan offers three tried-and-true pieces of advice on how you can really create wealth.

In 2021, Brennan released More Straight Talk on Investing: Lessons for a Lifetime, a followup to his 2002 book Straight Talk on Investing. At the time, he spoke with Grow, where he explained his three top tips on how to build wealth.

“This period right now reminds me of the end of the 20th century, with trees growing to the sky, rampant trading, and speculation in headlines,” Brennan says. “It seems like a good time to provide a counterbalance. The noise level in the markets is so high right now, it’s fun to present tried-and-true advice for how you really create wealth.”

Brennan stresses that you need to develop a plan and stick with it.

“This thing doesn’t have to be 50 pages long. But outline what you’re hoping to accomplish with your investments over a particular time span,” Jack Brennan explains. “This allows you to think long term and realize that what happens this decade is irrelevant to your long-term financial future.”

He advises people to develop plans that can withstand sudden economic downturns such as a stock market crash.

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The former Vanguard CEO recommends that you view your assets as “buckets.” He said to separate buckets into: “Short-term resources, intermediate goals, long-term goals.”

“One of those buckets is your emergency fund. That should be in the bank or invested in short-term bonds,” he says. “The defined-contribution retirement system has made it easy to set aside money for long-term goals.”

“Once a year, maybe on New Year’s Day, sit down and look at it all. You don’t even have to do anything about it, but stay engaged,” he suggests.

Brennan says you need to “separate your serious money from your play money.”

“You need to treat that differently than the account you’re trading meme stocks in or following advice from an influencer,” he states. “If readers of my book come away with one thing, it should be that.”

When it comes to building wealth, Brennan notes, “There is little evidence that anyone has ever traded themselves to wealth.”

His third wealth-building tip is to take advantage of investing innovations.

“We’re at the best point there has ever been for individual investors,” Brennan states. “Costs have gone through the floor. Broad-market ETFs give you diversification, tax-efficiency, and liquidity. You can create a diversified portfolio at such a low cost. And target-date funds allow you to set it and forget it if you want to do that.”

Brennan also gave an interview to Reuters this year, where he advised investors, “Do your homework, be disciplined, be skeptical in avoiding fads, keep learning. Those are four elements I tell people all the time.”

When asked his advice for avoiding classic investor biases and mistakes, Brennan answered, “We are all subject to emotions when it comes to investing, so there are a couple of things that are very important. One is to tune out all the noise. You shouldn’t really care about what is happening today, or this month, or even this year. I’m 66, and I hope I still have a 30-year time horizon.”

He continued, “The second thing is that once a year, you should reaffirm what you’re trying to accomplish.”

Jack Brennan gives investment advice to young people who may inherit money.

“If you do inherit money, you shouldn’t just take somebody else’s advice,” he advises. “You need to be a knowledgeable consumer yourself. That’s the big opportunity for Gen X and Millennials: To be smarter about financial issues than my generation was.”