Boglehead Secrets: 4 Traits to Financial Freedom

Posted by: Dr. S. N. Sangeethaa

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Financial Freedom

Our country is developing. We’re rich. Only 5% become financially independent by 65. How come? How we spend money is usually the answer.

Think your financial lifestyle?

You choose your financial lifestyle, even if you’re unaware. Let’s examine three couples’ financial lifestyles for simplicity. Each lifestyle will remind you of someone you know.


The Borrowers : “Live today, forget tomorrow.” Bill and Betty Borrower’s creed. Credit cards support it. The Borrowers rarely pay cash for anything.

The Buyers : Consumers spend with paychecks, Borrowers with credit cards. Chad and Cathy spend their net incomes rather than borrowing. After checking their take-home income, they buy as much as they can.

The Keepers : Keepers earn the same as Borrowers and Consumers. They might make less. However, over a lifetime, they will likely have more money to spend and more work-free years to enjoy it than the other two couples.

What’s different?

It starts with what the Keepers do with money they make. They start every paycheck by saving for financial independence. 10% of their take-home salary is saved and invested. They enthusiastically join workplace savings and matching schemes.

The boglehead

John C. Bogle’s “The Bogleheads’ Guide to Investing” gives practical and plain investment advice. Taylor Larimore, Mel Lindauer, and Michael LeBoeuf, all Bogleheads, wrote the book.

The Vanguard Group, which pioneered low-cost index mutual funds, was founded by John C. Bogle. Bogle advocated passive investing and index funds for low-cost diversification.


The Boglehead’s Guide to Investing, there are four principal traits of a successful investor

Trait #1 — Courage: Most people are scared to invest because of uncertainty.

Trait #2 — Discipline: Accumulating wealth is not how much you make; it’s how much you keep.

Trait # 3 — Careful planning: Wealth building is all about choice. It’s your job to decide what to do with every dollar that comes into your life.

“You can spend it today or save and invest it to make more dollars tomorrow. The key to successful money management is striking a healthy balance between the two.”

Trait #4 — Staying the course: Investing is about buying assets, holding them for long periods, and reaping the harvest years later. It requires patience and optimism.

Another surprisingly helpful trait that will give you a leg up with investing — is ignorance.


“The Bogleheads’ Guide to Investing” stresses:

Broad Diversification: To mitigate risk, the book recommends investing in stocks and bonds.

Low-Cost Investing: Bogleheads recommend low-cost index funds and ETFs to reduce costs and boost profits.

Long-Term Perspective: Bogleheads advise investors to avoid market timing and short-term trading.

Market Timing: The book advises against trying to predict market moves. It advises buy-and-hold.

Asset allocation: Choosing stocks, bonds, and other assets depending on risk tolerance and financial goals.

Rebalancing: Regularly modifying the portfolio’s asset allocation, especially after market volatility.

Behavioral finance: Recognizing and overcoming behavioral biases that can impair financial decisions.

Bogleheads buy market-matching mutual funds or ETFs.  To diversify their portfolio, they may acquire a stock and bond mutual fund.  They exclusively buy funds with cheap fees and charges.

Taxes are crucial.  401ks and IRAs are best for tax efficiency. Finally, when the stock market falls, they keep investing.  When stocks rise, they invest.


Here are few India’s investment choices which you need to know before investing.

Low-Risk Investment

Low-risk investors are risk-averse. The investor desires low portfolio volatility. Retirees and others who have saved for years make these investments. Fixed-income investments guarantee returns.

Best Low-risk investing plans include

  1. Safe Investment
  2. Secured Deposit
  3. Pension Fund
  4. Monetary funds
  5. Money Market Funds hold short-term debt.
  6. Municipal Bond CD
  7. Treasury Bills

Medium-Risk Investment

Medium-Risk investments suit some investors. These returns exceed low-risk investments. Risky investments with higher rewards.

Best medium-risk investing plans include

  1. Debt Funds
  2. Dividend Stocks
  3. Exchange-Traded Funds
  4. Company Bonds

High-Risk Investment

High-risk investments are not guaranteed. These investments in India are high-return if invested carefully.

Best High-risk investing plans include

  1. Equity mutual funds
  2. Hedge Funds/Forex Trading


It is a comprehensive and insightful guide that advocates the principles of the Boglehead investment philosophy. Throughout the article, it provides the various strategies to achieve financial independence and security. The key takeaway from the article is the emphasis on long-term, low-cost, and diversified investing. Bogleheads believe in the power of passive index investing, where investors hold broad market index funds rather than attempting to beat the market through active stock picking or market timing. By following this approach, readers are encouraged to remain disciplined and avoid making emotional decisions during market fluctuations.


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