DEEP DOWN, I REMAIN absolutely confident that the vast majority of American families would be well served by owning their equity holdings in a Standard & Poor’s 500 Index fund (or a total stock market index fund) and holding their bonds in a total bond market index fund. (Investors in high tax brackets, however, would instead own a very low-cost quasi-index portfolio of high-grade intermediate-term municipal bonds.) To repeat, while such an index-driven strategy may not be the best investment strategy ever devised, the number of investment strategies that are worse is infinite.

Hear Warren Buffett: “Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.” (Don’t forget that an index fund with minimal fees is also, for most investors, the best way to own bonds.)

For all of the inevitable uncertainty amid the eternally dense fog surrounding the world of investing, there remains much that we do know.

As you seek investment success, realize that we can never know what returns stocks and bonds will deliver in the years ahead, nor the future returns that might be achieved by alternatives to the index portfolio. But take heart. For all the inevitable uncertainty amid the eternally dense fog surrounding the world of investing, there remains much that we do know. Just consider these commonsense realities:

• We know that we must start to invest at the earliest possible moment, and continue to put money away regularly from then on.
• We know that investing entails risk. But we also know that not investing dooms us to financial failure.
• We know the sources of returns in the stock and bond markets, and that’s the beginning of wisdom.
• We know that the risk of selecting individual securities, as well as the risk of selecting both fund managers and investment styles, can be eliminated by the total diversification offered by the traditional index fund. Only market risk remains.
• We know that costs matter, overpoweringly in the long run, and we know that we must minimize them.
• We know that taxes matter, and that they, too, must be minimized.
• We know that neither beating the market nor successfully timing the market can be generalized without self-contradiction. What may work for the few cannot work for the many.
• Finally, we know what we don’t know. We can never be certain how our world will look tomorrow, and we know far less about how it will look a decade hence. But with intelligent asset allocation and sensible investment choices, we can be prepared for the inevitable bumps along the road, and should glide right through them.

Our task remains: earning our fair share of whatever returns our business enterprises are generous enough to provide in the years to come. That, to me, is the definition of investment success.

The traditional index fund is the only investment that guarantees the achievement of that goal. Don’t count yourself among the losers whose investment returns will fall well short of the returns realized in the stock market. You will be a winner if you follow the simple commonsense guidelines in this Little Book.

John Bogle and Benjamin Franklin: parallel investment principles.

As I consider my investment ideas in the context of those I have observed over the long sweep of history, I find, in retrospect, a remarkable set of parallel principles that reflect the wisdom of Benjamin Franklin. Consider this collection of his sayings and mine.

• On saving for the future:
• Franklin: If you would be wealthy, think of Saving as well as Getting. Remember that time is money. Lost time is never found again.
• Bogle: Not investing is a surefire way to fail to accumulate the wealth necessary to ensure a sound financial future. Compound interest is a miracle. Time is your friend. Give yourself all the time that you possibly can.

• On the importance of cost control:
• Franklin: Beware of little Expenses; a small Leak will sink a great Ship.
• Bogle: Basic arithmetic works. Your net return is simply the gross return of your investment portfolio less the costs you incur. So minimize your investment expenses.

• On taking risks:
• Franklin: There are no Gains, without Pains. He that would catch Fish, must venture his Bait.
• Bogle: Invest you must. The biggest risk is the long-term risk of not putting your money to work at a generous return, not the short-term (but nonetheless real) risk of market volatility.

• On understanding what’s important:
• Franklin: An investment in knowledge always pays the best interest. Learning is to the Studious, and Riches to the Careful. If a man empties his purse into his head, no man can take it away from him.
• Bogle: To be a successful investor, you need information. If information about past returns earned by mutual funds—especially short-term returns—is close to meaningless, information about risks and costs is priceless.

• On the markets:
• Franklin: One man may be more cunning than another, but not more cunning than everybody else.
• Bogle: Don’t think that you know more than the market; no one does. And don’t act on insights that you think are your own but are usually shared by millions of others.

• On safety:
• Franklin: Great Estates may venture more, but little Boats should keep near shore.
• Bogle: Whether your assets are great or humble, diversify, diversify, diversify in a portfolio of stocks and bonds. Then, only market risk remains. Investors of modest means should be especially cautious.

• On forecasting:
• Franklin: ’Tis easy to see, hard to foresee.
• Bogle: It takes wisdom to know what we don’t know.

• On looking after your own interests:
• Franklin: If you would have a faithful Servant, serve yourself.
• Bogle: You must never ignore your own economic interests.

• And finally, on steadfastness:
• Franklin: Industry, Perseverance, and Frugality make Fortune yield.
• Bogle: No matter what happens, stick to your program. Think long term. Patience and consistency are the most valuable assets for the intelligent investor. “Stay the course.”

Yes, I freely concede that eighteenth-century Franklin had a far better way with words than twenty-first-century Bogle. But our near-parallel maxims suggest that the principles of sensible saving and investing are time-tested, perhaps even eternal.

The way to wealth.

The way to wealth, I repeat one final time, is not only to capitalize on the magic of long-term compounding of returns, but to avoid the tyranny of long-term compounding of costs. Avoid the high-cost, high-turnover, opportunistic marketing modalities that characterize today’s financial services system. While the interests of Wall Street’s businesses are well served by the aphorism “Don’t just stand there—do something!,” the interests of Main Street’s investors are well served by an approach that is its diametrical opposite: “Don’t do something—just stand there!”