The smartest advice I ever got

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"Whoever cultivates the Golden Mean avoids both the poverty of a hovel and the envy of a palace." I'm not sure when I first read that quotation from the Roman poet Horace, but I used it to introduce my chapter on balanced funds in "Bogle on Mutual Funds." These funds allocate investors' assets between stocks (usually about 65%) and bonds (the remaining 35%).

Today, sadly, balanced funds seem out of fashion, but the idea of the Golden Mean remains great investment advice. Asset allocation is the most important decision investors must make. It helps keep our counterproductive emotions out of the picture, assuring us of some profits when stocks rise and some protection when they fall. It also enables you to "stay the course" through thick and thin. Come to think of it, that's also a pretty good piece of advice.

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