Occam’s Razor is the principle (attributed, likely erroneously, to William of Occam) that in explaining a something, you should not make any more assumptions than are necessary. In other words, if there are multiple solutions to a problem, choose the simplest one.

Quoting John Bogle, you should only invest in financial products that meet the following standards:

1. innovation that is based on clarity, consistency, predictability relative to the market, and low cost
2. innovation that provides an optimal opportunity that it will work tomorrow rather than innovation based on what worked yesterday; and
3. innovation that not only minimizes that risks of ownership but clearly explains the nature and extent of those risks.1

Updated on January 28th, 2019