According to data released by the Vanguard Group itself, the average "go-it-alone" Vanguard investor has grown his or her nest egg from $100,000 to $384,095 in the past 16 years.  Not bad.

But what if you could make 136% more by not making five simple mistakes investors at Vanguard fall prey to every day?

Vanguard is one of the best mutual fund families in the world. In fact, no other fund family comes close to Vanguard in keeping expenses low, hiring experienced fund managers and offering a great fund selection.

But the truth is, it's now more difficult than ever to invest wisely with Vanguard. That's because over the past 16 years, the number of Vanguard funds has doubled from 55 to more than 100 with $1 trillion under management. With so many funds to choose from, it's easy to pick the wrong fund. I've done it and kicked myself when falling prey to 5 common mistakes investors at Vanguard make every year. 

Don't make the same mistakes I did. Here's the top 5…

Mistake #1: Investing in Index Funds

Why is investing in index funds the first mistake on the list?  Because Vanguard's managed funds dramatically outperform its index funds—by as much as 2-to-1 in 2007 alone.

Take Vanguard's 500 Index fund, for example. It's the family's largest fund, with more than $100 billion in assets. In fact, it's the third-largest mutual fund in the world.

Now, the average Vanguard investor hardly thinks twice when he or she invests money with this fund. Often, it's their first choice because they think it's the safest, best-diversified fund money can buy, since it mimics the S&P 500 and has low operating expenses.

But the 500 Index is not the safest index fund, nor is it the best-performing index fund. In fact, during the last bear market, investors lost more than $40 billion in this fund. In fact, more than 26% of the fund's assets are tied up in just 10 stocks… and nearly half (49%) of its assets are invested in just three sectors.

The bottom line: Index funds, even the best ones, simply don't compare to Vanguard's actively managed funds.

Mistake  #2: Ignoring the Demographics of the Economy

Last week, many of you may have heard that the first baby boomer filed to collect Social Security. It made all the headlines. This is an important demographic trend that investors need to watch very closely as more than 77 million baby boomers turn 65 over the next few years and begin retiring… downsizing… and needing more medical assistance. That's 25% of our population looking for more medical attention.

Investing in the health care industry is one of the smartest moves investors can make now. The boomers are getting older, and they'll need more and more medical devices, drugs, managed care, biotech innovations and so on.

But there's just one problem for Vanguard investors. Vanguard's famous health care fund is closed to new investors.

Where there's a will there's a way. There is a heath care fund run by the same guy who successfully manages Vanguard's Health Care fund. His name is Ed Owens, and he's a fund manager with a stellar track record. If you want to catch the wave of one of the biggest demographic trends to roll across our country in the past 20 years, you'll definitely want to take a look at the other funds he's managing.

Mistake #3: Jumping Into Bubble Sectors

You'd think that after the tech wreck, investors would steer clear of trendy sector funds—but they still make a killing at Vanguard. Billions are being invested in sector funds right as we speak. Let's face it, they're tempting. But remember: Buying into a sector fund is actually a form of market timing, which individuals never seem to master.

What many investors also don't realize is that sector investing is expensive (minimum investments hover around $100,000) and frankly, their performance over the long haul simply isn't worth the price of admission.

Dan Wiener, one of the leading independent authorities in Vanguard investing completed an exhaustive analysis of Vanguard's sector indexes. His data include more than 15 years of monthly total returns. What did he find? Of the 10 sectors, only 5 beat the market as a whole over rolling one-, three- and five-year periods. If you do go the sector route, here are the ones you want to take a look at:

• Energy Index
• Financials Index
• Health Care Index
• Industrials Index
• Information Technology Index

Mistake #4: Failing to Diversify Outside the U.S.

The real stock market action these days is outside the U.S. Sure, our economy is strong and some may even say it's growing. But our growth rate is nothing like what's happening overseas… and Vanguard is right there ready for action!

After posting gains of 44% in 2003 and 20.1% in 2004, Vanguard closed its only true global fund. But in August of 2005, it reopened it and kept a standard low minimum for investors ($3,000). The news gets even better: This actively managed fund has about half the risk of Vanguard's 500 Index!

Mistake #5: Not Getting Independent Advice

Most mutual fund newsletters track dozens, even hundreds, of mutual fund families. But keeping track of Vanguard's hundreds of funds is a full-time job for an entire staff! And that's precisely what Dan Wiener does—he keeps track of Vanguard and all of their funds. Quite simply, he calls them like he sees them. When he sees an underperforming fund, he lets his investors know right away—along with any better-performing alternatives.

You see, Vanguard is a business. Vanguard works for Vanguard. They profit from their crummy funds as well as the great ones.

Dan Wiener works diligently for investors everywhere—in fact, it's his life's work to know everything there is to know about Vanguard's family of funds.

Don't you want him on your side?

Accept a risk-free trial membership to Dan Wiener's The Independent Adviser forVanguard Investors and learn how to DOUBLE your Vanguard returns today! If you have any money at Vanguard—or are thinking of sending some there soon—I urge you to get Dan's free report: The Action Plan for Vanguard Investors. In it, you'll not only get the names of the fund I mentioned above, but also other secrets Vanguard doesn't want you to know! Confident Investor subscribers can download it instantly with their RISK-FREE trial subscription! Don't miss out.