If I do the above mentioned am I pretty much GUARANTEED to have that 1 million in my account after 35 years?
You are guaranteed some sum of money between 0 and infinity. That said, you are likely
to have about 900k, based on historical averages. If you want guarantees, you must buy into US treasuries, which yields far less (on the order of, or near, inflation. This is much less than the historical stock market average).
In other words how often do people choose the wrong mutual funds/bonds to invest in with Vanguard that would make this fail?
It fails when people invest in the stinky mutual funds. I define these as any fund that has a load (a fee you pay to buy it, with a ticker symbol that has an A or B appended to it), or any fund with an expense ratio above .5%. Let me explain.
Let's take your 8% number, then subtract 3.5% for inflation. The other expense you must subtract is the annual expense ratio you have to pay to support the buying and selling within any given fund, as well as any salaries directly linked to the fund. This number varies fund to fund, generally between 0.
1% to 3.0%. This leaves the average Joe between 4.4% and 1.5% growth, anually. Naturally, a fund performing at 1.5% growth would be terrible. 4.4% is a significantly better, and higher than 3-3.5% inflation.
There are different flavors of mutual funds out there. Generally, the consumerist in all of us believes that if it costs more, it will probably be of a higher quality. Expense ratios are contrary to this line of thinking. 80% of the time, a lower expense ratio (thus making it an index fund) yields higher fund performance. Similarly, a higher the expense ratio (generally making it a managed fund) yields a lower fund performance.
This is why it is important to purchase mutual funds with a low expense ratio.