How John Bogle Put Money In Your Pocket, Even If You’ve Never Invested With Vanguard, Ep #72

There are many people who have impacted the way the world of investing works – but none in such a game-changing way as John Bogle. John founded Vanguard, a discount investment company specializing in index funds, in 1976 and was harshly criticized for it. But his approach has truly changed the way investments happen today.

John passed away this week, so on this episode, I’m going to talk a bit about how his work has impacted investors worldwide, even those who have never invested in his funds.

How John Bogle put money in your pocket, even if you’ve never invested with Vanguard. Listen to this episode of #RetirementStartsToday. #RetirementPodcast #Retirement Click To Tweet

Outline of This Episode

[1:05] Retirement headlines
[1:21] Lottery winners compared to accident victims: who is more happy?
[4:00] The biggest regrets of baby boomers
[7:05] The death of John Bogle, Founder of Vanguard
[11:00] Why the cost of typical funds turned out not to be worthwhile
[12:22] Vanguard’s hockey-stick growth and why John Bogle has impacted your wealth
[13:59] Quote about John Bogle

Retirement Headline: Who is happier, lottery winners or accident victims?

North Western University recently published a fascinating study that looked into what happened with two groups of people: Lottery winners and accident victims. Researchers wanted to know – Six months after the life-changing event, were the participants happier or not?

The research was done at the 6-month mark by asking respondents to rate how pleasant they found various activities – such as talking with a friend, watching television, eating breakfast, hearing a funny joke, getting a compliment, or reading a magazine.

Can you guess what the results were? I’ll give you a hint – the accident victims were happier, but do you know why? Listen to find out.

Retirement Headline: What is the biggest life regret for older Americans?

CensusWide was recently tapped by British Airways to conduct a study of Baby Boomers. Those polled were asked to name their life’s biggest regret. One in five of the people who responded say that they regret not traveling more.

What about you? Do you think your feelings will be the same if you don’t set aside the time and money to do some traveling while you still can?

I say “while you still can” because I’ve talked with many retirees who have a passion for traveling – and they generally tell me that traveling is a young person’s game. That means you need to do it sooner rather than later if you’re going to do it at all. Regret is a terrible thing, and it becomes even worse once we realize we can’t remedy the situation.

On this episode, I tell you why I suggest you quit putting off your dreams and start planning your dream trip. You’ll also hear my reasoning behind the belief that spending a couple of thousand dollars on a dream trip won’t mean the difference between a financially successful retirement or not. Finally, I’m going to tell the ONE way to ensure the trip of your dreams actually happens.

Retirement Headline: What is the biggest life regret for older Americans? Listen to this episode of #RetirementStartsToday. #RetirementPodcast #Retirement Click To Tweet

John Bogle, Founder of Vanguard the world’s largest mutual fund company passed away

Even if you’ve never invested money through a Vanguard fund, you’ve likely saved thousands of dollars in fees thanks to John Bogle. John was a pioneer in the truest sense of the word, implementing low cost investing when it was a laughable concept. What happened as a result changed the investing universe forever. Not only did Vanguard’s industry-leading low fees preserve money for scores of people it also pressured the investment industry to replicate Vanguard’s low fees. That means the industry as a whole followed suit – and you have received the benefits.

Mr. Bogle’s folly wasn’t so foolish after all

Vanguard wasn’t always the powerhouse we know today. Fund investing, which is what Vanguard has specialized in, was actually a money-losing proposition in its early years. It was for that reason that the investment industry referred to John Bogle’s idea of low cost investing as “Mr. Bogle’s folly.”

But the pundits and experts didn’t know what they were talking about. The idea of low fee fund investing turned into something truly incredible. Between 2007 and 2014, investors poured $1 trillion dollars into equity index funds, while they pulled $659 billion out of actively managed funds. Nobody could have predicted a shift in investor behavior of that size, nor that it would happen in such a short period of time. Nobody except John Bogle.

Vanguard itself grew at an annual compound growth rate of 21% between 1974 and 2014. It’s also unique in that it is a client-owned company. The fund’s investors own the fund and the funds in turn own Vanguard. This unique ownership structure allowed Vanguard to continue to lower the cost of their funds as the company grew over time. As assets went up, costs went down. As total assets grew, new funds were able to be launched. Even today, managed funds cost much more than the meager percentage Vanguard requires.

A heartfelt “Thank you” to John Bogle, founder of Vanguard, on this episode of #RetirementStartsToday. #RetirementPodcast #Retirement Click To Tweet

A heartfelt “Thank you” to John Bogle

Even if you’ve never invested with Vanguard, or had any money in a Vanguard fund, you have money in your pocket or 401k right now due to the efforts of John Bogle. That’s because the new approach to investing he started way back in 1974 has compounded over the years. That means investors have saved more and more in fees as time has gone on.

And it was all led by John Bogle, the man who made index investing cool. Our hats are off to you, Mr. Bogle. Rick Ferri probably says it best…

You cannot measure the quality of a man by the size of his bank account, but in John Bogle’s case, you can measure it by the size of your bank account.
Rick Ferri