Consuelo Mack interviewed John Bogle, the founder of Vanguard Investments. For those who don’t know “Jack” about Bogle, he’s the pioneer of index investing. Before Vanguard, most investors either invested in individual stocks and bonds or paid for actively managed funds. Both typically underperformed the whole market.Some interesting stats are mentioned in the video below. Expenses matter a lot when investing. The average Vanguard fund costs 0.20% annually. The average in the industry is 0.79%. That puts a huge drag on returns for the long haul.
The industry of traditional index fund and ETFs has grown exponentially since the 1990’s. Each type has grown to over $1 trillion in size. Jack Bogle also discusses his tenth and last book “The Clash of the Cultures: Investment vs. Speculation“.
John summarizes the 10 takeaways from his book. Here are six of them:
- Time is your friend – If earning 7% annually, your money doubles every ten years.
- Buy right, hold tight – Pick a fund through thick and through thin.
- There is no escaping risk – All investments are risky even investments that are “risk free”.
- Forget the needle, buy the haystack – Buy the entire market.
- The hedgehog beats the fox – Own the market you are guaranteed to earn the market returns.
- Stay the course – Don’t let your emotions get in the way of investing. “Don’t just do something, just stand there!”.