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How the Great John Bogle Always Emphasizes Saving on Investment Fees

How the Great John Bogle Always Emphasizes Saving on Investment Fees

John Bogle is considered the pioneer of index funds, having started the first indexed mutual fund, the Vanguard 500, in 1975. He is the former CEO of the Vanguard Group, an investment management company managing $1.4 trillion in assets. With these credentials, it’s not surprising that Bogle has been a passionate and successful advocate for investing in index funds, and over the course of his career, has been honored for his financial and social contributions. In 1999 Fortune magazine included him as one of the investment industry’s four “Giants of the 20th Century,” while Princeton University awarded him the Woodrow Wilson Award for “distinguished achievement in the Nation’s service.” In 2004, Time magazine named him one of the world’s 10 most powerful and influential people.

During his career, Bogle has been extremely vocal about investing in funds with lower fees, which consequently, alienated him from many people in the financial industry. He has routinely criticized market-timers looking to buy low and sell high, and instead advocates, a buy-and-hold strategy. Bogle has adamantly criticized the high fees and steep costs in the finance industry, which he has described as the “extractive industry” focused more on compensation of managers. As of late, he has spoken out about the way indexed funds have been used as a marketing tool, falsely leading investors to buy hybrid funds (more or less managed funds that loosely track an index).

With such hostile views towards the financial industry, Bogle has been heavily criticized throughout his illustrious career. When the Vangugard 500 was first offered, for instance, competitors criticized him and the fund, calling it “Bogle’s Folly,” “Un-American,” and saying “Average returns are for average people.” Despite this criticism, however, for the last 25 years, the Vanguard 500 has performed better than 88% of all funds. While comparing Vanguard to other funds on a yearly basis appears only somewhat impressive, over the long run, the Vanguard 500 is a top performing fund offered at one of the lowest available fees.

With his relentless pursuit and advocacy for lower costs, and criticism of the high fees charged by the financial industry, there is much to take away from this reputable and hard-fought investor. His track record and recognition certainly goes above and beyond the reputation of most in the financial industry, and all along viewing lower fees and operating costs as the main driver growing investor wealth.