John C Bogle

Who is John C Bogle?

He is the founder and retired CEO of Vanguard -- the best place to invest. He has been touting index funds for a very long time as being a smarter investment than more active mutual funds. He states that a basic index fund, like one that tracks the S&P 500, will be about 85% of the actively managed mutual funds out there.

If you read a lot of the rest of the site, you know that I really love Vanguard. They are just the lowest cost and easiest way to invest in an intelligent manner. I use them. Their website is easy-to-use and understand. And yet, it is flexible enough to give you a wide array of convenient options.

Why should I listen to John C Bogle?

Because he's right. The data backs up his assertions. How can a fund that has no regular human interaction regularly beat a professionally and actively managed mutual fund? Because the costs (expense ratio) on an actively managed mutual fund are significantly higher than a passive index fund. This might be a difference of one half of 1% in your expense ratio, but that difference can cost you a lot of money.

For example, over the course of 30 years if your costs are .7% more, then you will make about 20% less on your investments. Not so small now, right?

He has also demonstrated that the ability to consistently pick winning stocks is extremely rare in a mutual fund manager. Although, many of the disadvantages in picking winning stocks that a mutual fund manager has a small, individual investor does not face.

His methods of investing (generic index funds) will not make you rich overnight, but they'll also not send you to the poorhouse overnight. Not only that, but you'll likely do better than most people that try to pick stocks or winning mutual funds. This has been mathematically demonstrated and finance professors cannot help but agree.

He's also written several books on index funds and investing in general.

Should I read his books?

I've read a few of his books and I would put it low on your reading list unless you are seriously considering investing in active mutual fund. His arguments are true, but he repeats himself frequently in stating and restating and restating...the fact that active mutual funds are a bad idea to invest in. Don't get me wrong. His books are good, but there are several better ones out there.

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