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What can you learn from Jack Bogle - the man who made millions rich? Dividend Investor Detox Mar 19
February 08, 2019
Jack Bogle RIP - The inventor of the index-linked tracker fund
What you can learn from Jack Bogle's investing philosophy
Jack Bogle, the man whose invention, the index-linked tracker fund, saved solo investors billions upon billions of dollars in fees sadly passed away in January aged 89.
At RetireOnDividends.com, we have looked at the impact Bogle had on the part-time investor and why tracker funds are a very serious option for nearly all investors. [Click here for our full article...].
Bogle was also a celebrated financial author and you can read a brief review of his most popular book "The Little Book of Common Sense Investing" here.
In brief, here are the main points to learn from this remarkable man and his investing philosophy:
LESSON #1: DON'T PAY FUND MANAGERS' SALARIES WITH YOUR INVESTMENT FUND:
The passive index-tracker funds Bogle invented have tiny fees by comparison, generally 0.1% or
LESSON #2: MOST INVESTORS AND FUND MANAGERS HAVE A 50/50 CHANCE OF BEATING (OR BEING BEATEN BY) THE MARKET:
By buying the whole market with low costs, then, over time, you will perform as well as the underlying businesses in the index. It will require patience but the performance since 1900 in the US has been around 9.5% per year according to Bogle.
These are more than acceptable returns to someone who simply keeps buying (and holding) index trackers.
For that reason, unless you're incredibly confident in your ability to pick quality companies, it's probably a good idea to stick largely to tracker ETFs or Traditional Index
Funds (TIFS) in your portfolio. They're not sexy, but they work.
New on RetireOnDividends during January:
LESSON #3: IT'S IMPOSSIBLE TO TIME THE MARKET, SO DON'T EVEN TRY:
Bogle's philosophy was to buy and hold... preferably forever. He believed that if the average investor would do just fine if he or she simply purchased investments and kept reinvesting the income. In this respect his philosophy was precisely like Warren Buffett's. One of his most famous sayings was "don't just do something, stand there".
LESSON #4: DIVERSIFICATION IS KEY:
The problem is that if you're only willing to bet on one or two stocks, you run the risk of serious losses if your choices turn out to be losers.
Bogle championed the passive index tracker fund not for his own profit (he structured Vanguard as a non-profit-making co-operative which paid no sales commission) but for the good of the customers. He favored trackers because even for a small investment, you get instant and broad diversification - the holy grail of investors, small and large alike.
To read our full article on Jack Bogle's life, click here
Mike RobertsP.S. Would you like a question answered in our next newsletter? If so, email it through to me at email@example.com
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