Courtesy of Pam Martens
John Bogle, Founder of the Vanguard Group
The legendary John Bogle passed away yesterday in Bryn Mawr, Pennsylvania. He was 89. Bogle was the founder of Vanguard Group. In announcing his death, Vanguard said that Bogle “introduced the first index mutual fund for investors and, in the face of skeptics, stood behind the concept until it gained widespread acceptance; and he drove down costs across the mutual fund industry by ceaselessly campaigning in the interests of investors.”
We’ll always remember Bogle for the courage he demonstrated on April 23, 2013 when he appeared on the PBS program Frontline. Bogle dropped the bombshell that Wall Street has attempted to hide for half a century: If you work for 50 years and receive the typical long-term return of 7 percent on your 401(k) plan and your fees are 2 percent, almost two-thirds of your account will go to Wall Street.
Bogle explained the math to Frontline’s Martin Smith:
Bogle: What happens in the fund business is the magic of compound returns is overwhelmed by the tyranny of compounding costs. It’s a mathematical fact. There’s no getting around it. The fact that we don’t look at it— too bad for us.
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