DAVID GREENE, HOST:
A giant in the world of investing died yesterday. Jack Bogle was 89 years old. He created the first index fund which became what economists say is the most powerful tool that Americans can use to save and invest for the future. He founded the low-cost investment firm Vanguard. Here's more from NPR's Chris Arnold.
CHRIS ARNOLD, BYLINE: If you have a retirement account, chances are that you have more money because of Jack Bogle. By creating that first index fund back in the 1970s, Bogle started a revolution of super-efficient, low-cost investing, a revolution that took on Wall Street firms and the high fees that they charge investors. And Bogle became a champion for the little-guy investor, maybe because he knew what it was like not to have enough money. His family lost everything they had in the Great Depression.
JACK BOGLE: So I grew up having to earn what I got, help out with the family expenses and started working when I was 9 years old.
ARNOLD: Today, the company Bogle founded, Vanguard, manages more than $5 trillion. Some of that could be your retirement savings. And it's structured essentially as a nonprofit. I met Jack Bogle a few years ago at his summer cottage in upstate New York, and sitting down with him was like sitting down with an instantly likable college professor.
BOGLE: We live in this mythical world where we kind of believe the American way is if you try harder, you will do better, that if you pay a professional to do something, it will pay off. And these things are true, except in investing.
ARNOLD: This was one of Bogle's key insights. The market doesn't really have that high returns of the fees that you pay. The cost is everything. And those fees can eat up half of the money you would otherwise have down the road.
BOGLE: The tyranny of compounding long-term costs 'cause they eat you up.
ARNOLD: Hiring mutual fund managers to try to pick this stock over that stock. Bogle showed that 85, 90 percent of the time, you're going to make more money just buying the entire stock market, just a big list, an index of, say, the biggest companies in the U.S. It could be 10 times cheaper, or 20 times cheaper, and you'll make way more money over time. That's what broad-based index funds let you do. And that's why Bogle's been celebrated as basically the George Washington of an investing revolution.
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WARREN BUFFETT: Jack Bogle has probably done more for the American investor than any man in the country. Jack, would you stand up? There he is.
ARNOLD: That's perhaps the most famous investor in the world, Warren Buffett, honoring Bogle in 2017.
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BUFFETT: I estimate that Jack, at a minimum, has left in the pockets of investors tens and tens of billions. And those numbers are going to be hundreds and hundreds of billions over time.
ARNOLD: Buffett called Bogle a real hero. We should say, too, that while Bogle was a critic of greed and excess on Wall Street, he was also a big fan of capitalism as the best system in the world. And he spoke out, calling for young people, the leaders of tomorrow, to be more idealistic and follow his lead and clean up the mess. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.
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