Jack Bogle Explains How the Index Fund Won With Investors

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Bylo Selhi
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Jack Bogle Explains How the Index Fund Won With Investors

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Jack Bogle Explains How the Index Fund Won With Investors
A. ...Warren Buffett believes this. He said that 90% of the trust he’s leaving to his wife should go in the Vanguard 500 Index Fund.
Q: If he’d asked, would you have suggested the more diverse Vanguard Total Stock Market Fund instead?
A: Yeah! I wrote him about that. I didn’t hear back from him...

Q: What’s that mean, to cut out the profit? Vanguard keeps costs low, but people must certainly be making financial services industry salaries.
A: I never said we have low costs. I’ve said we have low expense ratios. That’s very different. If you multiply Vanguard’s average 0.14% expense ratio by its $3 trillion in assets, that’s total expenses of about $4 billion. Go back to when we had about $1 trillion in assets, charging 0.21%—that’s about $2 billion. So Vanguard’s costs have gone from $2 billion to $4 billion. When you have 20 million shareholder accounts, it costs money. When you’re employing 15,000 people all over the world, it costs money. We don’t disclose executive compensation anymore, which I think is a little strange. [Bogle stepped down as Vanguard’s senior chairman in 1999.] I designed the best company that I could design. But there are ways to make it better.

[N.B. $1T assets cost $2B to run. 3x assets increased costs by only 2x. Hence the difference—due to economies of scale—got passed back to fund investors by way of lower fees. Does your fundco do that? If not, why not? ...bylo]

Q: You’re concerned that the financial sector is too big. Why?
A; The job of finance is to provide capital to companies. We do it to the tune of $250 billion a year in IPOs and secondary offerings. What else do we do? We encourage investors to trade about $32 trillion a year. So the way I calculate it, 99% of what we do in this industry is people trading with one another, with a gain only to the middleman. It’s a waste of resources.
Bonus: Bogle, "Don't do something, stand there" mantra video is here: http://money.us/1SGwI1L
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Miriam2
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Re: Jack Bogle Explains How the Index Fund Won With Investors

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Bylo -
I wish you would post more often! Every time I see your cute little beaver waving the Canadian flag I laugh :happy
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Re: Jack Bogle Explains How the Index Fund Won With Investors

Post by abuss368 »

Thank you Jack Bogle!
John C. Bogle: “Simplicity is the master key to financial success."
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Bylo Selhi
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Re: Jack Bogle Explains How the Index Fund Won With Investors

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Miriam2 wrote:Every time I see your cute little beaver waving the Canadian flag I laugh :happy
Enjoy! https://www.google.ca/search?q=canadian ... 0&bih=1087

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