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In this Tuesday, May 20, 2008, file photo, John Bogle, founder of The Vanguard Group, talks during an interview with The Associated Press, in New York.
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In this Tuesday, May 20, 2008, file photo, John Bogle, founder of The Vanguard Group, talks during an interview with The Associated Press, in New York.
Credit: AP Photo/Mark Lennihan, File

This man was called a communist for helping middle class investors

John Bogle created the largest mutual fund company but questioned the direction capitalism has taken. He died on January 16, 2019.

Bogle founded the Vanguard Investment group in 1974 with the radical idea that you didn’t need to pay exorbitant fees to own stocks. He became the king of low cost investing with a heretical notion: “Don’t believe you know more than the market, because nobody does.”

Bogle's innovation was index mutual funds. Rather than a selection of stocks, index funds buy all the stocks. As a result, the cost of purchasing index funds is low. The approach attracted new people to investing, earning returns equal to and often better than funds that picked stocks.

Bogle didn’t just create a new way of investing, he was a lifelong critic of his fellow mutual fund operators, accusing them of “rank speculation,” reckless assumption of debt, “obscene” multi-million-dollar paychecks, and golden parachutes. His foes accused him of being "a communist, a Marxist, a Bolshevik, a Calvinist scold and zealot, a holier-than-thou traitor… a subversive who was undermining the pillars of capitalism with un-American rants".

When Ross Reynolds spoke to John Bogle in 2005, Bogle had left the Vanguard Group, but he was still sharing his opinions. He had just published book called Battle for the Soul of Capitalism, subtitled "How the Financial System Undermined Social Ideals, Damaged Trust in the Markets, Robbed Investors of Trillions — and What to Do About It."

KEY TAKEAWAYS FROM THE KING OF LOW COST INVESTING

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  1. “Don’t believe you know more than the market, because nobody does.” The vast majority of mutual funds under perform the stock market average. Their fees eat into returns. Stick with a low cost index fund that buys all stocks in the market.
  2. Is your 'socially responsible' investment as clean as you'd like? Check out what stocks they hold.

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