Vanguard has a new article with some interesting bits for investing enthusiasts.
I feel like younger folks simply know index investing as the default for essentially every single 401k plan out there. Most own index funds without even thinking about it. However, 50 years ago, it was called “Bogle’s Folly” when a young Jack Bogle went against Wall Street and introduced his index fund to everyday people.
Even 25 years ago when I started out, you really had to make a conscious choice to buy a Vanguard index fund. If you didn’t open an account directly at Vanguard, you were looking at high commissions on every trade because Vanguard refused to pay kickbacks to brokers to keep them on “No Transaction Fee” lists. Vanguard may send me glossy brochures now, but back in the day, they were super-thrifty with zero ads.
I always find it amazing that Jack Bogle started thinking this up as an undergraduate in college! It took him another 25 years to create the retail index fund, which is also an impressive level of stubbornness. Fact #6:
6. In his 1951 undergraduate thesis for Princeton University, Mr. Bogle highlighted the crucial role of costs in the long-term returns earned by investors. He identified costs as a drag on the performance of the industry, which was then entirely actively managed.
I think it’s important to remember that index funds won despite being hated by Wall Street because well, they made people a lot of money. Their performance is excellent, and every year that record is cemented even further. Fact 32:
32. What if, at the fund’s inception in 1976, you’d put $10,000 into what are now called Investor Shares of Vanguard 500 Index Fund? The investment could have grown to nearly $2.2 million by February 28, 2026—illustrating the powers of discipline, low-cost investing, and compounding.
Index funds aren’t magic. They mostly win for the simple reason of low costs. This is important because Wall Street will keep continuing to spin out new products that offer you the possibility of higher returns while giving them the certainty of higher fees in their pocket.
YieldMAX ETFs. High costs. Buffer ETFs. High costs. Private equity. High costs. 2X Leverage ETFs. High costs.
Don’t let the allure of a successful gamble distract you from how badly high costs tilt the odds against you. Over time, the house is going to win.
I remain grateful for Jack Bogle and his unwavering message. Save your money and buy all the winning businesses (own the entire haystack). Enjoy maximizing your returns by keeping costs low. Buy low-cost index funds and ignore the rest of the advertising noise. It worked. It works.
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