I chose this really grainy picture of Jack Bogle for a couple of reasons. It is likely his college graduation photo where he wrote his senior thesis on the concept of an index fund. And two, most photos of him are as an old man because Wall Street desperately wanted to ignore him at all costs. He cost them billions.
The heroes for Wall Street are snake oil salesman like Warren Buffet. There are all kinds of pictures of him in his younger days. Countless TV interviews of him. He continued the Wall Street tradition of ripping off the little guy (his Berkshire Hathaway doesn’t even pay dividends). As CNBC reported, Bogle died with a relatively modest 88 million. Buffet floats in and out of the richest man in America spot with something over 88 billion.
Show me a billionaire and I’ll show you someone who never paid his employees worth a damn.
Wall Street hated Bogle. He exposed them for what they are. They saw the writing on the wall when he founded Vanguard and created the “index fund” in 1975. That fund morphed into this wonderful thing to where now you can buy the S&P 500 for as little as $100 dollars a month and at an expense ratio of .04%. Wall Street hated that! Back in ’75 they had load funds! Front loads, back end load, service fees, redemption fees, on top of high expense ratios. Between them and the government the small investor made nothing (this is pre IRA/Roth IRA).
Bogle changed all that. Based on what he did, a rank and file employee saving just $100 dollars a paycheck can end up a millionaire! Wall Street and Buffet never wanted that. WS operates on the theory of “yachts for them”, not you. I had occasion to run the numbers recently of what $100 dollars a pay period with an employer match would do for you over 30 years with very modest returns.
I didn’t base it on outlandish returns of 18% a year. I didn’t even base it on a low expense ratio fund like Bogle’s, I based it on a .50% fee. I did base it on an employee saving 5% ($100 dollars) and when he saved at 10% ($200 dollars) each of the 26 pay periods in a year. I ran it on returns of 4%, 5%, 8% and 11% (10 percent being the historical return for the S&P 500) over 30 years. I didn’t even base it on a 45 year work career! This is just over 30 years!
Saving $100 dollars a pay period with employer match for 30 years:
4% – $297,661
5% – $354,381
8% – $613,240
11% – $1,093,029
Saving $200 dollars a pp with $100 employer match for 30 years:
4% – $446,491
5% – $531,572
8% – $919,860
11% – $1,639,544
Imagine what you could do over 45 years? Imagine what you could do plowing just a little extra into market troughs? Imagine if you had a spouse doing the same thing? Just put it on auto-pilot. No tricks. No high frequency trading. No exotic funds. Just $100 dollars every 2 weeks into the S&P 500. Bogle did that. Over 30 years an index fund creams the money manager every time. Not just on the actual returns, but when you take out expenses and fees its ridiculous!
Jack Bogle did that. Thanks Jack.
Here are the numbers for $100 bucks a paycheck with employer match over 40 years with a very modest average 8% return: $1,402,360. And that my friend, is why Social Security is stupid. That’s why the government is coming after your IRA. They already stole Social Security.