John "Jack" Bogle, who died in January at age 89, founded the mutual fund giant Vanguard in 1974. A year later he made market history by creating the first Standard & Poor's 500 equity index fund for regular individual investors. The low-cost broad-based index investing movement he pioneered revolutionized investing for ordinary savers.
Barron's recently published a 2007 essay by Bogle that had been commissioned but unpublished. The column emphasizes four main points: Individuals should focus on keeping costs down, broadly diversify, allocate their assets prudently and stay the course.
Bogle also recommended a simple portfolio strategy consisting of a bond index fund and a stock index fund, adjusted for the investor's age. Barron's did the numbers. A 40-year-old investor who followed Bogle's advice would have earned an annualized return 7.3%. That would turn $100,000 into $236,000 by May 1, 2019.
His advice sent me looking for an interview I had with Bogle following the global credit crisis and the plunge in the stock market about a decade ago. He followed his own advice.
"I am a believer in diversification. You buy index funds for stocks, and your bond portion should equal your age," he said. "This is how I invest, so I know how little it's hurt me to have a substantial position in U.S. bonds."
I also think Bogle's low-fee keep-it-simple approach encourages people to spend more time on what really matters to them. He called it knowing when "enough is enough." He wonderfully captured the idea of "enough" in a commencement address at the Georgetown University business school in 2007 — the same year as his unpublished article. His talk closed with a poem by author Kurt Vonnegut.
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