John Bogle: The man who became an investment legend

Forty-three years ago, John Bogle revolutionized investing by introducing the first index mutual fund for individual investors and helped lower the costs across the mutual fund industry by championing the interests of the small investors.

In 1974, he founded the Vanguard Group, a company designed to uphold his philosophies despite heavy criticism from Wall Street and other major players on the market. At the time, the stock market was dominated by institutional investors and wealthy people. They were usually the only ones who were knowledgeable about how investing works.

Today, Vanguard Group is touted as the world’s largest investment firm. In December 2018, it has more than $6 trillion in assets under management. The largest of the index funds under its belt is the Vanguard 500 Index Fund with over $440 billion.

Bogle, who was fondly called “Jack,” stepped down as chairman and CEO of Vanguard in 1996. By that time, however, he has inspired many Americans to earn enough to buy their own homes, to secure their children’s education, and to save for their retirement.

Indeed, many touted him as an investment legend: a stock market philanthropist for introducing the concept of low-fee investments, and for putting the interests of the masses ahead of his own. He rallied behind small investors to make them earn and advance amid corporate greed.

John Bogle’s net worth in 2018

Today, it could be said that investors—even the heavyweights—owe him a lot. As highlighted by Ritholtz Wealth Management founder Barry Ritholtz, even BlackRock Inc. and State Street Corp. owe the man a debt of gratitude.  

For all that Bogle contributed to the investment world, however, it would come as a surprise to know that he died with an estimated net worth of only $80 million in 2018.

He could have easily been a billionaire but, consistent with his philosophies, making himself even richer was not his cup of tea. Perhaps his modesty could be best explained by what investment manager William Bernstein said of him.

“Jack could have been a multibillionaire on a par with [Bill] Gates and [William] Buffett.  He basically chose to forgo an enormous fortune to do something right for millions of people. I don’t know any other story like it in American business history,” Bernstein said.

A loss for today’s stock market

John Bogle died of cancer last January 16, 2019. Perhaps, the most resounding philosophy he left is how businesses should serve as fiduciary or trustee to its clients. This had also been the overarching theme of his public speeches, including in one he gave in 1987.

“We are more than a mere industry. We must hold ourselves to higher standards, standards of trust and fiduciary duty. Change we must—in our communications, our pricing structure, our product, and our promotional techniques,” Bogle said in his speech before the National Investment Company Services Association.

Decades after that speech, however, the stock market is seemingly back to how it used to be.

A 2017 Gallup survey found that wealthy individuals are more likely to own stocks than their counterparts who belong in the middle or working-class. The survey showed that 89 percent of families earning more than $100,000 had “some money” invested in the stock market while a measly 21 percent of families earning $30,000 or below had stock investments.

For context, stock ownership before 2008 was at 62 percent while only 54 percent of Americans own stocks at the time the survey was conducted.

Certain market volatility has been felt since the last few months of 2018 and unpredictability continues to linger this year. It is a very tricky time for investors as geopolitical relations and global economic slowdown continues to affect the stock market. At a point like this, Bogle’s call for businesses to uphold their positions as the ultimate trustee of small investors is sorely missed.

(Featured image by The Institute for Fiduciary Standard via Wikimedia Commons. CC BY-SA 4.0.)