Jack C. Bogle founder and former CEO of The Vanguard Group (Image: Benjamin Wachenje)

Jack C. Bogle founder and former CEO of The Vanguard Group (Image: Benjamin Wachenje)

Wise investors won’t try to outsmart the market. They’ll buy index funds for the long term, and they’ll diversify.”

That’s what Jack C. Bogle says.  He is the pioneer of low-cost index investing and founder and former CEO of Vanguard which now manages over $3.3 trillion in assets globally.

Bloomberg has a new interview with him and its great.

He is a proud penny pincher who used to get laughed at for not even trying to beat the market but is now considered an investing legend.

Forty years ago when he started, Wall Street dubbed Bogle’s new investment thesis “Bogle’s Folly”.  He challenged the status quo and said investors were better off buying and holding a low-cost fund that mimics the market as opposed to paying money managers huge fees to try and beat it.

Today, indexing is the most commonly used strategy in the world.  In the past 12 months alone, more than 5 times the amount of money flowed into index funds than into actively managed funds.

He has won countless awards.  In 2004, TIME magazine named Mr. Bogle as one of the world’s 100 most powerful and influential people and Institutional Investor presented him with its Lifetime Achievement Award. In 1999, FORTUNE designated him as one of the investment industry’s four “Giants of the 20th Century.” In the same year, he received the Woodrow Wilson Award from Princeton University for “distinguished achievement in the nation’s service.”

Although most CEO.ca readers are likely the opposite of the index-based, passive investors of which Mr. Bogle is a forefather; the long-term returns he has generated don’t lie.

Mr. Bogle believes investing is simple when you apply a long-term, passive strategy.

He recommends 60-40, equity-bond split with 95% of the investor’s wealth allocated to low-cost index funds and the remaining 5% put into gambling stocks (like the junior miners???).  And, the most important part, you keep your money in there for the long-term.  A lifetime, actually.

He has written 11 books, including the bestseller and investment classic “Common Sense on Mutual Funds“.  Also, “The Clash of the Cultures” which Warren Buffet recommended in his 2012 letter to Berkshire Hathaway shareholders.

When asked about current valuations in US equity markets, he says:

“It would be nice to only invest when valuations are low. Moments of great depression in stock values are a great time to buy. You can’t invest at 2009 valuations today. So what are you going to do? You have to invest at today’s valuations. You can’t not invest now. Choose to not invest and you are ensuring you will have nothing 40, 50 years from now. 

You’re investing for a lifetime. A 40-year-old probably has a 50-year life expectancy. That’s what you’re investing for. I am an indexer. That’s well known. I’d keep it simple and have my money in the S&P 500 or a broad market index, and the rest in the in a bond index.”

Mr. Bogle, now 85 years old, is not a billionaire like his mutual fund colleagues such as the Johnson family (who founded Fidelity Investments).

He uses that fact as evidence that Vanguard maintains the lowest cost investing platform in the business, something he values more than money.

He is an avid philanthropist and has given most of his wages and wealth away.

“My only regret about money is that I don’t have more to give away,” he says.

Read: Jack Bogle: I Wouldn’t Risk Investing Outside the U.S. (Bloomberg)

Related: A Mutual Fund Master, Too Worried to Rest (New York Times, 2012)