MARY LOUISE KELLY, HOST:
A champion of people trying to save for retirement has died. Jack Bogle was 89 years old. He created the first index fund which became what economists regard as the bedrock most powerful tool for how everyday Americans should save and invest for the future. Bogle founded the low-cost investment firm Vanguard.
NPR's Chris Arnold has done stories about Bogle over the years, and he joins me now. Hey, Chris.
CHRIS ARNOLD, BYLINE: Hey, Mary Louise.
KELLY: So I know in your reporting you have referred to Jack Bogle as a George Washington figure. Except instead of the American Revolution - revolution on Wall Street. Explain. How did he transform investing?
ARNOLD: You know, if you have a retirement account - anybody in America basically who is investing in the stock market has more money, chances are, because of Jack Bogle. And the reason is that in 1975, he created the first index fund, and that came to be, like, a shot heard round the world.
What he was doing there is he was saying cost is everything. And he was challenging the high fees that financial firms like to charge people and say, look; you don't have to pay these high fees; there's a better way. And the competition that that created brought down the fees that are charged for everybody in their retirement accounts, whether you're in index funds or Vanguard funds or anything else. And it's put billions of dollars into the pockets of middle-class and everyday investors all around the world.
KELLY: OK, well, help me understand exactly what this better way was. I mean, what was the big idea behind what he did with index funds?
ARNOLD: Well, I got to spend a day with Jack Bogle at his house on a lake in upstate New York a few years ago. And that - he's a - also a very wonderful guy. Anybody who's ever met him just - you like him instantly. And here's the way he put this notion of Wall Street and the fees that they charge.
(SOUNDBITE OF ARCHIVED BROADCAST)
JACK BOGLE: We live in this mythical world where we kind of believe the American way is if you try harder, you will do better, and if you pay a professional, it will pay off. And these things are true except in investing.
ARNOLD: And his idea was with an index fund - if people aren't clear on exactly what that is, you buy a fund that owns, some of them, the entire stock market - like, all of corporate America. You, Mary Louise, can own all of corporate America or a very small slice of it for a very, very low cost. And research has shown that this is just a very effective, powerful way to invest. You make a lot more money over time, chances are, if you invest this way instead of paying a lot of fees for guys to pick stocks for you. And it's really worked for a lot of people. And Vanguard, the company he's founded, now has $5 trillion under management.
KELLY: Wow.
ARNOLD: And he's changed the industry.
KELLY: Wow. And interestingly, Jack Bogle himself - while he was making all of our retirement funds fatter, he actually took home a lot less money than you might think.
ARNOLD: Absolutely. I mean, he's made nothing on the scale of the big hedge fund guys - very modest by comparison. And he really was more motivated about changing the world than he was about making money for himself. We should say, too, though, that while Bogle was a critic of Wall Street and its greed and its excess and all the things that are wrong, he was a complete fan of capitalism and wanted, like, you know, the young people and the future leaders to fix the problems and make it better, and it really is the best system in the world.
He also had a ton of fans. I mean, the most famous investor in the world, Warren Buffett, was also a - really liked Jack Bogle. He said in an annual letter in 2017, quote, "if there's a statue ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle."
KELLY: Wow. Thank you, Chris.
ARNOLD: You're welcome.
KELLY: That's NPR's Chris Arnold talking about Jack Bogle, creator of the first index fund. He has died at the age of 89.