# John Bogle: Vanguard Founder and Pioneer of Index Investing

John Bogle, known as "Jack," founded the [Vanguard Group](https://www.investopedia.com/articles/investing/111715/how-vanguard-index-funds-work.asp) and pioneered [index investing](https://www.investopedia.com/terms/i/index-investing.asp), enabling investors to buy mutual funds that follow the market. He aimed to make investing easier and cheaper for the average person. He introduced the Vanguard 500 fund, which tracks the returns of the S&P 500 and marked the first index fund marketed to retail investors.

He died on Jan. 16, 2019, at the age of 89, leaving a lasting legacy and influence in the investment community.

### Key Takeaways

*   John Bogle founded Vanguard Group and introduced index investing, revolutionizing the mutual fund industry by making investing more accessible and affordable.
*   Bogle launched the Vanguard 500 fund, the first index fund marketed to retail investors, which tracks the S&P 500.
*   He implemented a unique structure in which shareholders of mutual funds became part owners, reducing investment costs.
*   Bogle's focus on low-cost, no-load funds and passive investing strategies helped popularize this approach among average investors.
*   His philosophy emphasized that passive investing is generally more cost-effective than active investing due to lower fees and expenses.

![John Bogle](https://www.investopedia.com/thmb/ULIMSo4QURB59d31YWCKlxcVmqo=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/John_bogle.asp_v2-db538a5a053f4a138779fd77f57b3aaf.png)

*— Investopedia / Hugo Lin*

## John Bogle's Foundation: Early Life and Academic Journey

John Bogle was born on May 8, 1929, in Montclair, New Jersey. He attended Blair Academy which was paid for by his uncle, as his family had lost most of their wealth in the 1929 stock market crash. John Bogle attended Princeton University where he studied economics.

In his early career, he joined Wellington Management in 1951 and attempted to persuade them to change their strategy of focusing on one investment fund to many. He eventually became chairman of Wellington but was fired after a poorly made merger decision. He then founded his own mutual fund company, Vanguard Group, in 1974.

## John Bogle's Revolutionary Contributions to Investing

### The Vanguard Vision: Innovations in Fund Management

With Vanguard, Bogle employed a novel ownership structure in which the [shareholders](https://www.investopedia.com/terms/s/shareholder.asp) of mutual funds became part owners of the funds in which they invested. The funds themselves own the investment firm, making the fund investors indirect owners of the firm itself. This structure allows the firm to incorporate any profits into its operating structure, reducing investment costs for fund investors.

In 1976, Bogle introduced the Vanguard 500 fund, which tracks the returns of the [S&P 500](https://www.investopedia.com/terms/s/sp500.asp) and marked the first [index fund](https://www.investopedia.com/terms/i/indexfund.asp) marketed to retail investors. Bogle’s unique structure for Vanguard also made it a natural fit for the provision of [no-load mutual funds](https://www.investopedia.com/terms/n/no-loadfund.asp), which do not charge a commission on investment purchases.

> **Important**
>
> An index fund is an investment fund, such as an ETF or mutual fund with a portfolio that is constructed to match that of a specific market index.

When the Vanguard 500 fund was launched in its initial iteration, it raised only $11 million in its first underwriting in 1976. As of July 28, 2022, the fund manages more than $709 billion in assets.

Bogle retired as CEO and chair of Vanguard in 1999 and wrote _Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor_ the same year, which has since become a classic for investors worldwide.

### The Enduring Legacy of John Bogle: Transforming How We Invest

John Bogle helped popularize index investing, where funds track a major market [index](https://www.investopedia.com/terms/i/index.asp). Bogle believed average investors couldn't beat the market long-term and focused on lowering mutual fund costs. For example, he focused on no-load funds with low [turnover](https://www.investopedia.com/terms/p/portfolioturnover.asp) and simple strategies.

Passive investing is based on the idea that costs from chasing high returns often cancel out gains, whereas [passive strategies](https://www.investopedia.com/terms/p/passiveinvesting.asp) with lower fees yield better results. Unlike passive investing, [active investing](https://www.investopedia.com/terms/a/activemanagement.asp) involves managers taking a hands-on role to try to beat the market.

Index funds fit this model nicely because they base their holdings on the securities listed on any given index. Investors who purchase shares in index funds gain the benefit of the [diversity](https://www.investopedia.com/terms/d/diversification.asp) represented by all the securities on an index.

This protects against the risk that a given company will lower the performance of the overall fund. Index funds also more or less run themselves, as managers only need to ensure their holdings match those of the index they follow. This keeps fees lower for index funds than for funds with more active trading.

Finally, because index funds require fewer trades to maintain their portfolios than funds with more active management schemes, index funds tend to produce more tax-efficient returns than other types of funds.

## What Was John Bogle's Net Worth?

At the time of his death in 2019, John Bogle's net worth was approximately $80 million. He earned the bulk of that money as the founder of the investment management company, Vanguard.

## Who Invented Passive Investing?

John Bogle, the founder of the investment management firm, Vanguard, invented passive investing. By doing so, he created a new industry focused on this type of investing as opposed to the traditional method of investing, active investing. He is known as the "Father of Passive Investing."

## What Is the Difference Between an ETF and an Index Fund?

An ETF can be bought and sold on an exchange like a stock at any point whereas an index fund can only be traded at the end of the day at the set price point. ETFs provide greater flexibility than index funds.

## The Bottom Line

John Bogle is a titan in the history of investment management by starting the Vanguard Group, one of the largest investment management firms in the world. Through Vanguard, he popularized passive investing, making it easier for average investors to invest their capital and generate returns with low risks. Bogle introduced the innovative index investing concept that revolutionized investment strategies.

Bogle championed the benefits index investing, such as low costs, tax efficiency, and diversification for average investors. The Vanguard 500 fund was a significant contribution to the investment landscape when Bogle introduced it.

> **Article Sources**
>
> 1.  Vanguard. "[Vanguard Announces the Passing of Founder John C. Bogle](https://corporate.vanguard.com/content/corporatesite/us/en/corp/who-we-are/pressroom/Press-Release-Vanguard-Announces-Passing-Of-Founder-Jack-Bogle-011619.html)."
>     
> 2.  SuccessStory. "[John Bogle Story](https://successstory.com/people/john-bogle)."
>     
> 3.  Vanguard. "[500 Index Fund Admiral Shares](https://institutional.vanguard.com/investments/product-details/fund/0540)."
>     
> 4.  Bloomberg. "[Jack Bogle Was a Punk](https://www.bloomberg.com/news/articles/2022-04-29/jack-bogle-book-explores-radical-vanguard-founder)."
>     
> 5.  National Public Radio. "[Jack Bogle, Father of Simple Investing, Dies at 89](https://www.npr.org/2019/01/16/686031022/jack-bogle-father-of-simple-investing-dies-at-89)."