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The Founder of Vanguard

The King of index funds has passed away.

Jack Bogle, the founder of Vanguard who created the first index mutual fund for individual investors in 1975, died Wednesday at the age of 89, the company said.

Bogle transformed the way people invest. He believed that investors should own a mix of bonds and stocks but shouldn't pay investment managers to pick them.

Jack Bogle provided simple, low-cost investing to hundreds of millions of people around the globe. Even today, investment firms charge ridiculous fees for passive funds -- especially in Canada. It's common to see Management Expense Ratios (MERs) of over 2%!

I used to have a retirement savings plan through my work. The employees had to choose from Investors Group (IG), a predatory Canadian firm, that charged MERs as high as 3% a year. By contrast, out of all the funds that Vanguard offers, the highest MER is 0.39%.

Note that it's difficult to make apples-to-apples comparisons between companies and their funds because they don't really offer the exact same investments. So, one has to look at similar funds. I do remember comparing the relevant funds through my workplace and Vanguard and realized that IG charged 25 times more than Vanguard. In other words, Investors Group would charge me $25 for every $1 fee from Vanguard for the privilege of buying similar equities. Over decades that could result in a net loss of hundreds of thousands of dollars for the average worker.

Jack Bogle, unlike many financial charlatans, did a lot for the little guy.

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