John Proved Using A Broker Might Just Make You So

I was thirteen years old and knew nothing about the stock market, investing or really anything related to personal finance. Other than the need to save and knowing the sooner I started, the bigger my delayed gratification might become. Not all that different from so many at any age.

I opened a brokerage account thinking I needed some serious expertise if I was ever going to be a successful investor. I met with an advisor, made my first cash deposit and left instructions to buy a series of savings bonds that at the time, were only available for purchase once a year. With an impressive office located in a tall glass tower, I had to be in good company. Clearly, they were doing something right.

The following month, a week after the annual window to buy had closed, the broker called me asking to refresh his memory on what I wanted to do with my deposited funds. It was my first lesson in taking personal financial responsibility.

This week the world lost a true visionary who proved you don’t need to be a financial expert to be successful at investing on your own. John Bogle was the founder of The Vanguard Group and creator of low cost, exchange traded index funds. Funds designed to let you invest directly in the stock market index with ultra low management fees. The same index that most funds fail to beat.

John was a pioneer who removed the complexity often associated with investment decisions. Much like any entrepreneur who introduces something that hasn’t been done before, he came under tremendous fire and criticism in the beginning. Forty-three years since inception, Vanguard today has over five trillion under management and has helped countless individuals achieve financial independence.

During the financial crisis, Warren Buffett waged a $1 Million bet that in the space of ten years, he could out preform any actively managed fund simply by buying a single, passive index fund. Only one advisory firm accepted his wager.

Last year he won the bet by achieving an average annual return of 8.5% and 125.8% over ten years, versus actively managed results of 2.2% and 36.3% respectively. Warren’s investment choice? The Vanguard S&P 500 fund (VOO).

Pixar showed us anyone can cook. John proved anyone can invest.