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Jack Bogle, the Man Who Revolutionized Investing, Dies At 89 (marketwatch.com)
Thelasko shares a report from MarketWatch: You can thank Thomas Edison for the light bulb casting light in your home, Henry Ford for your affordable, mass-produced car, and Apple's Steve Jobs for the astonishing computer in your pocket. And Jack Bogle, who died Wednesday [at the age of 89]. The low-cost mutual funds he helped pioneer at Vanguard aren't as sexy or dramatic as other inventions. And you can't really touch or see them. But their effect on everyday lives has been enormous. Bogle's low-cost index funds, and the imitators they have inspired, may have saved ordinary Main Street Americans a staggering $250 billion, or more, in mutual fund fees over the last forty years. According to the Investment Company Institute (ICI), there are now about 450 index mutual funds with around $3.4 trillion in assets. There are also 1,800 exchange-traded funds, also with around $3.4 trillion in assets.
Boring, low-cost mutual funds like the Vanguard funds are how about 10 million Americans have become millionaires. Mustn't they've held Vanguard or similar funds inside their 401K or other retirement plan. That's most millionaires.
Other interesting facts about millionaires:
33% of millionaires never made $100,000 in any year.
Most made less than $150K.
Millionaires are no more likely than the average American to have received any inheritance. (21% f people, and 21% of millionaires, inherit any money).
Less than 1% of millionaires made most of their money in one year, from a particular event. 99% consistently invested over the long term.
Most commonly held jobs of millionaires:
Engineer
Accountant
Teacher
88% of millionaires have a bachelor's degree, 52% have a graduate degree. About half are first time graduates - their parents didn't have a degree.
Of those will have a degree, most went to state schools rather than private schools, and 68% worked their way through school rather than taking out loans.
Except the actively managed fund "experts" aren't actually any better at predicting the market. After fees, actively managed funds underperform low fee index funds with similar investment goals two-thirds of the time. And no, that doesn't mean one-third of actively managed funds are better than index funds; the overperforming funds change each year, and over 10 year periods, and the index funds win over 90% of the time.
So your premise is that index funds are free riders benefiting from the research of more informed investors, yet if that were the case, they should, by definition, underperform the actively managed funds since the index funds should in theory be buying lower and selling higher (since the index funds are always riding coattails, as it were, buying after others buy, and selling after they sell). And all that money in index funds should, by your theory, be making informed investment choices even more lucrative. Yet that's not how it goes in practice. In practice, even as the fees on actively managed funds have gone down, they've continued to underperform the index funds. The only way your theory jives with reality is if the majority of the so-called "informed" investors, including professional fund managers, have no real idea what they're doing (Note: Not going to dispute that possibility).
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The data indicates that having typical middle-class parents raise you, driving to Starbucks in a car loan does tend correlate with the kids doing the same thing. So there is a correlation there - up to typical middle class status.
Those who do a lot better, millionaires and multi-millionaires, do *not* tend have rich parents, in fact the opposite is true. Multi-millionaires tend strongly to be people who budget and save, and that correlates with *lower* than average income of their parents when they grew up. Those who grow up with upper middle class parents tend to hand out money freely to Starbucks and Apple, and end up in debt or with little wealth. 80% of millionaires came from families that are middle class or lower.
Let's look at the mega-rich you mentioned. The Forbes 400 is perhaps the best known and best research list of the wealthiest Americans. Of the super-rich (Forbes 400), more had poor parents than had parents that were super rich. Most of these mega-rich built on what their parents or other family members had done. Fred was a millionaire, his son Donald is a billionaire (and a fuckwad).
One thing the mega rich tend to have in common in that they most often don't have hobbies they are passionate about, close friends, or much else other than money; they have focused on building their business empire and sacrificed other things. That's why I don't want to try to be mega rich. I'm good with $2 million, which doesn't require giving up time with my family - I just drink coffee at home with family rather than at Starbucks.
Call it what you will, this is the process used by over 80% of people who have at least a million dollars:
Typical salary $59,000.
Invest 15%* in boring ass index mutual funds for 25 years and you've got a million dollars.
Very simple, very boring, very effective.
* Employer match averages 5% with the worker investing 10%.
Edison stole his invention, exploiting America's refusal to recognize intellectual property rights in other countries. So did many U.S. "inventors".
Ford was not the first to make cars, or even to make affordable cars. Ford was merely the best at getting his name touted.
Steve Jobs?? Bwahahaha! The least competent narcissist on the planet? He invented nothing. Nor did Apple come up with portable or handheld computers. Apple were late in the game and overpriced.
Don't revise history, just to pump up the obituary of someone. It makes a mockery of whatever they actually achieved.
Applaud REAL achievements.
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)