The Retirement Gamble

If you have a 401(k) or IRA or any investments at all, click here for a must-see video "The Retirement Gamble" from last night's FRONTLINE on PBS.  The moral of the story:  When it comes to investing, expenses are your enemy, and index funds are your friends.

During the video, Jack Bogle, the founder of Vanguard and the inventor of the first low-cost index mutual fund, stated that over a lifetime many investors keep roughly one third (1/3) of their investment gains while Wall Street takes two thirds (2/3).  As shocking as it may seem, I wanted to reiterate that Jack Bogle's figures are correct.

Take the following example

The Battle for the Soul of Capitalism

Just finished the audio-book version of, "The Battle for the Soul of Capitalism" by the great John C. Bogle (inventor of the first index fund and founder of the Vanguard Group of mutual funds).

I love Jack Bogle and recommend everything he has written, and

Jack Bogle one of the founding fathers of indexing

Here is a great video interview with Jack Bogle, the founder of the Vanguard Group of mutual funds and the inventor of the first index fund. Bogle has also written several books, the best of which is, "The Little Book of Common Sense Investing" (I highly recommend reading).  Many followers of Bogle call themselves Bogleheads and they have a website designed to help individual investors.

I agree with 99.9% of what Jack (John) Bogle says in the video. The one thing I don't quite agree with is his stance on foreign stock funds.  I've run the numbers several times utilizing statistical optimization software and I am convinced that a small position in a foreign stock index fund both REDUCES THE RISK of a diversified portfolio and INCREASES RETURNS over sufficiently long-run results.  The impact is somewhat small, but every bit helps.  Luckily, despite Bogle's views, Vanguard has the best foreign stock index fund in the business called the Vanguard Total International Stock Index Fund.

I have never worked for Vanguard, but I've always been a big fan.  I have the vast majority of my own money invested in Vanguard Mutual Funds and Exchange Traded Funds (ETFs).  I use only Vanguard Mutual Funds in my book "The Rollover IRA Cookbook" and use many Vanguard ETFs in "The ETF Cookbook."

As always, you can see all my books at www.InvestorCookbooks.com