TIP743: Should Value Investors Own Index Funds?
We Study Billionaires - The Investor’s Podcast Network
The Case for Index Funds
This chapter examines the advantages of index funds as a low-cost, diversified investment strategy favored by value investors. It emphasizes the benefits of Vanguard's S&P 500 ETF and advocates for a simpler, passive approach to investing while illustrating the pitfalls of complicating the investment process.
In this episode, Clay shares John Bogle’s timeless philosophy of passively investing in low-cost index funds. Bogle, the founder of Vanguard, helped spark a global movement that has made investing more accessible and cost-effective. Today, Vanguard manages over $10 trillion in assets, and Bogle’s simple approach has been adopted by millions worldwide, collectively saving investors trillions of dollars in fees over the years.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro 03:34 - How John Bogle’s index fund philosophy revolutionized investing. 05:46 - Why most active mutual fund managers underperform the S&P 500 over time. 25:11 - How to estimate realistic future returns for the S&P 500. 31:50 - How fees and taxes quietly erode investment returns. 50:23 - Why index funds are easier to hold onto during market crashes. 52:11 - Why Clay chose not to invest in index funds at this point in his investment journey.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join Clay and a select group of passionate value investors for a retreat in Big Sky, Montana. Learn more here.
- Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
- John Bogle’s book, The Little Book of Common Sense Investing.
- Nick Magguilli’s book, Just Keep Buying.
- Related Episode: MI167: The Bogle Effect w/ Eric Balchunas.
- Related Episode: TIP709: The Art of Long-Term Investing w/ Francois Rochon.
- Related Episode: TIP734: My Investment Philosophy w/ Clay Finck.
- Follow Clay on X and LinkedIn.
- Check out all the books mentioned and discussed in our podcast episodes here.
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