By the time I first heard of John Bogle, he was already considered to be in the pantheon of investment giants along with Benjamin Graham and Warren Buffet. His passing yesterday at age 89 is a blow to the investment industry as we could still use his wisdom, but at least he left us with the revolutionary investment ideas and timeless quotes.

John Bogle founded the Vanguard Group in 1975 after an initially successful stint at a reputed mutual fund had gone wrong. Bogle’s radical idea was that the best outcome for an investor was to earn the average return of the market while minimizing all expenses associated with the investment including management fees, taxes and commissions for trades. His argument is that most active fund managers who try to beat the market will underperform the index over the long-term because of excessive fees and regression to the mean. Also, he argued that people could not mathematically beat the index unless someone was underperforming the index. Therefore, it was better to stick to tracking an index (by buying all the assets in an index weighed by their market cap) while minimizing the fees you pay that takes away from the returns. His investment philosophy has been proven right again and again as the SPIVA scorecard keeps showing active managers failing to beat their benchmark even after all the extra fees supposed to lead to outperformance.

He launched the First Index Investment Trust now named the Vanguard 500 Index Fund with the goal of simply tracking the S&P 500 Index. The structure of the mutual fund is such that the investors in the fund own it and therefore the objective is to reduce fees as much as possible instead of generating fees for management. The success of the investment structure of his mutual funds and their strategy has made Vanguard Group the world’s largest mutual fund with over $5.1 trillion in assets under management.

The nature of ownership on the emphasis of rewarding the investor over the fund manager meant that John Bogle never accumulated the kind of wealth that such a successful fund manager with that obscene amount of assets under management would have acquired. Compared to the billions owned by other fund managers, John Bogle was reported to be worth $80 million. This refusal to amass personal wealth in order to pass up the returns to investors is to me the most admirable trait of Bogle, since he practiced what he preached.

For a good idea of Bogle’s investment genius, timeless wit and unbeatable arguments, I recommend you read the Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns which you can pick up on Amazon. It is one of the numerous books in which Bogle shared his radical idea. My review of the book is can be found here.

John Bogle may be gone, but you can be sure his ideas are going to live on for as long as investment exists.