Image Credit: Emanuel Leutze, “Washington Crossing the Delaware” (1851), Metropolitan Museum of Art
By Jason Zweig | Jan. 18, 2019 6:59 a.m. ET
While Jack Bogle is known for driving down costs for investors, that still understates his contribution to finance. He should also be remembered as the inventor of total return and the mutually owned fund company.
Until the mid-1970s, it was nearly impossible for individual investors to capture both market appreciation—the rise in share prices—and dividend income. Not only did most investors fail to beat the market; few could even match it.
Incredible as it seems today, some mutual funds charged commissions to reinvest dividends; if you wanted to plow a fund’s income back into more shares of the fund, you often had to pay a toll of 4% or more. Brokerage accounts were so clunky and costly that investors in individual stocks often didn’t reinvest dividends at all.
With two mighty blows—the invention of the index mutual fund and the elimination of fund commissions—Mr. Bogle smashed that antiquated system....
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For further reading:
John C. Bogle, Common Sense on Mutual Funds
Benjamin Graham, The Intelligent Investor
Jason Zweig, The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money
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