Explaining ETFs | #8

Vanguard was founded by Jack Bogle in 1975. Jack Bogle has been credited with creating the first index fund that was available to individual investors. He was also a big proponent of enabling low-cost investing for individuals. The mission of Vanguard has always been to put the investor first, innovating for the investor and not themselves, while keeping costs as low as possible. Vanguard does not have a private nor public owner and so they have no one to serve but the shareholder. The typical mutual fund system as described by Jack Bogle, started with an entrepreneur created a company that forms mutual funds, and that company runs the fund and gets paid for it. That is the way any company starts – it’s the conventional way. However, the difference in the mutual fund industry is that “when that little baby (fund) grows up and doesn’t need all that parental care (Management Fee) anymore, they still have that parent watching over them and taking money away”.  Some mutual funds are over 100 years old and in principle the “child matures, grows up and goes off on its own – and Vanguard recognizes that”. Vanguard saves the investor about 1% a year in fees. This is the difference between getting 30$ (7%) for every dollar invested and 10$ (5%) for every dollar invested, over the course of 30 years. The index fund saves you money period. In this episode we discuss a great analogy of how ETFs work and the purpose they serve. For the 100th time since the inception of this podcast, we discuss VFV.TO – aka the Vanguard S&P 500 Index Fund for Canadians. Also, we go through a twitter thread on how Fashion Nova was built – completely unrelated, but still interesting. We hope this episode provided you some value or at least pointed you in the right direction. Follow the show on Instagram @wealthispossible