Show notes
Watch the video here.This is the second of five presentations Paul recorded for Next Generation Personal Finance (NGPF.org), whose free curriculum reaches some 150,000 teachers. The sessions weren't open to the public, but NGPF has allowed Paul to share each one with Sound Investing listeners.The subject is index funds, and Paul starts where the story starts: John Bogle, 1976, and a fund launch that nearly got cancelled before it opened.From there he looks at what the evidence actually says about active management over 20 years, why most investors never hear about the costs that quietly come out of their returns, and what happens to a fund that doesn't perform. He also introduces the non-traditional index funds from Dimensional and Avantis that he believes give young investors their best opportunity, and closes with stories from the 90 minutes he spent in Jack Bogle's office.CHAPTERS00:00 Introduction02:44 What is an index fund?04:38 John Bogle and the first index fund08:50 Active vs. passive: beat the market or be the market10:52 The SPIVA report14:53 Quartiles and the 20-year picture19:49 How long do mutual funds survive?22:05 Asset class and style drift25:14 The tax cost of active management28:51 Bogle on costs and the hidden drags on return35:18 Myths about index funds38:28 Beating the S&P 500 with index funds42:35 Traditional vs. non-traditional index funds49:06 Dimensional and Avantis50:23 The number one reason to use index funds55:46 Stories from meeting Jack Bogle59:25 Wrap-upNGPF: ngpf.org
