Modern finance · 1950s–1990s
1976
The index fund for everyone
John Bogle's Vanguard launches a fund that simply tracks the S&P 500.
In 1976 Vanguard launched the First Index Investment Trust, which bought the S&P 500 instead of picking stocks, at a much lower fee. Critics called it "Bogle's folly".
💡 Why it made sense then
If most managers can't beat the market after fees, matching it cheaply leaves investors with more.
Ideas it gave us
- 🧺 Index fund
An index fund is a fund that buys every stock in a market index, such as the S&P 500, in the same proportions, so it matches the market's return instead of trying to beat it.
- 🧺 Expense ratio
The expense ratio is the yearly fee a fund charges, as a percentage of the money you have in it. A 0.5% expense ratio costs $5 a year for every $1,000 invested.
Practise with $10,000 in play money
Free. No real money involved.