TIP743: SHOULD VALUE INVESTORS OWN INDEX FUNDS?

W/ CLAY FINCK

TIP743: SHOULD VALUE INVESTORS OWN INDEX FUNDS? W/ CLAY FINCK

07 August 2025

In this episode, Clay shares John Bogle’s timeless philosophy of passively investing in low-cost index funds. Bogle, the founder of Vanguard, helped spark a global movement that has made investing more accessible and cost-effective. Today, Vanguard manages over $10 trillion in assets, and Bogle’s simple approach has been adopted by millions worldwide, collectively saving investors trillions of dollars in fees over the years.

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IN THIS EPISODE, YOU’LL LEARN:

  • Why most active mutual fund managers underperform the S&P 500 over time.
  • How John Bogle’s index fund philosophy revolutionized investing.
  • How fees and taxes quietly erode investment returns.
  • Why index funds are easier to hold onto during market crashes.
  • How to estimate realistic future returns for the S&P 500.
  • Why Clay chose not to invest in index funds at this point in his investment journey.
  • And so much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

 

[00:00:00] Clay Finck: For decades, Wall Street has been built on the idea that with enough research intuition or market timing, investors can beat the market. But what if the most rational investment strategy wasn’t about outsmarting the market at all, but simply owning it? That’s the radical simplicity.

[00:00:16] Clay Finck: John Bogle introduced when he launched the first index fund available to individual investors in the 1970s. Today, that concept is no longer radical as it’s utilized by millions of people. In this episode, we’re exploring why index funds work, why Bogle’s philosophy continues to resonate with so many people, and how passive investing has reshaped the financial landscape. [00:00:38] Clay Finck: Bogle argues that trying to beat the market is a loser’s game over the long run. Largely because of fees, taxes, and the human behaviors that get in our own way. Instead, he advocates for a low cost, long-term approach of buying and holding a broad market index fund. This strategy doesn’t promise the thrill of chasing high flying stocks, but it can offer a far more reliable path to building wealth steadily over time. [00:01:04] Clay Finck: While our show is tailored for value investors who are picking individual stocks and actively managing their portfolios, I found that index funds are held by many of the listeners of our show to help them gain more peace of mind and provide broader diversification for their portfolios. I thought this would be a good opportunity to dive into index funds such as those that replicate the S&P 500’s performance and explore why they continue to perform so well. [00:01:29] Clay Finck: Despite past claims that we were in an index fund bubble, or that the US markets could not sustain strong returns due to the high expectations placed on big tech stocks, this episode also served as a good opportunity for me personally to brush up on the power of passive investing. As someone who loves the game of trying to beat the market, it can be easy to overlook the power of such a simple, yet effective investment strategy that I believe should be utilized by most investors wanting to save for their future. [00:01:59] Clay Finck: Also, before I get into the episode, I wanted to mention that we’re quickly approaching our summative event and Big Sky Montana. This September, we’ll be gathering in the mountains to connect with kindred spirits, share ideas, have engaging conversations, and enjoy delicious food in a wonderful setting. [00:02:16] Clay Finck: Our goal is to create an unforgettable experience for you and help you develop friendships that will last a lifetime. To learn more and secure one of the last spots, you can go to theinvestorspodcast.com/summit or click the link in the description below. You can also shoot me an email at clay@theinvestorspodcast.com. [00:02:36] Clay Finck: With that, I hope you enjoy today’s episode on index funds. [00:02:44] Intro: Since 2014, and through more than 180 million downloads, we’ve studied the financial markets and read the books that influenced self-made billionaires the most. We keep you informed and prepared for the unexpected. Now for your host, Clay Finck. [00:03:08] Clay Finck: How do you cast your lot with businesses? Simply by buying a portfolio that owns shares of every business in the United States, and then holding it forever. This simple concept guarantees you will win the investment game played by most other investors who as a group, are guaranteed to lose. That’s a line from John Bogle’s book, the Little Book of Common Sense Investing, which I’ll be discussing during today’s episode.

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