When John C. Bogle launched his idea on the market in 1976, which was to make him rich and famous, it was one thing above all else: a flop. He wanted to raise 150 million US dollars for what was then the first index fund. But in the end, he only raised 11.3 million dollars and a lot of criticism. Such an index fund was "un-American", according to a poster circulating on Wall Street, and average at best. But who would want average when they could have the best?

If John Bogle, who offered everyone the "Jack", had given up that day, he would probably never have become a financial legend, millions of people would have paid a lot of money in fees to fund houses, his company Vanguard, founded in 1974, would not be a giant in the industry today - and the financial world would be a different place. Because what the man, who died in 2019 at the age of 89, propagated back then was nothing less than a revolution, which Nobel Prize winner Paul Samuelson once compared in a speech: "I put this invention by Bogle on a par with the invention of the wheel, the alphabet, the Gutenberg printing press and wine and cheese: an investment fund that never made Bogle rich, but increased the long-term returns of investment fund owners - something new under the sun."

What Samuelson considered to be an unparalleled invention was the "First Index Investment Trust", as John Bogle called it at the time and which is now called the "Vanguard 500 Index Fund". Even though Bogle himself attributes the invention to his colleagues at Wells Fargo, his investment fund is now regarded as a pioneer of passive investing. Instead of relying on a manager to pick the right shares at the right time and add them to your portfolio for high fees, an index fund tracks the performance of an index relatively bluntly. In the case of Bogle's fund, this is the S&P 500: if it rises, the index fund rises. If it falls, the fund also goes down.

In the beginning, Bogle was ridiculed and mocked

Because an index fund does not require an expensive manager, the costs are many times lower. The fund company therefore earns less, while the investor receives a higher return, Bogle claimed. After all, it is only in the rarest of cases that an active manager actually beats the market over a period of years. For Wall Street, what Bogle was doing there was an affront and his initial flop caused much amusement on the trading floor. It soon had its own name: Bogle's Folly.

But giving up was not something John Clifton Bogle thought about. Born in 1929, he was a child of the Great Depression, his father lost a lot of money and his parents later separated. Early on, he and his siblings earned some extra money with part-time jobs, such as delivering newspapers, before he earned a degree from Blair Academy in Blairstown thanks to two scholarships and then from the elite Princeton University in 1951. Even then, he was concerned with the question of why fund managers are so well paid when most of them can't beat the average.

After graduating, he joined the investment company Wellington Management, where he quickly rose through the ranks and worked until his resignation in 1973. At the age of 31, Bogle, who liked to work long hours, had his first heart attack. Many more were to follow because he suffered from arrhythmogenic right ventricular cardiomyopathy, a rare heart disease. This did not stop him from working hard, and in 1996 he even had a new heart implanted.

At the beginning of his career, however, he first became head of Wellington and was regarded as a clever, analytical thinker. However, when he engineered a merger that turned out to be a disaster only a short time later, he was fired on the spot. John C. Bogle was just 44 years old at the time - and had to start from scratch.

Today, his investment firm is one of the most successful in the world

So what to do? Shortly after his dismissal, John Bogle simply started his own investment company and named it Vanguard, after HMS Vanguard, Horatio Nelson's admiral ship at the Battle of Abukir. The name, which the company was given in 1974, gave rise to great expectations. However, business was slow, the index fund was initially a flop and in the years to come, inflows into the company were more likely to trickle than flow.

Bogle needed a lot of patience. It was not until the 1990s that more and more money flowed into index funds and, from the turn of the millennium at the latest, passive investing experienced a real boom, driven by the further development of the index fund: an exchange-traded fund (ETF). Vanguard soon began offering such products and to a certain extent benefited from the 2007 financial crisis. Investors had lost a lot of money and their trust in fund managers was gone. Instead, they put it into ETFs, which made them incredibly successful - and led to the terms ETF and index fund being used almost synonymously today.

6.2 trillion US dollars under management at Vanguard in January 2020, a veritable empire that never made John C. Bogle rich, partly because he didn't want to. By his own admission, he despised luxury goods such as yachts, usually ate a peanut butter and jam sandwich for lunch and generally hated spending money. At a meeting with a journalist in the 1990s, he is said to have once calculated that he would save money if he ordered things individually from the menu instead of the menu for under six dollars. And at a fine event at Princeton University, he is said to have asked for a simple loaf of bread - for the return train journey.

As frugal as he was in everyday life, he was generous when it came to charitable causes. He regularly donated a large part of his income, according to the motto he gave in an interview with Reuters: "The best rule of philanthropy is to give until it hurts, as much as you can, because none of us can get through life alone."

Warren Buffett on Bogle: "Jack has done more for American investors as a whole than anyone I've ever known."

Even his company "Vanguard", which he left at the end of 1999 to devote himself to research at the "Bogle Financial Markets Research Center" founded especially for him, is structured as a cooperative. Instead of the stock market players, it belongs to the investors in the funds, which the company in turn sells and manages. Accordingly, Bogle himself never earned as much money as he could have. Most recently, his wealth was estimated to be worth tens of millions.

The fees that Vanguard did not collect remained, according to Bogle's idea, with the investors, the hard-working people who might be able to finance their retirement with them.

What began as supposed folly has, according to Bloomberg's calculations, earned private investors more than 500 billion US dollars by 2016 alone, and the trend is rising. The figure was so large that Bloomberg dubbed it the "Vanguard effect". Bogle regularly preached advice to private investors, who were his focus, that the fund industry disliked because it hardly made any money: Stay invested for as long as possible and trade infrequently; don't trust experts; invest as broadly as possible. And probably the most important piece of advice: keep costs low.

Warren Buffett, perhaps the most famous investor of the 20th century and multiple multi-billionaire, once wrote in his annual investor letter: "If a statue is ever erected in honor of the person who has done the most for American investors, Jack Bogle should be the clear choice." And after his death, Buffett added: "Jack has done more for American investors as a whole than anyone I have ever known. On Wall Street they ask a lot for nothing. He asked for nothing in order to achieve a great deal."