Retirement plans need to be simpler: Vanguard founder Jack Bogle

Vanguard Group founder on how to manage your 401 (k) plan

Vanguard Group Founder Jack Bogle on index funds and how people should manage their 401 (k) plans.

Vanguard founder Jack Bogle wants to simplify your retirement plan by cutting back the clutter in your 401(k) plan.

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“You could run a retirement plan with three or four choices: a stock index fund, a bond index fund [and] a balanced index fund,” Bogle said during an interview on “Maria Bartiromo’s Wall Street.”

Vanguard is dropping 12 funds from its employee 401(k) retirement plan, offering 15 choices, down from 27 funds, effective on June 26. Bogle, who no longer runs Vanguard, said it’s an asset allocation issue and investors can make those choices fairly easy.

“By giving them quite so many issues at Vanguard -- in the industry, generally -- I think we’ve confused investors,” he told FOX Business’ Maria Bartiromo.

Index funds have become a major force in the investing world. Today, there are 3,485 stocks versus 5,000 index funds.

“We don’t need 5,000 index funds or 6,000,” Bogle said. “The whole idea of indexing funds was simplify, simplify, simplify, right out of Ralph Waldo Emmerson.”

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The legendary investor says the system has become complicated because it provides people with too many choices where they can trade those choices into growth and out of value.

“There’s too much trading going on which is the investor’s enemy finally,” he said.

Bogle helped turn Vanguard into the largest mutual fund company in the world. The Vanguard 500 index that Bogle created in 1975 was the first low-cost index mutual fund designed for the average investor.

His winning strategy for investors is to buy and hold the stock market for the long term.

“Any other strategy involves changing things and over an investing lifetime, you can probably have 40 changes, 50 changes. There’s no way that can be a winning strategy,” he said.

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