There are two people who I think have done more to help ordinary people achieve financial freedom than anyone else. The first is the late John C. Bogle, the founder of the Vanguard Group, who gave millions of us access to ultra-low-cost index mutual funds. The second is a 98-year-old man named Taylor Larimore. Larimore is known as “the king of the Bogleheads.” More on what a Boglehead is shortly, but count me among the hundreds of thousands of people who continue to benefit from Larimore’s wisdom.
Larimore is a World War II veteran who was paratrooper in the 101st Airborne Division during the Battle of the Bulge. His professional career included working as a life insurance underwriter, a revenue officer for the Internal Revenue Service, chief of the Financial Division for the Small Business Administration in South Florida and director of the Dade County Housing Finance Authority.
In 1986, Larimore read Bogle on Mutual Funds and became inspired by the sound logic of broad-market index funds. These funds simply try to match the total performance of a market index, such as the Standard & Poor’s 500 stock index (S&P 500), rather than hire a manager and an army of analysts to try and beat those indexes. Over time, index funds tend to beat the hotshot managers, in large part because index funds have much lower overhead and extremely low expenses.
Before then, Larimore recalls, he was spending much of his time constructing complex portfolios and experimenting with various market timing strategies trying to beat the market. He soon realized the market was beating him. Ever since, combining his financial experience with Bogle’s research and advice, Larimore has been investing with the philosophy of owning a few broad, low-cost index funds. “John Bogle changed my life, not just financially, but Jack made me a better person by knowing him,” he says.
In an effort to give back, Larimore, along with some like-minded disciples of Bogle’s investment philosophy of low fees and high diversification, was a key person in starting the movement called the Bogleheads. He wanted to spread the word and teach people about the benefits of simplicity by investing in low-cost diversified index funds.
In 1998, the Bogleheads community expanded with an online forum where people could connect, share ideas and seek investing advice from community members. The forum was first hosted by Morningstar and then became an independent online forum at Bogleheads.org. In 2000, Larimore and another key Boglehead, Mel Lindauer, hosted the first Bogleheads meeting at Larimore’s and his late wife Patricia’s Miami condo at which John Bogle himself was the keynote speaker.
Larimore’s philosophies — investing and life
Larimore told me the keys to financial independence are to live below your means, save regularly, keep costs and taxes low, avoid large mistakes, keep things simple and stay the course. Larimore said the three biggest mistakes people make are:
- Gambling in individual stocks.
- Using past performance to predict future performance.
- Building complex, high-cost and tax-inefficient portfolios.
Indeed, Larimore’s most recent book, The Bogleheads’ Guide to the Three-Fund Portfolios, shows how a simple portfolio of three total market index funds outperforms most investors with less risk.