Tags: Jack Bogle | Federal Reserve | retirement | investing

Jack Bogle: Fed Did Right Thing by Keeping Interest Rates Near Zero

Jack Bogle: Fed Did Right Thing by Keeping Interest Rates Near Zero
John Clifton "Jack" Bogle, retired founder of Vanguard Group. (Photo: AP)

By    |   Tuesday, 22 September 2015 08:02 AM

Jack Bogle, retired founder of mutual-fund giant Vanguard Group, said the Federal Reserve was right to leave interest rates unchanged at record lows.

"There are plenty of challenges ahead for our economy as the whole world economy gets into this messy state it's in," he told CNBC. "So I think the Fed is doing just the right thing under the old Hippocratic oath. First, do no harm."

The Fed last week kept rates near zero percent, where they’ve been since 2008 when the U.S. economy shrank the most since the Great Depression. The low rates mean that the cost of borrowing for a house or car will remain low for the foreseeable future.

The U.S. economy is “adequately strong but not vibrant,” Bogle said.

He recommended investors not hesitate to save to major expenses like retirement or college. A Gallup poll last month showed that 66 percent of Americans see the Social Security system as either in a state of crisis (21 percent) or having major problems (45 percent).

"There is no other way to do it,” Bogle said. “You want to start building early, as early as you possibly can, because that slope gets steeper and steeper; the more money you have to put in per month the closer you get to retirement."

Fund managers are bracing for a recession as they pull money out of emerging markets like China and seek the safety of cash and bonds, according to Bank of America Merrill Lynch.

The bank’s monthly survey found that the percentage of investment professionals who were weighted toward stocks fell from 41 percent in August to 17 percent this month, the lowest in three years. Fund managers also had the worst expectations for global economic growth in five years.

That kind of widespread gloom may point to an economic slowdown — or conversely, be a contrarian set-up for stock-market gains, said Michael Hartnett, chief investment strategist at BofA.

“Unambiguous pessimism means risk assets riper for a rally,” he said in a Sept. 15 report obtained by Newsmax Finance. “If no rally, then markets ominously hinting ‘recession’ and/or ‘default' imminent.”

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Jack Bogle, founder of mutual-fund giant Vanguard Group, said the Federal Reserve was right to leave interest rates unchanged at record lows.
Jack Bogle, Federal Reserve, retirement, investing
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2015-02-22
Tuesday, 22 September 2015 08:02 AM
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