But be cautious about arguing from an outlier. People manage their credit responsibly (for the most part); they buy as much home as they can afford, and don’t go crazy with plastic or other forms of credit. While some people abuse credit, for the most part it works exactly as it is should. The Great Financial Crisis was a reminder (in part) of what happens when we fail to regulate lenders appropriately.
Investing and retirement planning: The financial-services industry plays an important role in how we plan for retirement, fund philanthropy, and engage in generational wealth transfer. It’s how we take advantage of the power of compounding.
Because of the ingenuity of some smart Wall Streeters, there are low-cost index funds and exchange-traded funds that you can purchase with pretax dollars in your 401(k)s and IRAs. All that cash growing pretax adds up to a pretty penny. So long as you avoid being a guinea pig in other people’s experiments with new financial products, you can take advantage of innovations without shouldering an undue burden.
Sure, there is a near-infinite number of problematic practices on Wall Street, including fees buried in fine print, mandatory arbitrations, and undue influence in Washington. But by and large the financial-services industry does what it is supposed to. It may be expensive, but the good news is the trend is toward lower prices for financial services.
I cannot disagree with Bogle’s admonition that investing should be “simple” and “cheap.” Where we part ways is whether Wall Street, warts and all, is additive to America. It is. Let’s hope it keeps trending in the right direction.
This column was provided by Bloomberg News.