Vanguard was founded on the principle of staying patient in investing, with both eyes always focused on the long-term.

The rise of prediction markets is creating a wildly different dynamic, especially with younger investors, Vanguard CEO Salim Ramji said.

"The good news is, for a 25-year-old investor today, one out of three of them have an investment account. That's six times more than was the case 10 years ago. And that's a really good thing," Ramji said at Yahoo Finance Invest.

"The challenge, to my mind, is that there's another one-third of 25-year-olds who are outside of the traditional investments system. They're looking at online betting platforms. They're looking at things like prediction markets or crypto or sports betting. And if someone's just doing that, you know, for their fun money on the side, fine," he said.

Ramji cautioned, however, "The really disturbing thing is that when we survey those clients, 80% of them are doing those activities because they think it's a fast track to financial success. And the biggest problem I see in the investment landscape today is that people are blurring the lines between investing and gambling."

Vanguard is a global financial powerhouse founded in 1975 by the legendary Jack Bogle, who died in 2019 at age 89 and became known as the "father of simple investing." He revolutionized retail investing by championing ultra-low-cost index investing.

He also pounded home the message in TV appearances about the benefits of portfolio diversification and patience in growing one's wealth.

Today, the asset management behemoth serves tens of millions of individual investors worldwide and oversees approximately $12 trillion in assets under management.

Ramji has headed up Vanguard since July 2024. He is a former senior partner at McKinsey & Company and longtime corporate lawyer — and the first external hire ever selected to lead Vanguard since its inception.

He spent a decade at archrival BlackRock (BLK) as global head of iShares and index investments, where he directed the massive worldwide expansion of exchange-traded funds and managed trillions in passive capital.

Since assuming leadership, Ramji has focused on modernizing Vanguard's technological infrastructure and integrating generative AI client tools.

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More recently, he struck a roughly $4 billion deal to acquire fintech platform Altruist.

Just don't expect Vanguard to dabble in prediction markets, at least as long as Ramji is leading the firm and protecting the culture Bogle helped create.

"You have gambling firms using the language of markets to try and pretend that they're something they're not. When we looked at some evidence that came out of UC San Diego just recently, only 4% of those clients win. You have better odds in Las Vegas," Ramji said. "What we know, kind of over decades of empirical evidence, is that if people stay invested in the market, they're diversified, they keep costs low, and really they hold for long periods of time because compounding is the most powerful untalked-about force in investing. They can do pretty well. And I think some of the focus on the short-term gambling and the short-term payoffs of each of these platforms, one, they don't pay off for the vast majority of investors. Two, the house wins, even more so than the house wins in Las Vegas. And three, it really starts to destroy trust in the system, which has been built up over the past 50 years. And so that's the biggest caution I would say in the system that isn't being talked about enough."

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