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The Bogleheads' Guide to Investing
The Bogleheads’ Guide to Investing is a slightly irreverent, straightforward guide to investing for everyone. The book offers sound, practical advice, no matter what your age or net worth. Bottomline, become a Boglehead and prosper! Originally just the chat-line ruminations of Boglehead founder Taylor Larimore, and Morningstar forum leading cohorts Mel Lindauer and Michael LeBoeuf, their trusted advice has been brewed and distilled into an easy-to-use, need-to-know, no frills guide to building up your own financial well-being – so you can worry less and profit more from the investments you make. Invest like a Boglehead, and let their grassroots investment wisdom guide you down the path of long-term wealth creation and happiness, without all the worries and fuss of stock pickers and day traders. If you face a financial crisis or problem, or simply want to know what is prudent to do with the money you save, the Bogleheads will have the answers you need to help you gain your financial footing and keep it.
336 pages, Hardcover
First published January 1, 2006
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December 9, 2018
This is a really awesome investment book, especially for beginners. I highly recommend it.
Here is a summary of some of the notes I took while reading:
Debt = negative wealth
Debt is deadly and earning to spend gets you nowhere. The people who reach financial freedom focus on accumulating wealth over time. Focus on your net worth more than your net income.
Before you start investing:
1. Graduate from a paycheck mentality to a net worth mentality.
2. Establish an emergency fund
3. Pay off credit card and high-interest debt.
To calculate how many years it will take an investment to double in value, use the rule of 72. 72 ÷ the annual rate of return = the number of years it takes to double.
Saving is the key to wealth.
Investing is about buying assets, holding them for long periods of time, and reaping the harvest years later.
If you want to accumulate more wealth and/or achieve your financial goals faster the single most powerful thing you can do is save more.
Deciding how much to save is the most important decision you will ever make because you can't invest what you don't save.
The key to successful money management lies in striking a healthy balance between spending and saving.
The annual cost of driving a new, mid-priced car is about $2,500 higher than driving a three year old used car.
Moving to where the cost of living is cheaper can also free up a ton of extra money to invest. Be humble when homebuying.
When you are a beginning investor SAVING is more important than finding the best performing investment.
"Only buy something you would be happy to hold if the market shut down for ten years." -Warren Buffett
You can calculate reasonable expected returns on your portfolio by using Rick Ferri's 30 year market forecasts on portfoliosolutions.com. To calculate the expected return for each asset class in your portfolio multiply the percentage of your portfolio that is that asset class times its expected return. After doing that with all your asset classes add them together and that should be the total expected return (not counting inflation, expenses, taxes, etc). This if course isn't a foolproof prediction of future returns, but it can give you a reasonable ballpark expectation from which to work with.
Always read the fund prospectus to determine what kind of fees are involved before buying a mutual fund.
Always know the funds turnover and favor funds with low turnover.
Don't use wrap accounts.
Low cost is the best predictor for selecting funds with above-average performance.
For maximum tax-efficiency in taxable accounts, you should:
Favor funds with low dividends
Favor funds with qualified dividends
Favor funds with low turnover
Favor tax-efficient index funds and tax-managed funds.
When evaluating funds for a taxable account, use Morningstars Tax-Cost Ratio calculator for the longest period available.
Tax managed funds reduce shareholder taxes through methods such as:
Low turnover
Highest in, first out accounting
Tax-loss harvesting
Selecting low dividend paying stocks
Holding securities for long-term gains
Use redemption fees to discourage trading
Many 401k plans have substantial and often hidden fees that are highly detrimental to the investor. Look in the 401k's summary plan description to see if the administrative expenses are paid by the employer or the employees.
Many 401k plans have highly limited fund choices available.
Many 403-b plans have terrible investment choices. If you find yourself in this situation see if you can move your 403b to a better, lower cost provider by using a 90-24 transfer.
To get lots of good information on college savings plans, check out savingforcollege.com.
In the event that you receive a windfall, the Boglehead's suggest that you:
1-- Deposit the money in a safe account for at least six months and leave it alone until all emotions associated with the windfall have subsided.
2-- Get a realistic estimate of what the windfall can buy. Do your research and think carefully about your options before deciding what to do with the money.
3-- Make specific goals and plans of what to do with the money.
4-- Get professional help. It would be a good time to enlist the help of a good CPA to assist you with taxes, estate planning, insurance changes, and assess your overall financial well-being, etc. The CPA may recommend you to an estate planning attorney or a financial planner.
Do not:
Invest in the current hot-ticket thing
Lend or give money to friends or relatives
Buy a house or car
Take a luxury vacation
Go on a shopping spree
Make a large donation to a favorite charity
Buy expensive toys
Quit your job
After the six months you may do some of these things, but WAIT.
Three rules for being properly insured:
1-- only insure against the big catastrophes and disasters that you can't afford to pay out of pocket. The cheapest insurance is self-insurance.
2-- carry the largest possible deductibles you can afford. The larger the deductible, the more you are self-insuring and the cheaper the premium will be.
3-- only buy coverage from the best rated insurance companies.
Don't mix investing with insurance. Insurance is for protection and investing is for wealth-building. Keep them separate. The only good purpose of insurance is to protect yourself from catastrophes you can't afford.
When you have dependents, buy term life insurance. Buy the longest period that you can afford and need. Make sure the policy is guaranteed renewable.
Get health insurance with the lifetime benefit of the policy at least $1 million and preferably $2 million. Reduce the premiums by taking the highest deductible and co payment you can afford. If you are under 65 and considering a high-deductible health insurance plan, you may want to consider establishing a health savings account for tax-deducted savings.
A good healthcare plan should:
Give you the freedom to see a doctor or specialist of your choice without the need to obtain a referral.
No dollar limits on expenses such as hospital room rates, surgeries, procedures, and lab work.
It should have an annual cap on the amount of money you have to pay out of pocket.
It is good to include out of state and international coverage.
Disability insurance protects your greatest financial asset: you, and your future earning power. Buy as much disability insurance as you think you'll need.
Ideally, a good disability insurance policy will have:
Covers your inability to work in your own occupation
It requires a waiting period of no more than 90 days before coverage begins.
Carries a cost of living adjustment
Benefits are provided for partial disability
Provides the longest benefit in your own occupation for as long as possible or at least until age 65
You need replacement cost homeowners or renters insurance. Cover all potential disasters. Keeping a list and/or video or pictures of your possessions and storing them outside of your house will make it a lot easier if you ever need to make a claim.
If you drive an old car with a low book value you may not need comprehensive and collision coverage. You can skip other add ons like rental car reimbursement and towing because they aren't catastrophes. If you have a good healthcare plan you can skip coverage for medical payments too.
Reduce the cost of homeowners, rental, and auto insurance by taking the largest possible deductible you can afford. You can sometimes get discounts if your home has a security system, smoke detectors, or fire sprinklers. Auto insurance discounts are often given if your car has a security system, anti lock brakes, or air bags. Tell your agent if your car has them.
Purchase a personal liability umbrella policy of at least $1 million.
If you own a business, get insurance coverage for that too.
If you are getting older getting long term care insurance can protect against the enormous cost of care in a nursing home. If you have extremely high net worth you can probably skip it and self-insure. You probably don't need it if you qualify for medicaid. If you get it before you are 60 your premiums will be dramatically lower than if you buy this insurance when you are older.
Good qualities of a long-term care policy:
Daily benefit should be equal to current daily cost of a nursing home in the area where you live.
Inflation protection of 5 percent per year.
The benefit of the payment period should be at least three to five years. A lifetime benefit payment period is best.
An elimination period should be affordable. One hundred days is a good elimination period for most people.
Coverage cannot be canceled for any reason other than failure to pay premiums.
The policy should cover skilled and nonskilled care. Benefits should also cover home health and assisted living care without requiring a prior hospital stay.
No exclusion for particular illnesses like Alzheimer's or dementia.
Benefit triggers specify when coverage begins.
Waiver of premium when coverage begins.
Your annual premium can't be raised unless it's raised for every policyholder in the state.
The policy is tax qualified, making the premium tax deductible and the benefits not subject to taxes.
A good insurance agent can save you time and money and help you determine what types and amounts of coverage you may need.
All in all I highly recommend this book to any young or inexperienced investors looking to get their bearings and make wise investment decisions.
Here is a summary of some of the notes I took while reading:
Debt = negative wealth
Debt is deadly and earning to spend gets you nowhere. The people who reach financial freedom focus on accumulating wealth over time. Focus on your net worth more than your net income.
Before you start investing:
1. Graduate from a paycheck mentality to a net worth mentality.
2. Establish an emergency fund
3. Pay off credit card and high-interest debt.
To calculate how many years it will take an investment to double in value, use the rule of 72. 72 ÷ the annual rate of return = the number of years it takes to double.
Saving is the key to wealth.
Investing is about buying assets, holding them for long periods of time, and reaping the harvest years later.
If you want to accumulate more wealth and/or achieve your financial goals faster the single most powerful thing you can do is save more.
Deciding how much to save is the most important decision you will ever make because you can't invest what you don't save.
The key to successful money management lies in striking a healthy balance between spending and saving.
The annual cost of driving a new, mid-priced car is about $2,500 higher than driving a three year old used car.
Moving to where the cost of living is cheaper can also free up a ton of extra money to invest. Be humble when homebuying.
When you are a beginning investor SAVING is more important than finding the best performing investment.
"Only buy something you would be happy to hold if the market shut down for ten years." -Warren Buffett
You can calculate reasonable expected returns on your portfolio by using Rick Ferri's 30 year market forecasts on portfoliosolutions.com. To calculate the expected return for each asset class in your portfolio multiply the percentage of your portfolio that is that asset class times its expected return. After doing that with all your asset classes add them together and that should be the total expected return (not counting inflation, expenses, taxes, etc). This if course isn't a foolproof prediction of future returns, but it can give you a reasonable ballpark expectation from which to work with.
Always read the fund prospectus to determine what kind of fees are involved before buying a mutual fund.
Always know the funds turnover and favor funds with low turnover.
Don't use wrap accounts.
Low cost is the best predictor for selecting funds with above-average performance.
For maximum tax-efficiency in taxable accounts, you should:
Favor funds with low dividends
Favor funds with qualified dividends
Favor funds with low turnover
Favor tax-efficient index funds and tax-managed funds.
When evaluating funds for a taxable account, use Morningstars Tax-Cost Ratio calculator for the longest period available.
Tax managed funds reduce shareholder taxes through methods such as:
Low turnover
Highest in, first out accounting
Tax-loss harvesting
Selecting low dividend paying stocks
Holding securities for long-term gains
Use redemption fees to discourage trading
Many 401k plans have substantial and often hidden fees that are highly detrimental to the investor. Look in the 401k's summary plan description to see if the administrative expenses are paid by the employer or the employees.
Many 401k plans have highly limited fund choices available.
Many 403-b plans have terrible investment choices. If you find yourself in this situation see if you can move your 403b to a better, lower cost provider by using a 90-24 transfer.
To get lots of good information on college savings plans, check out savingforcollege.com.
In the event that you receive a windfall, the Boglehead's suggest that you:
1-- Deposit the money in a safe account for at least six months and leave it alone until all emotions associated with the windfall have subsided.
2-- Get a realistic estimate of what the windfall can buy. Do your research and think carefully about your options before deciding what to do with the money.
3-- Make specific goals and plans of what to do with the money.
4-- Get professional help. It would be a good time to enlist the help of a good CPA to assist you with taxes, estate planning, insurance changes, and assess your overall financial well-being, etc. The CPA may recommend you to an estate planning attorney or a financial planner.
Do not:
Invest in the current hot-ticket thing
Lend or give money to friends or relatives
Buy a house or car
Take a luxury vacation
Go on a shopping spree
Make a large donation to a favorite charity
Buy expensive toys
Quit your job
After the six months you may do some of these things, but WAIT.
Three rules for being properly insured:
1-- only insure against the big catastrophes and disasters that you can't afford to pay out of pocket. The cheapest insurance is self-insurance.
2-- carry the largest possible deductibles you can afford. The larger the deductible, the more you are self-insuring and the cheaper the premium will be.
3-- only buy coverage from the best rated insurance companies.
Don't mix investing with insurance. Insurance is for protection and investing is for wealth-building. Keep them separate. The only good purpose of insurance is to protect yourself from catastrophes you can't afford.
When you have dependents, buy term life insurance. Buy the longest period that you can afford and need. Make sure the policy is guaranteed renewable.
Get health insurance with the lifetime benefit of the policy at least $1 million and preferably $2 million. Reduce the premiums by taking the highest deductible and co payment you can afford. If you are under 65 and considering a high-deductible health insurance plan, you may want to consider establishing a health savings account for tax-deducted savings.
A good healthcare plan should:
Give you the freedom to see a doctor or specialist of your choice without the need to obtain a referral.
No dollar limits on expenses such as hospital room rates, surgeries, procedures, and lab work.
It should have an annual cap on the amount of money you have to pay out of pocket.
It is good to include out of state and international coverage.
Disability insurance protects your greatest financial asset: you, and your future earning power. Buy as much disability insurance as you think you'll need.
Ideally, a good disability insurance policy will have:
Covers your inability to work in your own occupation
It requires a waiting period of no more than 90 days before coverage begins.
Carries a cost of living adjustment
Benefits are provided for partial disability
Provides the longest benefit in your own occupation for as long as possible or at least until age 65
You need replacement cost homeowners or renters insurance. Cover all potential disasters. Keeping a list and/or video or pictures of your possessions and storing them outside of your house will make it a lot easier if you ever need to make a claim.
If you drive an old car with a low book value you may not need comprehensive and collision coverage. You can skip other add ons like rental car reimbursement and towing because they aren't catastrophes. If you have a good healthcare plan you can skip coverage for medical payments too.
Reduce the cost of homeowners, rental, and auto insurance by taking the largest possible deductible you can afford. You can sometimes get discounts if your home has a security system, smoke detectors, or fire sprinklers. Auto insurance discounts are often given if your car has a security system, anti lock brakes, or air bags. Tell your agent if your car has them.
Purchase a personal liability umbrella policy of at least $1 million.
If you own a business, get insurance coverage for that too.
If you are getting older getting long term care insurance can protect against the enormous cost of care in a nursing home. If you have extremely high net worth you can probably skip it and self-insure. You probably don't need it if you qualify for medicaid. If you get it before you are 60 your premiums will be dramatically lower than if you buy this insurance when you are older.
Good qualities of a long-term care policy:
Daily benefit should be equal to current daily cost of a nursing home in the area where you live.
Inflation protection of 5 percent per year.
The benefit of the payment period should be at least three to five years. A lifetime benefit payment period is best.
An elimination period should be affordable. One hundred days is a good elimination period for most people.
Coverage cannot be canceled for any reason other than failure to pay premiums.
The policy should cover skilled and nonskilled care. Benefits should also cover home health and assisted living care without requiring a prior hospital stay.
No exclusion for particular illnesses like Alzheimer's or dementia.
Benefit triggers specify when coverage begins.
Waiver of premium when coverage begins.
Your annual premium can't be raised unless it's raised for every policyholder in the state.
The policy is tax qualified, making the premium tax deductible and the benefits not subject to taxes.
A good insurance agent can save you time and money and help you determine what types and amounts of coverage you may need.
All in all I highly recommend this book to any young or inexperienced investors looking to get their bearings and make wise investment decisions.
October 26, 2021
A Boglehead is an investor who follows the philosophy of Vanguard founder John Bogle. This book contains simple, honest, and wise financial advice based on that philosophy. Contrary to active investing, with its market timing and performance chasing, the Bogleheads espouse passive investing, and base their strategy on Efficient Market Theory (EMT) and Modern Portfolio Theory (MPT). I’ve considered myself a Boglehead since 2008, when I stumbled upon the Bogleheads forum and moved my money into Vanguard funds. I highly recommend this book to beginning investors (it's pretty basic).
The three authors present not only their own opinions and Bogle’s, but include many quotes from big names like William Bernstein, Warren Buffett, Paul Farrell, Richard Ferri, Burton Malkiel, Bill Schultheis, Charles Schwab, Larry Swedroe, and Jason Zweig.
The book has an appendix of excellent investing books.
The Bogleheads’ tenants
• Choose a sound financial lifestyle.
• Start early and invest regularly.
• Know what you’re buying.
• Set goals and work toward them.
• Use index funds.
• Keep costs and taxes low.
• Rebalance.
• Diversify your portfolio.
Bonds
• Muni bonds make sense for those in higher tax brackets (25%+), but compare yields to the after-tax return on taxable bonds. Morningstar has a calculator.
• Hold your age in bonds, plus or minus based on risk tolerance.
• Use short or intermediate-term bond funds.
Asset allocation
• Use life-cycle/target date funds, or copy them in building your portfolio.
• The noncorrelation of REITs makes them worth holding in larger portfolios. Make them a max of 10% of equities allocation.
• Make international stocks about 20% of equities.
Insurance
• Don’t buy life insurance until you have dependents. Then, buy term.
• Seriously consider disability coverage. Buy as much as you think you’ll need. Consider purchasing with after-tax dollars.
• Property insurance should be replacement-cost.
• A personal liability umbrella policy of $1 million is a must-have.
• Choose an insurance company with an A.M. Best rating of A or better.
Miscellaneous
• When hiring a financial advisor, hire a fee-only (not commission- or fee-based) CFA or CFP.
• In over 200 years, there’ve been no 15-year periods where US stocks have lost money.
The three authors present not only their own opinions and Bogle’s, but include many quotes from big names like William Bernstein, Warren Buffett, Paul Farrell, Richard Ferri, Burton Malkiel, Bill Schultheis, Charles Schwab, Larry Swedroe, and Jason Zweig.
The book has an appendix of excellent investing books.
The Bogleheads’ tenants
• Choose a sound financial lifestyle.
• Start early and invest regularly.
• Know what you’re buying.
• Set goals and work toward them.
• Use index funds.
• Keep costs and taxes low.
• Rebalance.
• Diversify your portfolio.
Bonds
• Muni bonds make sense for those in higher tax brackets (25%+), but compare yields to the after-tax return on taxable bonds. Morningstar has a calculator.
• Hold your age in bonds, plus or minus based on risk tolerance.
• Use short or intermediate-term bond funds.
Asset allocation
• Use life-cycle/target date funds, or copy them in building your portfolio.
• The noncorrelation of REITs makes them worth holding in larger portfolios. Make them a max of 10% of equities allocation.
• Make international stocks about 20% of equities.
Insurance
• Don’t buy life insurance until you have dependents. Then, buy term.
• Seriously consider disability coverage. Buy as much as you think you’ll need. Consider purchasing with after-tax dollars.
• Property insurance should be replacement-cost.
• A personal liability umbrella policy of $1 million is a must-have.
• Choose an insurance company with an A.M. Best rating of A or better.
Miscellaneous
• When hiring a financial advisor, hire a fee-only (not commission- or fee-based) CFA or CFP.
• In over 200 years, there’ve been no 15-year periods where US stocks have lost money.
January 11, 2015
Great last paragraph in the introduction from the authors (Taylor Larimore, Mel Lindauer, and Michael LeBoeuf):
"We have no hidden agendas. We aren't financial planners or money manager looking for clients. We don't have a high-powered, get-rich-quick weekend seminar to sell you. We are all well over 70 years of age, financially secure and haven't missed a meal yet. Our primary mission is to simply to support Jack Bogle's mission by teaching others how to get the best long-term return on their investment dollars".
One of the better introduction to investing books that I have read. I think it will be worthwhile to dedicate some time to The Bogleheads and the Boglehead's Forum.
"We have no hidden agendas. We aren't financial planners or money manager looking for clients. We don't have a high-powered, get-rich-quick weekend seminar to sell you. We are all well over 70 years of age, financially secure and haven't missed a meal yet. Our primary mission is to simply to support Jack Bogle's mission by teaching others how to get the best long-term return on their investment dollars".
One of the better introduction to investing books that I have read. I think it will be worthwhile to dedicate some time to The Bogleheads and the Boglehead's Forum.
June 27, 2021
Useless book if you do not live in the US. It's like "The simple path to wealth" from J.L. Collins, but even worse. More than half of the book is only relevant if you live in the US: I Bonds, TIPS, 401k's, Roths... Complete chapters, like saving for college (everything you ever wanted to know about Coverdell education savings accounts!), insurance (learn how to optimize health insurance!), estate planning (including ways to avoid probate by using POD and TOD wills!) and other completely USELESS information if you are not American.
This book is also not optimized for the reader. I don't think the authors knew who they were writing this for. I think they just wrote down everything they knew, and that would be that. Who is the reader for a book that both explains all the really basic information about stocks vs bonds, talks about how to save for college, explains how much you can take out when you're retired and deal with estate planning for your children? Who is this book written for? If you have just begun investing, who cares about what kind of will is optimal or about warnings that you shouldn't overspend or underspend in retirement? If you are about to retire, who cares about basic information about stocks or about putting away as much you can when you are young? It's a big waste of time.
This book, if it should be called something should at LEAST be called "The Boglehead's Guide to Investing FOR AMERICANS". I cannot comprehend how they keep on talking about their website, bogleheads.org, KNOWING that it is an international community - they even mention this in the end: "We're geographically diversified, with Bogleheads in just about every nook and cranny in the United States. We also have many foreign Bogleheads, including fom Canada, Australia, Hong Kong, India, Japan and a number of other countries throughout Europe, Asia and the Far East." If that is so, why write a book called "The Boglehead's Guide to Investing" that is ENTIRELY focused on the US tax and legal system? It makes no sense and is almost false advertising.
I recommend other books like "A random walk on wall street" or the book from Bogle himself, "The little book of common sense investing" as good alternatives to this book, both for Americans and especially for non-Americans. In my opinion, "The Boglehead's guide to investing" doesn't need to exist. Read something better.
This book is also not optimized for the reader. I don't think the authors knew who they were writing this for. I think they just wrote down everything they knew, and that would be that. Who is the reader for a book that both explains all the really basic information about stocks vs bonds, talks about how to save for college, explains how much you can take out when you're retired and deal with estate planning for your children? Who is this book written for? If you have just begun investing, who cares about what kind of will is optimal or about warnings that you shouldn't overspend or underspend in retirement? If you are about to retire, who cares about basic information about stocks or about putting away as much you can when you are young? It's a big waste of time.
This book, if it should be called something should at LEAST be called "The Boglehead's Guide to Investing FOR AMERICANS". I cannot comprehend how they keep on talking about their website, bogleheads.org, KNOWING that it is an international community - they even mention this in the end: "We're geographically diversified, with Bogleheads in just about every nook and cranny in the United States. We also have many foreign Bogleheads, including fom Canada, Australia, Hong Kong, India, Japan and a number of other countries throughout Europe, Asia and the Far East." If that is so, why write a book called "The Boglehead's Guide to Investing" that is ENTIRELY focused on the US tax and legal system? It makes no sense and is almost false advertising.
I recommend other books like "A random walk on wall street" or the book from Bogle himself, "The little book of common sense investing" as good alternatives to this book, both for Americans and especially for non-Americans. In my opinion, "The Boglehead's guide to investing" doesn't need to exist. Read something better.
February 19, 2018
Here's what I learned by chapter:
Ch 8 Asset Allocation
* Investors will benefit from an international stock allocation of 20-40% of their equity allocation.
* REIT funds shouldn't exceed 10% of your equity allocation.
* Don't use high-yield bonds since they are more like stocks, waste of space in retirement accounts
* TIPS is a type of bond: VIPSX for low risk/return and VTAPX for higher risk/return
* High-income taxpayers should consider tax-exempt (municipal) bonds when tax-advantaged accounts are full
* Consider VBMFX (or VBTLX for admiral)
* VGTSX (VTIAX for admiral) is index of entire international stocks (equivalent to VTSAX)
Ch 9 Costs Matter
* The expense ratio is the only reliable predictor of future mutual fund performance.
Ch 10 - Taxes Part One
* Dividends and capital funds are taxed at federal level.
* Bonds are taxed at ordinary income tax rates whereas dividends are taxed less (0-20% depending on income level).
* Put stocks in taxable account and bonds in tax-advantaged.
* Check with fund to see if they primarily in stocks that issue dividends.
* Capital gain occurs when you sell a stock/bond for profit.
* Before purchasing a fund, look at unrealized gains or losses.
* Long-term capital gains have max tax of 15%, whereas short-term capital gains have highest marginal income tax rate.
* Look for funds with less turnover.
* Avoid selling mutual funds in taxable accounts otherwise it's subject to transaction costs and capital gains tax.
* Buy funds you can hold forever.
* Buy fund shares after the distribution date, or sell right before it.
* Harvest tax losses (sell losing securities to obtain tax losses to reduce current/future income taxes).
* Max allowed for tax loss harvesting is 3k per year.
* A Municipal bond invests >80% of assets in federal tax-exempt bonds.
* Compare yield of tax-exempt bond vs. yield of equivalent taxable bond fund (minus taxes you'd pay). Morningstar.com has tool for this.
* US Savings Bonds are tax-deferred for 30 years and are free from state taxes.
Ch 11 - Taxes Part Two
* Least tax efficient: international bonds, TIPS, REIT, small-blend stocks
* Most tax efficient: municipal bonds, stock index funds, large-cap stocks, international stocks
Ch 17 - Track Your Progress and Rebalance When Necessary
* Increased returns from not rebalancing were found to be small/nonexistent when compared to the additional risk taken on
* Rebalancing in a taxable account produces capital gains taxes.
* Investors who rebalanced investments every 18 months reaped many of the same benefits as those who did more often, but with less costs.
* Don't sell an asset if you've held it for less than 12 months.
* Rebalance tax-deferred accounts first/more often since there are no tax implications.
* Use tax-loss harvesting as part of your rebalancing strategy - sell your losers by Dec 31st.
Ch 8 Asset Allocation
* Investors will benefit from an international stock allocation of 20-40% of their equity allocation.
* REIT funds shouldn't exceed 10% of your equity allocation.
* Don't use high-yield bonds since they are more like stocks, waste of space in retirement accounts
* TIPS is a type of bond: VIPSX for low risk/return and VTAPX for higher risk/return
* High-income taxpayers should consider tax-exempt (municipal) bonds when tax-advantaged accounts are full
* Consider VBMFX (or VBTLX for admiral)
* VGTSX (VTIAX for admiral) is index of entire international stocks (equivalent to VTSAX)
Ch 9 Costs Matter
* The expense ratio is the only reliable predictor of future mutual fund performance.
Ch 10 - Taxes Part One
* Dividends and capital funds are taxed at federal level.
* Bonds are taxed at ordinary income tax rates whereas dividends are taxed less (0-20% depending on income level).
* Put stocks in taxable account and bonds in tax-advantaged.
* Check with fund to see if they primarily in stocks that issue dividends.
* Capital gain occurs when you sell a stock/bond for profit.
* Before purchasing a fund, look at unrealized gains or losses.
* Long-term capital gains have max tax of 15%, whereas short-term capital gains have highest marginal income tax rate.
* Look for funds with less turnover.
* Avoid selling mutual funds in taxable accounts otherwise it's subject to transaction costs and capital gains tax.
* Buy funds you can hold forever.
* Buy fund shares after the distribution date, or sell right before it.
* Harvest tax losses (sell losing securities to obtain tax losses to reduce current/future income taxes).
* Max allowed for tax loss harvesting is 3k per year.
* A Municipal bond invests >80% of assets in federal tax-exempt bonds.
* Compare yield of tax-exempt bond vs. yield of equivalent taxable bond fund (minus taxes you'd pay). Morningstar.com has tool for this.
* US Savings Bonds are tax-deferred for 30 years and are free from state taxes.
Ch 11 - Taxes Part Two
* Least tax efficient: international bonds, TIPS, REIT, small-blend stocks
* Most tax efficient: municipal bonds, stock index funds, large-cap stocks, international stocks
Ch 17 - Track Your Progress and Rebalance When Necessary
* Increased returns from not rebalancing were found to be small/nonexistent when compared to the additional risk taken on
* Rebalancing in a taxable account produces capital gains taxes.
* Investors who rebalanced investments every 18 months reaped many of the same benefits as those who did more often, but with less costs.
* Don't sell an asset if you've held it for less than 12 months.
* Rebalance tax-deferred accounts first/more often since there are no tax implications.
* Use tax-loss harvesting as part of your rebalancing strategy - sell your losers by Dec 31st.
October 31, 2014
Reading The Millionaire Next Door was my first step to building a responsible financial lifestyle; The Bogleheads Guide to Investing took me to the next level. Both of their books have their flaws, but they do a great job at showing the bigger picture. This review will be focussed on the last book, yet I recommend you to read The Millionaire Next Door before you read The Bogleheads Guide to Investing.
What did I like about Bogleheads Guide to Investing?
The book is accessible for the layman, and comes with concise and clear explanations of common investment vehicles. According to the authors, bonds and mutual funds are the way to go. Diversification means risk management; long-term investing is the way to go and you ought to keep your emotions out of the door. No speculating; but investing. This message is repeated, repeated, and repeated again. Accompanied with wonderful quotes and clear examples.
This is a book you want to buy, highlight and mark.
What didn't I like about Bogleheads Guide to Investing?
For starters, it's aimed at the American investor. Many chapters and paragraphs are useless for e.g. European investors. We deal with different tax regulations. I'm Dutch, and I've read the chapters on tax because of my interest in American laws; but for practical purposes, it's useless.
Also, the authors seemed to be fond of repeating the same ideas over and over again. But hey, maybe that's exactly what you need when it comes to investing; an idea that's becomes part of your system, preventing you from making irrational choices. Although I noticed it, it didn't bother me too much. It's a rather short book anyway.
Last, but definitely not least, there seems to be an awefull lot of self-promotion on Vanguard, making it feel biased.
Nonetheless, definitely would recommend for the starting investor, 3,5/5
What did I like about Bogleheads Guide to Investing?
The book is accessible for the layman, and comes with concise and clear explanations of common investment vehicles. According to the authors, bonds and mutual funds are the way to go. Diversification means risk management; long-term investing is the way to go and you ought to keep your emotions out of the door. No speculating; but investing. This message is repeated, repeated, and repeated again. Accompanied with wonderful quotes and clear examples.
This is a book you want to buy, highlight and mark.
What didn't I like about Bogleheads Guide to Investing?
For starters, it's aimed at the American investor. Many chapters and paragraphs are useless for e.g. European investors. We deal with different tax regulations. I'm Dutch, and I've read the chapters on tax because of my interest in American laws; but for practical purposes, it's useless.
Also, the authors seemed to be fond of repeating the same ideas over and over again. But hey, maybe that's exactly what you need when it comes to investing; an idea that's becomes part of your system, preventing you from making irrational choices. Although I noticed it, it didn't bother me too much. It's a rather short book anyway.
Last, but definitely not least, there seems to be an awefull lot of self-promotion on Vanguard, making it feel biased.
Nonetheless, definitely would recommend for the starting investor, 3,5/5
November 30, 2008
This book is perfect for anyone who wants/needs to learn the basics of investing. This book isn't about getting rich quick or beating the market every year. It's about the fundamentals of setting long-term goals and then allocating your financial resources in the simplest way possible to achieve those goals. It covers the basics of everything from investment options and asset allocation to tax implications and how much insurance you should have. It's written in such a way that it's totally accessible for anyone, regardless of their familiarity with the subject-matter. Bottom line it's a great book for entry-level investors.
December 30, 2016
I think the most important thing to address here is why you should read this book instead of any of the 3 million other investing books out there in the world. And the reason is, these authors stand to gain nothing from it. They even spill some ink in the introduction telling you to just borrow this book from a friend or the library if you're so inclined.
99% of the authors of investing books are just advertising themselves. They want you to buy their other 20 books, take their pricey classes, subscribe to their newsletters about hot stock picks, whatever. Those books are the equivalent of those internet comments in ALL CAPS that MY MOTHER EARNED $75/HR WORKING FROM HOME ~`~`~`~ YOU CAN TOO. Reading the comment may be free entertainment, but you probably wouldn't click on the link, would you?
If you're inclined to believe that get rich quick schemes work, I'm not going to waste my breath trying to convince you otherwise.
But if the head on your shoulders tells you that all sounds kind of scammy, and that if someone knew the secrets to stock picking and timing the market they would probably keep it to themselves rather than crow about it all over MSNBC, then this is the book for you. This is the good, sound, sage advice your financially successful wise old grandmother would have given you when you got your first job...if you were lucky enough to have one of those.
If you didn't, and you're looking at your 401k fund options American Century NT Mid Cap Value Fund and BlackRock Large Cap Core Fund and going, "HUH?", read this book.
[The short answer is, just pick the ones with the absolute lowest fees.]
This is a pretty good introduction to investing. It's sort of a personal finance 201 course - only useful if you've already done things like set a budget, handled credit card debt, etc. It glosses over those issues and assumes you are already on board with saving some reasonable amount of each paycheck- say 10% or more -and wondering what to DO with it after that.
It covers the basics - stocks, bonds, mutual funds, asset allocation, diversification - in a beginner friendly way, but backed up with plenty of data. Their points are almost all about how important it is to invest in index funds- first, because no one beats the market (they harp on this over and over and over again, but honestly, the world as a whole could stand to hear plenty more harping on the subject so I have no problem with it), because management costs erode returns exponentially over time, because taxes are even worse than management costs, and so on. For each point they run the numbers for two contrasting situations. For example, they consider the same portfolio over 20 years, once calculating the final balance if taxes are managed properly (namely, bond funds in tax deferred accounts), and once calculating the final balance if the opposite is done. Then they put the numbers in a table next to each other and let you see for yourself what the impact is. It doesn't overwhlem with a dozen examples and what-ifs and 20 different mathematical ways of stating the same result. Clear, straight, to the point.
The book also briefly covers other topics like insurance, saving for college, managing a windfall, and estate planning with basic info to get you started and then suggestions for further research if necessary in your situation.
Overall, a great introduction to the smart way to manage your money. But if you're already on board the Boglehead train [so named, by the way, after Jack Bogle, inventor of the index fund], there's not much new here for you. Unless you just enjoy having your opinions validated. :)
99% of the authors of investing books are just advertising themselves. They want you to buy their other 20 books, take their pricey classes, subscribe to their newsletters about hot stock picks, whatever. Those books are the equivalent of those internet comments in ALL CAPS that MY MOTHER EARNED $75/HR WORKING FROM HOME ~`~`~`~ YOU CAN TOO. Reading the comment may be free entertainment, but you probably wouldn't click on the link, would you?
If you're inclined to believe that get rich quick schemes work, I'm not going to waste my breath trying to convince you otherwise.
But if the head on your shoulders tells you that all sounds kind of scammy, and that if someone knew the secrets to stock picking and timing the market they would probably keep it to themselves rather than crow about it all over MSNBC, then this is the book for you. This is the good, sound, sage advice your financially successful wise old grandmother would have given you when you got your first job...if you were lucky enough to have one of those.
If you didn't, and you're looking at your 401k fund options American Century NT Mid Cap Value Fund and BlackRock Large Cap Core Fund and going, "HUH?", read this book.
[The short answer is, just pick the ones with the absolute lowest fees.]
This is a pretty good introduction to investing. It's sort of a personal finance 201 course - only useful if you've already done things like set a budget, handled credit card debt, etc. It glosses over those issues and assumes you are already on board with saving some reasonable amount of each paycheck- say 10% or more -and wondering what to DO with it after that.
It covers the basics - stocks, bonds, mutual funds, asset allocation, diversification - in a beginner friendly way, but backed up with plenty of data. Their points are almost all about how important it is to invest in index funds- first, because no one beats the market (they harp on this over and over and over again, but honestly, the world as a whole could stand to hear plenty more harping on the subject so I have no problem with it), because management costs erode returns exponentially over time, because taxes are even worse than management costs, and so on. For each point they run the numbers for two contrasting situations. For example, they consider the same portfolio over 20 years, once calculating the final balance if taxes are managed properly (namely, bond funds in tax deferred accounts), and once calculating the final balance if the opposite is done. Then they put the numbers in a table next to each other and let you see for yourself what the impact is. It doesn't overwhlem with a dozen examples and what-ifs and 20 different mathematical ways of stating the same result. Clear, straight, to the point.
The book also briefly covers other topics like insurance, saving for college, managing a windfall, and estate planning with basic info to get you started and then suggestions for further research if necessary in your situation.
Overall, a great introduction to the smart way to manage your money. But if you're already on board the Boglehead train [so named, by the way, after Jack Bogle, inventor of the index fund], there's not much new here for you. Unless you just enjoy having your opinions validated. :)
March 10, 2021
This book offers a mix of financial planning advice and investment advice. The financial planning advice is of the Captain Obvious variety - "pay off credit card and high-interest debts", "establish an emergency fund", etc. Not super useful, but not harmful either. The investment advice, in turn, is all over the place. "Buy index funds because passive beats active" - fair enough, lots of research corroborate that. But then you can add "a value and/or a small-cap fund", and Real Estate Investment Trusts can be "a worthwhile addition to larger portfolios". What gives? Either passive beats active, in which case you shouldn't tilt your portfolio towards any specific factors or industries, or it doesn't, in which case you should do stock picking.
Not to mention the magical numbers. "We suggest that REIT funds not exceed 10 percent of your equity allocation." Based on... what? Did the authors use efficient frontier to get to that number? If so, what were the other assets in the portfolio? Where is the data coming from? How long is their time series? "We believe that investors will benefit from an international stock allocation os 20 percent to 40 percent of their equity allocation." Why? The US is 56% of the world's stock market. Why put more than 56% of your equity allocation in US stocks? No explanation is given.
(A minor point, but: if you're presenting the results of some paper then just cite the damn thing. "One of [Financial Research Corporation's] most important studies was..." isn't helpful, it makes us waste time googling around, sometimes to no avail.)
(An even smaller point: "Despite the statistical impossibility, at least 70 percent of Americans believe they are above average." That's not a statistical impossibility if your average is the mean and not the median. Not important in itself, but I don't want to take investment advice from people who don't understand how averages work.)
I did learn new things. I had never thought about how rebalancing forces you to sell high and buy low. This was the first time I saw hard data comparing the returns to different rebalancing strategies. This was also the first time I saw hard data on loss harvesting (and learned that it does work, at least in the US). But that's maybe 5-10 paragraphs out of a 311-page book. (I also learned a lot about how the US government taxes equity and bonds, but most of that is irrelevant to us foreigners.)
Overall you're much better off by reading Burton Malkiel's "A Random Walk Down Wall Street". Same general point - passive beats active - but a lot more evidence-based and internally consistent.
Not to mention the magical numbers. "We suggest that REIT funds not exceed 10 percent of your equity allocation." Based on... what? Did the authors use efficient frontier to get to that number? If so, what were the other assets in the portfolio? Where is the data coming from? How long is their time series? "We believe that investors will benefit from an international stock allocation os 20 percent to 40 percent of their equity allocation." Why? The US is 56% of the world's stock market. Why put more than 56% of your equity allocation in US stocks? No explanation is given.
(A minor point, but: if you're presenting the results of some paper then just cite the damn thing. "One of [Financial Research Corporation's] most important studies was..." isn't helpful, it makes us waste time googling around, sometimes to no avail.)
(An even smaller point: "Despite the statistical impossibility, at least 70 percent of Americans believe they are above average." That's not a statistical impossibility if your average is the mean and not the median. Not important in itself, but I don't want to take investment advice from people who don't understand how averages work.)
I did learn new things. I had never thought about how rebalancing forces you to sell high and buy low. This was the first time I saw hard data comparing the returns to different rebalancing strategies. This was also the first time I saw hard data on loss harvesting (and learned that it does work, at least in the US). But that's maybe 5-10 paragraphs out of a 311-page book. (I also learned a lot about how the US government taxes equity and bonds, but most of that is irrelevant to us foreigners.)
Overall you're much better off by reading Burton Malkiel's "A Random Walk Down Wall Street". Same general point - passive beats active - but a lot more evidence-based and internally consistent.
June 6, 2022
Este no debería ser tu primer libro sobre inversión, pero puede que sea el último.
Se trata de una guía muy práctica sobre las mejores prácticas de la inversión pasiva. Si te interesa invertir en bolsa a diario e intentar predecir los movimientos futuros del mercado, este NO es el libro que deberías leer. Si, en cambio, tu objetivo es poder tener una estrategia sólida de inversión a largo plazo, que requiera un esfuerzo consciente pero limitado a unos pocos días al año, la filosofía de Jack Boggle (y de ahí los Boggleheads) es simplemente ideal.
Los principios de inversión que recomiendan no requieren que “creas” en nadie, ni que subjetivamente “sientas” cuál es el mejor camino. Todo lo contrario. Esta estrategia de inversión es completamente validable. Si sabes programación básica, en unos pocos días podrás validar los fundamentos de esta estrategia. Si no, existen herramientas gratuitas que harán el trabajo por ti.
Algunos elementos claves en los que se hace mucho énfasis son: el poder del interés compuesto, la necesidad de ajustar por inflación el retorno futuro, stocks indexados vs stocks individuales, el valor de la diversificación, estrategias de revisión periódica de inversión, y el valor de la inversión a largo vs corto plazo.
Adicionalmente hay una serie de tips bastante útiles relacionados a fuentes usuales de pérdida de capital (desastres, eventos imprevistos) y cómo controlarlos y considerarlos dentro de tu plan de inversión.
El primer cuarto del libro es tal vez el más pesado de leer y dificulta el continuar la lectura. El resto del libro es excepcional. Debe verse, eso si, como un cookbook o libro de referencia, por lo que la fluidez entre cada capítulo no es tan elegante como narraciones basadas en historias.
Hay varias secciones donde hay mucho detalle en consideraciones que solo aplican a Estados Unidos, sobretodo beneficios fiscales. Esto se puede saltar sin problema sin perjudicar el resto de la lectura.
Se trata de una guía muy práctica sobre las mejores prácticas de la inversión pasiva. Si te interesa invertir en bolsa a diario e intentar predecir los movimientos futuros del mercado, este NO es el libro que deberías leer. Si, en cambio, tu objetivo es poder tener una estrategia sólida de inversión a largo plazo, que requiera un esfuerzo consciente pero limitado a unos pocos días al año, la filosofía de Jack Boggle (y de ahí los Boggleheads) es simplemente ideal.
Los principios de inversión que recomiendan no requieren que “creas” en nadie, ni que subjetivamente “sientas” cuál es el mejor camino. Todo lo contrario. Esta estrategia de inversión es completamente validable. Si sabes programación básica, en unos pocos días podrás validar los fundamentos de esta estrategia. Si no, existen herramientas gratuitas que harán el trabajo por ti.
Algunos elementos claves en los que se hace mucho énfasis son: el poder del interés compuesto, la necesidad de ajustar por inflación el retorno futuro, stocks indexados vs stocks individuales, el valor de la diversificación, estrategias de revisión periódica de inversión, y el valor de la inversión a largo vs corto plazo.
Adicionalmente hay una serie de tips bastante útiles relacionados a fuentes usuales de pérdida de capital (desastres, eventos imprevistos) y cómo controlarlos y considerarlos dentro de tu plan de inversión.
El primer cuarto del libro es tal vez el más pesado de leer y dificulta el continuar la lectura. El resto del libro es excepcional. Debe verse, eso si, como un cookbook o libro de referencia, por lo que la fluidez entre cada capítulo no es tan elegante como narraciones basadas en historias.
Hay varias secciones donde hay mucho detalle en consideraciones que solo aplican a Estados Unidos, sobretodo beneficios fiscales. Esto se puede saltar sin problema sin perjudicar el resto de la lectura.
October 15, 2014
This is the second book I've read in the series by the same author's involving Boglehead's and their philosophy of investing. I'm so glad I found this group of un-selfish and knowledgeable individuals who really speak frankly and knowledgeably about the in and outs of investing your money. If you need free, in-depth, investment planning guidance, look no further.
April 13, 2015
I have to admit that I only read about half this book because I am not at a place in my life where I can start investing. That being said, I did like what I read, and I hope to refer back to this book when the time comes that I'm ready to open that IRA.
May 4, 2022
Really useful information! And I enjoyed the witty humor. I feel like everyone needs to be taught this in high school. I now feel better about investing my savings while avoiding all the scams and misguided advice out there. Written for the layperson. Thank you to the authors!
June 17, 2019
A great resource
This is a comprehensive book on personal finance and investing. It is accessible to beginners, but definitely goes into more advanced topics as well. I am grateful I decided to purchase this book so that I have it as a reference in the future.
The term Bogelhead comes from Jack Bogel, founder of Vanguard and the inventor of the index fund. Bogelheads tend to follow Bogel's advocacy for low cost investing through index funds, buying and holding funds, keeping things simple, and looking out for the average investor.
This is a comprehensive book on personal finance and investing. It is accessible to beginners, but definitely goes into more advanced topics as well. I am grateful I decided to purchase this book so that I have it as a reference in the future.
The term Bogelhead comes from Jack Bogel, founder of Vanguard and the inventor of the index fund. Bogelheads tend to follow Bogel's advocacy for low cost investing through index funds, buying and holding funds, keeping things simple, and looking out for the average investor.
November 6, 2022
Lots of good information. I do not recommend listening to it on audiobook, though, because quite frankly listening to a list of mutual funds is not exciting.
April 9, 2024
Absolute must read for everyone! Touches various aspects of personal finance and gave one of the most important tip which stuck with me : "Always book a refundable flight"!
December 5, 2023
Could have been significantly condensed. Also as an Australian citizen, a lot of the book was irrelevant to me as the legislation for taxes etc are different from the USA centred narrative - which took up a big chunk as the book went into specific details that are probably out of date now.
January 18, 2017
Being new to the subject of investing but having taken a keen interest in it over the past year after opening up an Acorns account and learning about asset allocation and portfolio strategies, I wanted to learn more. I initially picked Burton Malkiel's classic, A Random Walk Down Wall Street but it proved to be too daunting and intimidating for a novice like myself, without even starting the book. I also had this book, The Bogleheads' Guide to Investing, which I picked up from the library to read after. But I decided to switch the order and I'm glad I did!
The Bogleheads' Guide to Investing is quite a dense book filled with a lot of useful, practical information and advice. It took me a couple of weeks to finish it because every now and then I had to look up something on the internet to gain a more in-depth understanding and took notes. Lindauer, Larimore, and LeBoeuf take you through the whole lifecycle of investing - from saving, to establishing a sound financial plan, to achieving your goals, and following through and staying the course. One of the best books I've read in finance that is no-BS, simple but well detailed and written. Investing truly is simpler than Wall Street makes it look, provided you take the time to become an educated investor. Highly recommended!
The Bogleheads' Guide to Investing is quite a dense book filled with a lot of useful, practical information and advice. It took me a couple of weeks to finish it because every now and then I had to look up something on the internet to gain a more in-depth understanding and took notes. Lindauer, Larimore, and LeBoeuf take you through the whole lifecycle of investing - from saving, to establishing a sound financial plan, to achieving your goals, and following through and staying the course. One of the best books I've read in finance that is no-BS, simple but well detailed and written. Investing truly is simpler than Wall Street makes it look, provided you take the time to become an educated investor. Highly recommended!
September 1, 2015
A very basic book targets for beginner in investing. Especially suitable for Americans. Talked about the importance of saving, the difference of investing options, and further explained why we should focus on index funds. Other chapters are good for reading Asset Allocations and rebalancing your portfolio.
June 9, 2017
A great beginner's guide to financial planning. I recommend reading the last chapter first for the distilled version of the book. That may be all you need and then you can visit the appendices for more advanced resource recommendations. Or you can flip to the relevant chapter discussing whatever topic you are most interested in.
September 21, 2015
It's a well put together compendium of investing advice. It's really a one stop shop for getting your head on straight when it comes to money management. I would recommend it as a good first book to every person who has any money at all.
May 25, 2020
great all-around guide to investing. digs deeper than surface level without getting lost in the weeds.
February 5, 2024
If you could only have one book to guide your financial life by… make it this one. The authors provide comprehensive and sensible advice on every topic from age 18-80. I can’t recommend it enough.
A few notes/advisements that stuck out to me:
- 5/100 Americans are able to sustain their current lifestyle in retirement
- Commit future pay increases to maxing out retirement accounts
- Index funds are best for most investors most of the time
- Don’t buy anything that you don’t fully understand
- Very, very few actively managed funds outperform indexes due to their diversification and low costs
- The only consistent thing about the stock market is long-term gains over 20+ years
- Keep expense ratios under 1%
- Asset allocation determines ~77% of performance
- Much of investing media is sensationalist and dangerous
- Timing the market is futile
- Treat money the same whether it comes from income, tax return, bonus, etc.
- Investing should not be exciting
- Do not mix insurance and investing (insurance is for protection & investing is for wealth building)
- Stay the course
And many more practical tips for investing, insurance, taxes, and everything else life throws at us.
A few notes/advisements that stuck out to me:
- 5/100 Americans are able to sustain their current lifestyle in retirement
- Commit future pay increases to maxing out retirement accounts
- Index funds are best for most investors most of the time
- Don’t buy anything that you don’t fully understand
- Very, very few actively managed funds outperform indexes due to their diversification and low costs
- The only consistent thing about the stock market is long-term gains over 20+ years
- Keep expense ratios under 1%
- Asset allocation determines ~77% of performance
- Much of investing media is sensationalist and dangerous
- Timing the market is futile
- Treat money the same whether it comes from income, tax return, bonus, etc.
- Investing should not be exciting
- Do not mix insurance and investing (insurance is for protection & investing is for wealth building)
- Stay the course
And many more practical tips for investing, insurance, taxes, and everything else life throws at us.
August 6, 2020
A fantastic overview of an investment strategy that makes the case for mostly buying index funds/mutual funds/ETFs and holding onto them. This book has helpful explanations of key investment concepts, offers a fairly helpful strategy for the somewhat risk-averse, and backs it up with historical data. It also contains helpful advice for creating more tax-efficient portfolios, diversifying your investments, and more. However, the book isn't really all that geared toward young investors, and much of the book covers strategies that would be more relevant for people closer to retirement age rather than those just getting started with investing.
The core of the book for young investors can be summed up as this: the best strategy for young investors is to buy index funds that generally match the market (such as a total stock index & total bond index) and hold onto it.
This is definitely a book I'll be picking up a decade or so from now to re-read portions that will be more relevant in my thirties—hopefully with a new edition at that point!
The core of the book for young investors can be summed up as this: the best strategy for young investors is to buy index funds that generally match the market (such as a total stock index & total bond index) and hold onto it.
This is definitely a book I'll be picking up a decade or so from now to re-read portions that will be more relevant in my thirties—hopefully with a new edition at that point!
January 17, 2021
An excellent reference for financial wellness! This reminded me of the first good book I read on the subject of fitness, both focusing on a simple framework that emphasize the fundamentals without getting caught up in the cacophony of minor details. For investments, it's: start saving, have diverse investments, consider low-cost index funds, get insurance, and refrain from trying to time the market or gamble on hot stocks. That's about it! There are definitely details one can get into, but the book presents enough data and arguments to convince the reader that these few simple steps can get you a long way.
I was taking notes to revisit later (see my highlights) and I intend to go back to the book as needed. The details to fine-tune are around taxes, choice of funds, retirement considerations, and so on. For financially savvy individuals, this might be somewhat of a basic text, but if you find yourself in a stage of life where you are starting to think about these matters, I'd highly recommend the book.
I was taking notes to revisit later (see my highlights) and I intend to go back to the book as needed. The details to fine-tune are around taxes, choice of funds, retirement considerations, and so on. For financially savvy individuals, this might be somewhat of a basic text, but if you find yourself in a stage of life where you are starting to think about these matters, I'd highly recommend the book.
November 21, 2023
Not my style but the most interesting comment in the book
'In over 200 years, there’ve been no 15-year periods where US stocks have lost money'
Basically the collective of high-quality stocks
get beaten up in
2-year periods
5-year periods, and
10-year periods
but within 15 years, things crawl out of the ditch
..........
I would agree since some have speculated Commercial Real Estate and REITs in Commercial Property have been destroyed by the virus, inflation, and interest rates
and they think it could be 15 to 20 years to recover totally
So, as long as something has high quality assets and the financials of the company were very well run, most recover
and some do go bankrupt or get taken over in severe financial stress
........
in a way i think i've said this is the best of the dumb books....
I'm totally against the philosophy of just dump your money into a decent fund bunkum
I just think you need to just pick value stocks
super high quality
good growth long term
and cheap without any big problems on their books
...........
...........
think of the alternatives
- buy a low quality stock
- buy a stock with horrific growth
- buy a really really expensive stock with no strong reason to do so
buy a cult fund because it's safe, sigh
makes me think Bogle is the indexed fund version of the gold bugs with their gold buggery
who have 36 safety deposit boxes full of gold
and you make 87 dollars a year on average
cept once in a blue moon
............
dumping it in Berkshire Hathaway is a lot smarter, i think
and if you're totally nuts, go into QQQ and then you're like glue sniffing Silicon Valley-style with the roller coaster ride, and 50% drops not 15% drops
'In over 200 years, there’ve been no 15-year periods where US stocks have lost money'
Basically the collective of high-quality stocks
get beaten up in
2-year periods
5-year periods, and
10-year periods
but within 15 years, things crawl out of the ditch
..........
I would agree since some have speculated Commercial Real Estate and REITs in Commercial Property have been destroyed by the virus, inflation, and interest rates
and they think it could be 15 to 20 years to recover totally
So, as long as something has high quality assets and the financials of the company were very well run, most recover
and some do go bankrupt or get taken over in severe financial stress
........
in a way i think i've said this is the best of the dumb books....
I'm totally against the philosophy of just dump your money into a decent fund bunkum
I just think you need to just pick value stocks
super high quality
good growth long term
and cheap without any big problems on their books
...........
...........
think of the alternatives
- buy a low quality stock
- buy a stock with horrific growth
- buy a really really expensive stock with no strong reason to do so
buy a cult fund because it's safe, sigh
makes me think Bogle is the indexed fund version of the gold bugs with their gold buggery
who have 36 safety deposit boxes full of gold
and you make 87 dollars a year on average
cept once in a blue moon
............
dumping it in Berkshire Hathaway is a lot smarter, i think
and if you're totally nuts, go into QQQ and then you're like glue sniffing Silicon Valley-style with the roller coaster ride, and 50% drops not 15% drops
May 1, 2021
The Bible of investing for the average person. This book offers great advice on how to take control of your financial future and concrete examples on how to start. Unlike others, this book preaches keeping your investments as simple as possible. It gives you the basics on everything from stocks, bonds, insurance, taxes, and more. It is a jumping off point to see what you need to learn more about and resources to use in your future finance education. I will always recommend this book. My only caution is that I might not choose this book as my first ever finance read as it does go into some more complex ideas if you are just learning the absolute basics. If you get stuck on details such as different types of bonds, move on and use it as a reminder to try and learn more about those topics later.
January 15, 2023
Coming from a limited investing background, there was always a level of uneasiness and doubt when saving for retirement. While there was nothing groundbreaking in this book, I felt the succinct yet comprehensive explanation of all the major topics around saving extremely helpful.
As described at the end of the book:
“Maybe you’ve had some limited investing experience, but have always felt a bit uneasy or unsure when it comes to making those investment decisions. In this book, we’ve tried to give you solid information that you can both understand and use when you’re planning your financial future and structuring your portfolio so that it’s headed down the path to success. It’s our hope that with what you’ve learned in this book, you’ll feel much more confident when making your future investing decisions.”
As described at the end of the book:
“Maybe you’ve had some limited investing experience, but have always felt a bit uneasy or unsure when it comes to making those investment decisions. In this book, we’ve tried to give you solid information that you can both understand and use when you’re planning your financial future and structuring your portfolio so that it’s headed down the path to success. It’s our hope that with what you’ve learned in this book, you’ll feel much more confident when making your future investing decisions.”
May 24, 2022
You have to give a standing ovation to the professional money managers who have managed to convince the public at large that they have knowledge that the market and its millions of participants don't. They've made investing appear complicated and people have bought it. I always appreciate the logic test of--"If this guy could reliably and consistently beat the market, why would he share it with you? Why wouldn't he leverage himself as much as possible and capitalize on the knowledge himself?"
The authors of the Bogleheads series and the participants at the bogleheads.org forum are the biggest breath of fresh air. They share data on how statistically improbable it is to beat an index fund over any appreciable time period by hand-selecting securities, despite what the glossy pamphlet from Edward Jones claims.
The authors of the Bogleheads series and the participants at the bogleheads.org forum are the biggest breath of fresh air. They share data on how statistically improbable it is to beat an index fund over any appreciable time period by hand-selecting securities, despite what the glossy pamphlet from Edward Jones claims.
May 29, 2022
This is an excellent book on low-cost, profitable investing. How to avoid the trap of trying to beat the market. But it goes much further. It gives great advice to anyone on how to manage all of your finances, including investments in stocks, bonds, annuities, CDs; as well as how to navigate the world of finances - insurance, bank accounts, credit cards, saving, paying for financial advice, loans/mortgages, etc. Really everything you need from a frugal investor's standpoint. Worth a read whether you agree with their advice or not. I personally do agree and find that if you follow the advice in this book, you'll have be able to make sound financial decisions.
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