The Little Book of Common Sense Investing

Common Sense InvestingI found a lot to like about the The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns by John C. Bogle. Mr. Bogle was the founder of The Vanguard Group and is famous for creating the world’s first index mutual fund in 1975, the Vanguard 500 Index Fund.The logic of his index fund was to invest in a large number of stocks, all the stocks comprising the S&P 500, to make money from the combination of their growth and dividends. This is a departure from the more common view of investing in undervalued stocks to make money from an increase in their stock value.Bogle makes a convincing argument that the best way to get the value from the stock market is to invest in all the stocks by buying mutual funds based on indexes of the market that invest in all the stocks.The author points out that the real net income from stock investments is the investments’ gain minus the cost of the investments. The costs are relatively easy to determine in the case of retail brokers charging for a stock trade when buying or selling stocks. However, the costs are much more complicated for mutual funds because, in addition to the cost of the trade, in many cases there is an annual incentive sales fee for the broker for up to five years (up to 1.5% a year according to the author). I had no idea that there were hidden sales fees in addition to the purchase fee charged by the brokers. In addition to annual fees, most mutual funds typically have additional management fees of 2 to 3%. In comparison, index funds have low management fees (often .4% or lower) with no hidden sales fees.What is more disturbing is that 99% of mutual funds significantly underperform the S&P 500 index. When the excessive costs combined with the underperformance of mutual funds are compared to S&P index funds, the long term income differences are shocking. The net return after taxes of $10,000 invested in an indexed fund from 1980 to 2005 would have been $76,200 versus $16,700 for other mutual funds (for those mutual funds that survived). This represents 456% more net income to the investor with far less risk.If you are one of the 85% of investors who let their broker "manage" their assets, Bogle’s book may keep you awake at night. To sleep better, I switched to low cost, low risk index funds.The author’s perspective is unique since he invented the very first indexed funds. It is a little like reading Thomas Edison's thoughts about the light bulb. Bogle knows the issues and history of investing in indexes versus other types of mutual funds.This "common sense investing" book was easy to read and easy to understand. I highly recommend it to anyone wanting their investments to produce more income with less risk. Five Stars and hats off to the founder of index investing.

SO helpful. I went over this book with my money manager, and no surprise, he had all this BS to say about how Bogle is wrong. Needless to say, I fired the money manager. Investing has always seemed mysterious, which is what they want you to think! With this and a few other books, I feel just competent enough to do it myself (with a little help from friends and the Bogle website).

The book could make the difference between retiring early or working for the rest of your life. Jack Bogle uses interesting stories and examples to make his case. The book opposes the business model used by most 401Ks and investment firms. It would be ridiculous to think these points could be made without stories, examples, math and historic review. Anyone that gives this book less than a 5 star rating is probably a stock broker or "professional" money manager. Jack Bogle is trying to keep them out of your pocket. So there's an entire industry in fear of this book.Warren Buffett said; Jack Bogle did more for the individual investor than anyone he’s ever known.Buy it, read it and pass it on.

Highly recommend this book. I started with Peter Lynch's books and have read a number of investment books, journals, etc over the years. I've been reasonably successful, but prefer a more hands off approach if possible. It used to be exciting to watch stocks each day, but that is not conducive to peace.I think this provides a low cost way for me to invest and be successful in the market with relatively little on hands management or excessive worry, beyond the normal market ups and downs.

I absolutely love this little book. It's what people like Warren Buffett, Benjamin Graham, and Peter Lynch have been saying for years (and Bogle too in other books). Basically it boils down to you'll make as much from your investments in companies as the companies earn in profits over the long-term less transaction costs, taxes, etc. Bogle points out the folly of trying to time the market, the costs of churning your portfolio, in both commissions and taxes. He also advocates broad based index funds, which I would say is probably right for every investor who doesn't have the time or interest to investigate individual stocks. He also encourages the use of dollar cost averaging which benefits investors so much over the long-term!Bogle also points out the problems of forecasting the future exclusively by looking to the past. It's been used as a justification in housing that prices never go down, various hedge fund strategies, etc. The problem is back in the past, housing prices never went up by 10-20% a year nor did we have hedge funds moving money around by clicks on a keyboard like we do now. The past is a guide but not a guarantee by any means.Overall, a simple book, a wonderful book, and if the investors of Bernie Murdoff had read this book, they probably wouldn't have lost $50 billion!

Just finished this book. Once I started it, I found it hard to stop. This book is a must for anyone who invests in the stock market, or who has a 401K, or invests in mutual funds directly. The charts and wealth of statistics are an "eye opener". The concept of Index investing is simple, and that's why its not given much attention. As the book states, its simplicity is what makes it unappealing because we have been led to believe that investing is so difficult that the average person cannot do a good job of it on their own, and thus my employ high priced "pros" to do it for us. If you read ths book, you will see that the facts as presented will refute this. However, it must be stated that to make the concept of "Indexing" work, it must be a long term effort, i.e. a 30 year working lifetime time horizon. Charts will bear this out with hard to refute numbers. The book is an easy read and well worth the time spent. You will be wiser, and probably richer for reading it.

On one level, I would concur with other reviewers of this book. It is just a tad repetitive - Bogle makes his key points fairly early on (minimise costs, don't try to second-guess the markets, avoid the poisoned-chalice of 'timing', buy the appropriate risk-graded market exposure using passives etc) and then keeps coming back to them later on.However...and it's a big however. In practice, I think the repetition is important. It is only superfluous for those who may have already learned the lessons, bought into the underlying logic. The fact is that the preponderance of investors (and, apparently, fund managers) still believe in an Alice-in-Wonderland world of investment which is all about special insights, market timing, leveraging and unfeasibly complex investment products or strategies. In the UK, many IFAs still attempt to 'pick the winners', akin to having a day at the races, except one's entire future wealth prospects depends upon the outcome. Bogle circles around, and comes back to his themes, but exploring them in different contexts, and with different examples.The author deals with all of this. He writes beautifully, and clearly. He is always forthright, and the text breathes commonsense and belief in every sentence. He also very usefully handles the issue of fads - for instance, chapter 15 supplies some much needed clarity on the pitfalls of ETFs, which often appear to be embraced somewhat indiscriminately by investors and advisers alike. There are eighteen chapters, which may seem a lot for "The Little Book of...", but they are short chapters, and they provide access to the subject-matter in bite-size chunks. This is eminently readable, even for busy people with little time for reading.Overall, this is a very useful book of practical guidance on the subject of investing. I would also recommend very strongly Jack's other seminal book, 'Enough':  Enough True Measures of Money, Business, and Life by Bogle, John C. ( Author ) ON Jun-25-2010, PaperbackEnough True Measures of Money, Business, and Life by Bogle, John C. ( Author ) ON Jun-25-2010, Paperback

I've been trying to learn more about investing for quite a while, but this is the first book I've bought on the topic."The Little Book of Common Sense Investing" is focused on the use of index-linked funds, which are described as the ideal investment tool for people who don't want to get too involved in stock-watching, but want an investment which has a good chance of soundly beating the returns offered by cash savings accounts over the long term.With the author John Bogle being one of the key players in the field of index funds (albeit now retired), one could easily anticipate a certain unfair bias in favour of these products. There does appear to be a certain element of this, as no mention is given of any potential disadvantages to index funds (other sources confirm that they do exist to some degree). That said, the book gives very clear examples of why an index fund can be generally expected to beat the alternatives, and provides an excellent argument for why this should be one of the main investment tools for everyone except die-hard gamblers.I wish the book was a little longer, with some discussion of the disadvantages of these index funds and a clearer display of how level-headedness and the Dunning–Kruger effect contribute to people being so determined that they can beat the market.

If you want to cut through all the financial pornographers in the investment management industry this is the book to buy

Avoids the hype, the jargon, the wild promises of super wealth, just tells you how to make some decent money,

Good book but could have been a bit shorter