The Bogleheads Guide to Investing – Book Review| Updated: |
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Here is another book review of an investing book. The BogleHeads Guide to Investing is the second book I read in my way to personal finance enlightenment. This book is written by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf.
This book is a complete guide about personal investing, how to save money, and how to invest it. I think it is an excellent book, well-written and full of excellent advice. The book is full of quotes from other financial figures and uses facts to support every argument.
It is not perfect. It is very well suited to U.S. investors, less practical for international investors. But it still is a book I would recommend to anyone serious about investing.
In this article, I will share my review of The Bogleheads Guide to Investing.
The Bogleheads Guide to Investing
What is good about The Bogleheads Guide to Investing is that it is complete, covers a lot of different subjects, and contains tangible advice that you can follow.
This book contains several essential messages:
- Avoid debt: This one is a no-brainer! The first thing you can do to improve your finances is to get rid of debt. If you can, you should, of course, avoid debt in the first place.
- You should start to invest early: By the power of compounding, starting early even with small sums will amount to a large amount. If you get some percent of improvement each year, this improvement should be compounding each year. That means that each year the interest is getting better.
- Know what you are buying: This one is crucial. You should only consider investing in assets that you understand. If you do not understand an asset, you should not invest, you should always research before you invest or seek advice.
- Know how much you need for retirement: If you plan to retire early, you should know precisely how much money you will need and how much expenses you have each month. It is essential to realize that your current expenses are not necessarily the same as your retirement expenses. You may need more or less money in retirement.
- Keep it simple: Invest in a few index funds that are replicating the entire stock market and stick with your strategy. Investing in index funds is a simple strategy that works very well on average.
- Minimize the costs of your investments: Only use no-load funds with very low fees. You cannot control the returns on your portfolio. But you can control how much you are losing to fees.
- Do not try to time the market: Market timing is not possible in the long-term, simply stick with your long-term strategy. It is almost impossible to beat the market in the long-term. Therefore, the smart strategy is not to try.
- Rebalance if necessary: When the market is going well, some of your assets will be doing well. For instance, stocks will be doing better than bonds in a strong bull market. In that case, you should rebalance by selling some of your stocks and invest them into bonds. This should help you by buying low and selling high automatically. Not everybody likes this rebalancing idea, so you need to be careful about that. The important thing is to be aware that unbalance will occur eventually.
- Diversify: Do not put all your eggs in the same basket. There is no point in investing in two funds that have the same assets inside. If you only invest in one stock or one market and that stock or market crashes, your entire portfolio will crash.
The book explains all these messages (and a lot more) quite well. The book uses many strong facts to support the messages. It is well explained.
What I did not like
There are very few things I did not like about this book.
First, as it is the case with almost every American book, it is not easy to translate all the advice here. Many of the values you will learn are important regardless of where you live. But you cannot apply the same portfolio to a small country as you would to the United States.
Also, not all retirement accounts are alike. For instance, in Switzerland, we have some mostly uninvested retirement accounts. Also, bonds in Switzerland are really bad (negative). So you will not want to buy bonds. So, the rebalancing will be very different as well.
Finally, the book is a bit old on the fees side. Of course, you should avoid funds with load fees. But these days it is very easy. You should especially avoid all funds with more than 0.4%-0.5% fees.
But aside from this, it is an excellent book.
Overall, I think the Bogleheads Guide to Investing is a great book. If you are willing to invest but do not know precisely how to start, you should take a look at this book. You can profit from its advice to elaborate on a sound investment strategy.
The only thing missing from this book is some advice for non-US investors. That is the case for most books. You cannot invest exactly like an investor from the United States when your country is many times smaller than the U.S.! But that is only a small point.
If you are interested, you can buy it on Amazon: The Bogleheads’ Guide to Investing. If you want to read more about investing books, you can take a look at the best personal finance books I have read.
If you already read the Bogleheads Guide to Investing, I would be glad to hear your point of view. Also, if you have more recommendations for books!
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7 thoughts on “The Bogleheads Guide to Investing – Book Review”
I’m thinking about start reading some books as well.
Did you find any book with advice for non-US investors already?
Do you think this book is a good introduction to the finance/investment world?
PS: I moved to Switzerland a few months ago and I started my FI journey this month after finding your blog, so for that, thank you.
No, all the books are focused on the U.S. side of things. If you want to read more things more specific about Switzerland, you can go to the MustachianPost forum or englishforum.ch. They have some nice things, but it’s often all over the place.
The general consensus for U.S. is to have 25% international allocation. For Switzerland, most people things that’s way too much. I personally have 20% allocation to Switzerland in my portfolio. Not counting second and third pillars. I think that makes sense, but you should do your own research.
I’m glad I inspired you to start your FI Journey :)
Thanks for stopping by.
Great book, I agree with you.
Related to it, you could have a look to “A Random Walk Down Wall Street”, by Burton Malkiel. Excellent support of passive investing and why other methods do not really work. It is a book that builds the foundations to Bogleheads. It describes the Effective Market Hypothesis, an idea that could be debatable, but very relevant from my point of view.
Another book that I found very interesting regarding Financial Independence is “The Millionaire Next Door”. It describes what we all guess, but nobody says. That a rich person may invite you at home and perhaps offer you an expensive whiskey, but as soon as you open his refrigerator you will find cheap cans of beer from the supermarket. Because you cannot become rich with high expenses.
Thanks for the books idea, I’ll put them on my list. I have a big list of books to read, but I’m having trouble to find them at good prices in Switzerland.
LibGen is your friend!
I have two issues with Libgen:
1) Based on the country you are, it’s not legal. So I prefer to avoid this kind of thing as much as possible.
2) They mostly have epub. And it’s a pain to convert them to mobi-format for Kindle.
Great ideas I got from this blog without reading the book. Thank you