Book Review: The Bogleheads Guide to Investing

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Bogleheads Guide to Investing CoverHere is another book review about an investing book. This is the second book I read in my way to personal finance enlightenment: The Bogleheads Guide to Investing, 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’s a really good book, well-written and full of very good advice. The book is full of quotes from other financial figures and uses facts to support every argument.

The book

What is really good about this book is that it’s very complete, it covers a lot of different subjects and contains really tangible advice that you can follow.

This book contains several very important messages:

  1. Avoid debt: This one is a no-brainer ๐Ÿ˜›
  2. You should start to invest early: By the magic of compounding, starting early even with small sums, will amount to a large amount
  3. Know what you are buying: This one is very important. You should only consider investing in assets that you actually understand. If you don’t understand an asset, you should not invest, you should always research before you invest or seek advice
  4. Know how much you need for retirement: If you plan to retire early, you should know exactly how much money you’ll need and how much expenses you have each month.
  5. Keep it simple: Invest in few index funds that are replicating the entire stock market and stick with you strategy
  6. Minimize the costs of your investments: Only use no-load funds with very low fees.
  7. Don’t try to time the market: Market timing is not possible in the long-term, simply stick with your long-term strategy.
  8. 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.
  9. Diversify: Don’t put all your eggs in the same basket. There is no point in investing in two funds that have the same assets inside.

The book explain all these messages (and a lot more) quite well. The book uses many strong facts to support the messages.

Summary

Overall, I think it’s a great book. If you are willing to invest but don’t know exactly how, you should definitely take a look at this book. You can profit from its advice in order to elaborate 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 US investor when your country is many times smaller than the US! But that is only a small point.

If you are interested, you can buy it on amazon: The Bogleheads’ Guide to Investing

If you already read that book, I’d be glad to hear your point of view. Also, if you have more recommendations for books ๐Ÿ™‚

3 thoughts on “Book Review: The Bogleheads Guide to Investing”

  1. 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.

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