Continuing Financial Ed: The Bogleheads’ Guide To Investing (Second Edition)
Some of you may be asking yourself, what on earth is a Boglehead (not to be confused with a bobblehead (which is something I definitely do not suggest taking financial advice from).
I honestly feel that there were two seminal events in my life after my brutal divorce that basically showed me the light, financially speaking, and allowed me to make my remarkable financial transformation.
The first was discovering the White Coat Investor blog (it took me awhile but I believe I discovered Jim Dahle’s website in late 2014/early 2015).
Dr. Dahle was a blogger who spoke about the financial plight of physicians and indeed was “helping those who wear the white coat get a ‘fair shake’ on Wall Street.”
The second event was stumbling upon and then purchasing the Bogleheads book followed by actually visiting the Bogleheads’ website.
The Bogleheads are a collective of incredibly kind, supportive, and financially astute individuals who take their time to answer anyone’s questions on finance.
This group pays homage to John “Jack” C. Bogle, who in 1974 founded the Vanguard Company.
If you are proponent of passive index fund investing (which I sincerely hope you are), you owe a great debt of gratitude to John Bogle who essentially flew in the face of convention and created the index fund industry as we know it.
Bogle could have made far more money for his company and himself if he allowed the active investing model to continue.
However Bogle truly was altruistic and wanted every investor to have a chance at building wealth.
Bogle introduced the world’s first mutual index fund in 1975 for which he was initially ridiculed for.
The discussions by the Bogleheads on various topics is always illuminating as they have a combined encyclopedic knowledge of pretty much every salient financial point for any financial subject thrown at them.
I joined the Bogleheads and posted my first forum query in July 2015.
I had just started making progress and picking myself up from the financial depths of my divorce and subsequent frivolous civil lawsuit.
I asked the Bogleheads community to assess my situation and to offer any advice to help me regain my wealth.
The response was amazing and I felt like I truly met a genuine group of people who had no ulterior financial motives and truly wanted to help a fellow member.
So it brings me great pleasure to introduce to you one of the books that directly transformed my life:
Date of Publish:
270 pages spanning 23 chapters
I have read two types of finance books:
- There are books that are geared to the average individual which eloquently explain concepts and principals of basic finance.
- Then there are the books that are more like advanced college textbooks for finance majors with graphs and formulas to drive home a particular point.
I tend to favor and gravitate to the former, and this book, by the Bogleheads clearly qualifies as such.
Suited for investors of all levels, from novice up to the more financially astute.
Early chapters help lay the foundation for sound financial practices and are particularly useful for those individuals who are just now beginning their financial journey.
Concepts very familiar with those who embrace the FIRE philosophy are again extolled, such as how lifestyle choices can impact your path and of course the time tested principal of using the 8th wonder of the world, compound interest, to help turbocharge your nest egg.
This is not a get rich quick scheme book.
Rather this book preaches tried and true practices of savings and continued periodic investing throughout the accumulation phase.
Being disciples of John Bogle, it comes as no surprise that there is a high emphasis on index funds being the core of your portfolio, which is highlighted in the chapter “Keep It Simple.”
If your portfolio is primarily comprised of actively managed funds, do yourself a favor and buy this book.
If, as a result of this book, you switch to passively managed index funds, your ROI on the book price will be unprecedented as you can literally have a 6 figure savings because of it.
A very informative chapter, “Costs Matter,” breaks down the various costs an investor can be subject to (hidden or otherwise).
By keeping expense ratios and other costs down, you have more money left that is invested which in turn generates a much larger return decades later.
Although it is said don’t let the “Tax Tail Wag The Investment Dog,” knowing what kind of potential taxes there are and how you can minimize them is essential, and is covered in two chapters in this book.
For those unfamiliar with the concept of Tax Loss Harvesting or Rebalancing, this book covers both and the rationale for why you need to consider them in to boost your gains.
The last chapters in the book address strategies to help avoid common pitfalls an investor faces such as the constant marketing machine of Wallstreet and Financial Gurus who try and predict where stocks are heading (spoiler alert: they can’t).
Many a sound investment strategy has been derailed, seduced by the Wall Street siren’s call as they are screaming in your ear not to miss the next big thing and you blindly follow them like a lemmings off a cliff.
There is even information on how to properly insure your nest egg including discussions on long term care insurance and disability insurance as well as considerations on how to pass your money onto your heirs.
Overall this book does a great job of compiling a large amount of topics in an easy to read format for any level of investor.
The Bogleheads are truly a group of amazing individuals who genuinely care for you and have no ulterior financial motives.
I personally consider the Bogleheads book one of the two books (the other being the White Coat Investor) that has helped me jumpstart my path to my current level of financial success and I have absolutely no hesitation in recommending it to others.