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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:
Title:
The Bogleheads’ Guide To Investing (Second Edition)
Date of Publish:
2014
Length:
270 pages spanning 23 chapters
Readability:
Excellent.
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.
Target Audience:
Suited for investors of all levels, from novice up to the more financially astute.
Content:
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.
Summary:
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.
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Wow, what a deeply generous person, that Bogle!
I’ve yet to read this one, but you’re one of many who have recommended it, so I’ll finally add it to my list. Looking forward to it!
Jack Bogle truly is an amazing individual. He could have been greedy and made far more money than he has (don’t get me wrong, he’s incredibly rich, but that hasn’t stopped anyone before). He essentially allowed the common investor a chance to succeed in the market when everyone else just wanted to charge fees to pad their bottom line.
Any index fund as we know it is the result of him and his generosity.
It’s amazing how books can really transform lives. I agree that Jack Bogle has been a transformational figure in the investing world, and many individual investors owe a lot of their investment success to him. As always, I wish I had read this book sooner rather than later!
Thank you for the comment. So many docs (and I’m sure vets too) complain about there is not enough time for financial education. It really is minimal effort for an amazing ROI. I figure reading this book and the white coat book was done in less than 10 hours. Those 10 hours have likely saved me $200-300k (or probably more) in my investing lifetime.
Hey XRV!
I have no idea why most people would not use this investment style. Especially early on eh? You can always add other alternative later.
We didn’t even have products that allowed us go invest like this for a long time in Canada.
In my case I was not even aware of them until I came across White Coat investor and this book. It saddens me to say this, but even as late as 2010 (and prior to my divorce) I had been investing in my retirement accounts by picking individual stocks because I “recognized the name (Amazon, Caterpillar, etc). I actually got lucky with some so it could have been worse. Once I came across the concept of owning everything instead of one thing, it just made much more sense to do that (and it took significantly less time to do so).… Read more »
The WCI book was also my first financial book followed by the boglheads. Both easy reads and great places to start learning the basics of personal finance.
After those two it’s time for some FI reading,
Those definitely are two great books to start out with. They ignited my passion for reading financial books and over the course of several years I have accumulated quite a few.
Jack Bogle revolutionized passive index investing. The world is a better place for investors because of him.
You are definitely preaching to the choir 🙂 I doubt many people truly realize the impact Jack had on the common investor but for those who do he is definitely deserving of the hero title. Thanks for stopping by, much appreciated!
So I did an analysis of their “Middle aged investor” which uses a complicated 6 asset allocation and came up with a expected return of 7.13% and a SD of 9.13%. This portfolio IS NOT on the efficient frontier, after they go through some discussion of modern portfolio theory and the importance of asset allocation the authors then seem hell bent on shooting themselves in the foot ignoring their own discussion. I then looked at a portfolio that was on the efficient frontier 31% small cap value 7% REIT 62% intermediate bonds which gave the same 7.13% yield and 6.58%… Read more »
That is an excellent point. Ever since you did that post on sequence of return risk earlier showing the 3 fund Boglehead portfolio doesn’t do as well I have been looking at changing my allocation. On personal Capital analysis my current allocation lies right on the efficient frontier line and slightly better than the allocation their model suggests so I think I am ok. But I would be curious to see if it can be improved upon with the simpler 2 fund approach.
If you’re on the efficient frontier and your satisfied with your risk then in my opinion you’re done. A 2 fund has the advantage of being cheap to own and easy to re-balance and tax loss harvest. Owning more funds IMHO looks prettier and you can develop all kinds of narrative why you might do it but in the end it’s risk and reward that dominate. Any asset allocation that raises your risk or decreases your reward knocks you off the efficient frontier and becomes more costly to own. The key to understanding this is in the degree of of… Read more »
You’re doing a real service to your reader’s by promoting the latest iteration of this book. The Boglehead’s Guide To Investing, along with The White Coat Investor and Bill Bernstein’s Four Pillars of Investing are what I’d call the Holy Trinity of Investing books for physicians. They lay a foundation for understanding basic finance that leads to a reasonable DIY, low cost, passive indexing strategy that most of us can handle. Gasem’s legitimate critique notwithstanding, there’s a lot to help a newbie get to self-reliance in this book.
Strong work, Xrayvsn!
CD
Thanks CD. I am trying to do a review of all the books that helped me out sort of in the order I came across them myself. Of course it will give the impression that every book gets a great review (which they may all end up having) because these books were highly recommended and the reason why I bought them.