"The Little Book of Common Sense Investing" – by John C. Bogle is one of the best investing books for beginners, which can really help you get smart with the market. Packed with valuable information, this guide also explains concepts in a way that's easy to understand as a novice investor.
Owning a diverse range of stocks and holding it for the long term is a winner’s game. However, to find out how to get the best benefits from index investing, there's no better guru than the well-known investment expert John C. Bogle. Founder of the Vanguard Group and the creator of the index fund, Bogle primarily relied on index investing to build substantial cash flow. With “The Little Book of Common Sense Investing,” he aims to help you do the same. A best-selling investing read, this book offers new information, insights and perspectives on investing and building wealth.
This small book is divided into 18 chapters, where each section spells out ideas on how you can invest in low-cost index funds. The chapters are precise and perfectly sized to read during spare moments.
Here are a Few Key Take-Aways from “The Little Book of Common Sense Investing:”
- You are at high risk if you are investing in single stocks. However, index funds don’t have any risk. The reason being, they invest in the whole stock market.
- Thanks to the power of compounding – a usual index fund offers huge returns in the long run.
- Capitalism is a game of positive-sum.
- Actively managed funds are bad because past profits don’t guarantee future success.
- The majority of your money is best invested in safe, low-cost index funds.
- You can’t go wrong by just choosing the cheapest index fund.
- Forget the fads and marketing hype and focus on what works in the real world.
- Overall share market returns reduce with the increase in share buying and selling.
- The changing returns are because of the emotional aspect of investing. It’s not related to the rise in dividends and earnings.
- Recognize that in the long run, business reality trumps market expectations.
“The Little Book of Common Sense Investing” will change the very way you think about investing. It highlights the fact that successful investing is not a cakewalk job – it requires discipline and patience; however, it is still simple. Because, it's all about common sense.
Some Great Quotes from the Book:
- “Successful investing is all about common sense”.
- “Buying funds based purely on their past performance is one of the stupidest things an investor can do.”
- “The mutual fund industry has been built, in a sense, on witchcraft”.
- “Owning the stock market over the long term is a winner's game, but attempting to beat the market is a loser's game.”
- “The true investor . . . will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies”.
- “The greatest enemy of a good plan is the dream of a perfect plan. Stick to the good plan.”
- “The two greatest enemies of the equity fund investor are expenses and emotions.”
- “Fund investors are confident that they can easily select superior fund managers. They are wrong.”
- “When there are multiple solutions to a problem, choose the simplest one”
This book is really good for an average person who is interested in learning the basics of a real-world investment philosophy. Spelled out smoothly – this book does a fantastic job of laying out the reasoning behind a seemingly simple investing strategy.
However, be warned that this book doesn’t give you ‘get-rich-quick’ investment philosophy. This book tells you how to match the market over and over again with minimal effort – however, it does not tell you how to beat the stock market. Thus, this book is recommended for someone who is just getting their hands into investing. More experienced investors may not get nearly as much out of this book; however, it's a good read to brush up your investing skills.