The Bogleheads’ Guide to Investing

The Bogleheads’ Guide to Investing

  • Lindauer, M., Larimore, T., & Leboeuf, M. (2014) The Bogleheads’ Guide to Investing. Hoboken: Wiley.
  • Category: Investing
  • Recommended Financial Literacy Level: [Novice]+
  • Recommended Audience:
    • EVERYONE that is interested in becoming more financially literate. Whether or not you intend to be a DIY investor or hire out, this is a book that should be read and on your shelf at home. Personally, it’s one of my go to gifts for friends and family.

The Bogleheads’ Guide to Investing is roughly 300 pages in length and jam-packed with substantiated information, including data tables from credible sources and wisdom from some of the most knowledgeable players in the game. What makes this book so informative, yet readable, is the use of well-crafted sequencing, relatable metaphors, and thoughtful writing. The book not only does a great job instilling confidence and encouraging its readers, but it also empowers them with the information/tools necessary to make informed decisions about their finances, investments, and retirement planning. If this is your first dive into becoming financially literate then I’d recommend you really take your time reading this book, take notes as you go, and consider reading it more than once.

Divided into two parts and 23 chapters, The Bogleheads’ Guide to Investing begins by (hopefully) persuading you to reevaluate, or perhaps evaluate for the first time, your current financial life and what you imagine your life like in retirement. The remainder of Part I ultimately provides you with the information you’ll need to sit down and prepare your own informed financial plan – something crafted to fit your personal situation. This should include things like your goal savings rate, retirement age, what accounts (retirement, taxable, college-savings, HSA, etc.) are available to you, how you intend to maximize your contributions to those accounts while decreasing your tax burden, your asset allocation, which funds to consider and why, and what to do with excess cash. Part II details what to do next (rebalancing your portfolio, managing bear/bull markets, retirement considerations, asset protection, and estate planning). Below you can see what each chapter covers:

  • Part I:
    • Chapter 1 – Choose a Sound Financial Life
    • Chapter 2 – Start Early and Invest Regularly
    • Chapter 3 – Know What You’re Buying: Part One
    • Chapter 4 – Know What You’re Buying: Part Two
    • Chapter 5 – Preserve Your Buying Power with Inflation-Protected Bonds
    • Chapter 6 – How Much Do You Need to Save?
    • Chapter 7 – Keep It Simple
    • Chapter 8 – Asset Allocation
    • Chapter 9 – Costs Matter
    • Chapter 10 – Taxes: Part One
    • Chapter 11 – Taxes: Part Two
    • Chapter 12 – Diversification
    • Chapter 13 – Performance Chasing and Market Timing Are Hazardous to Your Wealth
    • Chapter 14 – Savvy Ways to Invest for College
    • Chapter 15 – How to Manage a Windfall Successfully
    • Chapter 16 – Do You Need an Advisor?
  • Part II
    • Chapter 17 – Track Your Progress and Rebalance When Necessary
    • Chapter 18 – Tune Out the “Noise”
    • Chapter 19 – Mastering Your Investments Means Mastering Your Emotions
    • Chapter 20 – Making Your Money Last Longer Than You Do
    • Chapter 21 – Protect Your Assets by Being Well-Insured
    • Chapter 22 – Passing it On When You Pass On
    • Chapter 23 – You Can Do It
  • Appendix I – Glossary of Financial Terms
  • Appendix II – Books We Recommend
  • Appendix III – Financial Websites We Recommend
  • Appendix IV – Vanguard Asset Allocation Questionnaire and Pie Charts

The book also discusses the Bogleheads.org website and community. With over 75k members, their forum is top-notch and arguably the best out their for FREE personal finance and investing advice. It’s a safe place for you to ask questions and get valuable feedback. I actually have the Bogleheads Forum bookmarked and am a regular visitor. The members really go above and beyond to answer questions and engage in a wide variety of informative discussions. I would encourage you to make an account and spend some time on the forums, searching and/or asking about nearly anything financial.

Around 80% of Americans have some sort of debt/loan, which is an issue not really addressed in this book. So depending on your situation, you may want to consider supplementing The Bogleheads’ Guide to Investing with another resource to create a financial plan that meets all of your specific needs such as those found [here].

Jack’s Biggest Takeaway:

  • For one reason or another, I was jaded (and truthfully still am a bit) about insurance since my teenage years when I started paying for it… to the point where until the last year or two I’ve been arguably underinsured. Don’t get me wrong, I had home insurance, full-coverage car insurance, the standard life insurance policy my jobs have come with, etc.; however, I had always declined disability coverage (I’m young, what could happen?) and increasing my liability limits on things like auto-insurance or an umbrella policy (I thought “cheaper that way”). Chapter 21 (Protect Your Assets by Being Well-Insured) has aided in opening my eyes to how lucky I’ve been to not have become disabled during my working years when I’m heavily reliant on my income. The chapter not only describes and explains the different types of insurance, but describes which types you should or should not consider and why. More than that, it provides information on how to screen potential insurance agents to make sure they have your best financial needs in mind when it comes time to make those decisions.
  • Windfalls are something I never anticipated having to deal with and still don’t (I don’t play the lotto, no anticipated inheritances, etc.). We don’t choose who we fall in love with, though, and this is a “problem” my fianceé had. Fortunately she/we had no interest spending the money nor a need to do so anytime soon, so it just kind of set there for quite some time until we finally decided to invest it according to the written financial plan we put together. Ch. 15 (How to Manage a Windfall Successfully) describes the emotional (sounds weird, I know) experiences people have when receiving windfalls, how they are generally mismanaged, and tips/steps to take to properly manage one.

When Lindauer, Larimore, and LeBoeuf wrote The Bogleheads’ Guide to Investing they really did have your best interests in mind. In a not-so-subtle overstatement, I would compare reading their book to hiring a large group of the best some of the best fiduciary financial advisors. The best part? It’s less than $20.

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Have you read The Bogleheads’ Guide to Investing? What are your thoughts, likes/dislikes, and biggest takeaways?

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