Author Topic: Just finished "The Little Book of Common Sense Investing"...  (Read 219 times)

freedomfightergal

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Just finished "The Little Book of Common Sense Investing"...
« on: January 02, 2019, 12:58:00 PM »
Boning up on my Investment knowledge - aka Retirement panic attack!

I just finished the updated John C Bogle book, "The Little Book of Common Sense Investing".  Here are my takeaways: -

1. He was an epic game changer in the investment market. Kudos to him!
2. Managed Mutual Funds are a mistake, he really bashes them to death.  I ended up skimming some sections as I kept thinking, "okay, I get it".  The reasons being, they underperform the benchmark, the Expense Ratio of sometimes 1-2% cannibalizes your return, then there are hidden fees sometimes, loading, taxes and inflation!
3. Stick to low cost Index funds
4. Design an Asset Allocation and stick to it. Generally 50/50 stock to bonds is good.

The section that really had me thinking was his many comments iro of stocks and bonds stating, "both returns are likely to be significantly lower", under the Chapter, "When the Good Times No Longer Roll".  Based on them being so over priced for so long (the last ~ 40 years), high P/E ratio's and how the market always returns to the mean. His numbers for the next era of stocks/Bond mix, 3.5% before costs.  After inflation return of 1.6% -  what the???  He even has this table: -

Nominal Gross Return 3.6%
Investment costs -1.5%
Nominal Net return 2.1%
Inflation - 2%
Real Annual Return 0.1%

or no cost option - 1.6% return

It kind of had me thinking, "Yikes! What the heck should I invest in then?  Seems like nothing is that great".  I may just pay off the Mortgage of 4.75% first...



Anyone else read this book? I'd be interested in other comments or thoughts.







rubybeth

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Re: Just finished "The Little Book of Common Sense Investing"...
« Reply #1 on: January 02, 2019, 01:11:20 PM »
Read it a few years ago. Got me to change almost everything into index funds. Have told others to read it. They did the same. I don't worry about the specific percentages. There's a big debate mortgage payoff in which I don't care to get involved, but frankly, I'd rather have money in either taxable or untaxable funds than in my house.