Reflections: The Little Book of Common Sense Investing
Title: The Little Book of Common Sense Investing
Author: John C. Bogle
Medium: Book
Motivation for reading: This was a Christmas gift from my dad
Reflections & Takeaways:
Caveat: I’d like to preface this that I am not a financial expert. Do not blindly follow anything I write here without doing your own due diligence!
My dad gave me this book — and I’m grateful because I’m all ears about getting any additional sound financial help and advice. My dad has proven to be reliable on his advice to me and leading me in the right direction. To his credit, my dad has been my principal financial advisor in giving finance tips and recommending books like this on, as it caters to my “investing” style.
First, I know that I’m never going to beat the market, and I don’t have any false pretenses about my ability to do so, so I’m not even going to try. I’ve also heard, and take this with a grain of salt, that women tend to do better long term in the markets because they have a tendency to invest and leave it be and not move money around. My father trained me well when he taught me that you lose when you move money around; moving money typically comes at a cost in the form of a fee of some sort.
One of the author’s major points is that the little gains that one makes in the market (if you can make any profits) can easily be lost through fees and taxes. Optimize for minimal fees, and don’t forget taxes, which are also a form of fee.
John C. Bogle is the founder of Vanguard so one could argue that he has a personal incentive and a bias towards index funds; Mr. Bogle started the first index fund after founding Vanguard. But I do believe he makes a valid argument about why they are the best investment vehicles for most people. He makes a lot of sound recommendations that I trust, and he includes the numbers to prove it.
As I mentioned before, my style of investing is to invest for the long term, which is pretty challenging for most people. I think people are impatient and have a tendency to let emotions run and panic. Some people believe they can beat out the market while others react emotionally to the ups and downs of the market. I honestly just try not to look too much and based on Mr. Bogle and other financial experts, trust that the overall trend of the market is upwards over time. Of course there will be the natural mountains and valleys, but I try not to follow too closely in order to not get pulled into any emotional decisions and avoid panic. I truly believe that the winner is patience. As my fourth grade teacher would say “patience is a virtue,” and in retrospect, I believe she was talking about the stock market.
I enjoy reading about personal finance because it’s definitely an area that I can learn more about as the times change. But I do believe that there are a few simple, overarching strategies that can take you far and help you in the long run; minimize fees, compound interest, and diverse portfolios. These three maxims point towards investing in index funds.
I particularly enjoyed this book’s concrete investment strategies which some other finance books lack. At the end of the day, you can’t forget your purpose for saving and investing the money. It’s a challenge because we tend to fall into the trap of telling ourselves that we just want more. A lot of the other books emphasized that part of personal financial planning that this book didn’t, and when it comes to money you need to remind yourself what you are saving your money for. Don’t become captive to the idea of just wanting more money. Identify early your financial desires and priorities, and let them that guide you to decide how to invest and save.
Random books that I made connections with while reading this book:
The One-Page Financial Plan by Carl Richards
Your Money or Your Life by Vicki Robin
Unshakeable by Tony Robbins
You Are a Badass at Making Money by Jen Sincero
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