The little book about investing by John C bogle, and one thing I want to say before I tell you guys the main three nuggets to these books. ✅2 FREE AUDIOBOOKS✅ https://amzn.to/2Enayo8¬¬¬
The Little Book of Common Sense Investing Book Review | John C. Bogle
1. For the first Nugget ( the overall idea of the Book is to compare investing strategies )
– Investing in Individual Stocks
– Investing with high fee/high turn over Mutual Funds
– Investing with low-cost index funds
Example: Individual investing
– Everyone has probably heard about tesla and how the stock went up in price
– A lot of people that call themselves investors went and bought some, just because they heard its good
– Now the stock went down and they sold and lost money, but don’t know what happened.
The idea is: to do this type of investing, you need to understand how to analyze a business vs its stock market valuation. So you basically have to find a business with more value than what the market is giving them.
– Which takes warren buffer around 5-8 hours of reading every day, to invest in 1-3 companies per year. ( so it’s not as simple as YouTubers/yahoo and all these people paint it )
Example 2: Investing with a High Fee Mutual Fund that promises to beat the market
– I called a company the other day, and they said we manage your entire portfolio and provide professional advice, tax harvesting, and our job is to try to beat the market
– I asked how much would this cost? He said well just 1% of your portfolio value per year, which is a pretty good price.
– But when I told him, I don’t want any of those features I just want to hold for 40 years and make no trades. ( he said well we still have to charge 1%)
The idea is: If I invest 10k, and didn’t contribute anything more to, and left it for 40 years, and got back 7% without accounting for inflation.
Fund A: .09% = cost me 5k
Fund b : 1.02% = cost 49k
So when they tell you its only 1%, don’t trust it:
Example 3: Investing with low-cost index funds
– Right now I use acorn to invest and basically investing into 80 stock-based ETF and 20% bonds ETF
– Overall in the past year, I’ve gained 9.42% and also 2.35% in dividends ( adjusted for inflation 2.5%, that’s still 9.27% gain)
– So just like the prior example, my investment will grow, but not pay all the money 33% of my value in fees.
That’s why John, believed so much in index funds.
2. The Stock Market is Not a Casino but people Gamble like it is
Three Main rules that I learned from this book and many others.
– You can’t predict the market, so beating it is impossible over 50 years, so riding the wave is much better.
Interest fact: Only 2% of mutual funds managers beat the market for more than 30 years (it’s like finding a needle in the haystack)
– If its sounds to good to be true then it probably is
Example: Every day I see people talking about
• How they are going to make millions with forex trading
• Millions day trading
• Millions with bitcoin
The truth is, most of those people are following the trend, and they just want to be the next literally ticket winner.
– Average and boring with investing is good
Simple plans more than often always win.
But having a complicated plan is usually a salesman trying to convince you of all the great stuff he’s doing.
3. Pick Your Cards ( either Low-Cost index Fund or Picking stocks, or being okay with 33% of your value being loss)
I know I use these analogies of casinos and cards, but at its core, the stock market is just a list of businesses with set values, but people let emotion get in the way.
For me: Currently, I’m investing 5% of all my income, but my plan is to get to 25% of my income invested into index funds and ETFs, and then 65% into investing activities like real estate and 10%/50-70k to enjoy life.
In the end:
Picking is going to be hard work but done correctly it’ll be worth the 5-8 hours of reading.
High cost: is expensive and you’ll lose a big junk
Low cost is great and you’ll get the most benefit for the least amount of work.
But: the worst thing you could do is not take action. Whether it’s the market or any investment, the goal should always be to make your money work for you.
Link to calculator: https://www.nerdwallet.com/blog/investing/millennial-retirement-fees-one-percent-half-million-savings-impact/
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