Book · Money and wealth mindset · 2007
The Little Book of Common Sense Investing
John C. Bogle · 20 chapters
The Useful verdict: Read 6 of the 20 chapters. They make the whole case for low-cost index funds; the rest backs it up with more data. Chapters follow the 2017 10th anniversary edition.
The book in 60 seconds
John C. Bogle, who founded Vanguard, argues that investors as a group can only earn the stock market's return, minus what they pay in fees, trading and taxes. So the winning move is to own the whole market through a low-cost index fund and hold it for decades. The rest of the book backs that up with data on costs, fund chasing and how to split stocks and bonds.
Your time
About 3 hours to read the parts that matter, instead of about 7 hours for the whole book.
Based on about 270 pages at 40 pages an hour, with skimmed parts counted at a third.
Raja's take
The most boring money book I'd recommend, and that's the point. Read chapters 1 and 4, then look up the fee on every fund you own. If that's all you do, it was worth the time.
Read only these chapters
Tap any chapter. Read: ch. 1, ch. 3, ch. 4, ch. 5, ch. 7 and ch. 18.
1. A Parable
The Gotrocks family owns every company, then pays helpers to trade among themselves. The whole book in 1 story.
4 ideas from this book
The Gotrocks parable
A family owns every company. The more helpers it pays to trade among themselves, the less the family keeps.
Costs come first
Investors as a group earn the market's return before costs. After costs, the average investor earns less.
Pick the cheaper fund
Between 2 similar funds, the lower fee is the better bet. You know the fee in advance; you don't know the return.
Don't chase last year's winner
Buying after gains and selling after losses is how investors earn less than their own funds.
Read it if
You want to start investing and don't know what to buy.
Skip it if
You want a step by step money setup. I Will Teach You to Be Rich covers that.
Quick answers
Is The Little Book of Common Sense Investing worth reading?
Yes, but not all of it. Read 6 of its 20 chapters: ch. 1, ch. 3, ch. 4, ch. 5, ch. 7 and ch. 18. They make the whole case for low-cost index funds; the rest backs it up with more data. Chapters follow the 2017 10th anniversary edition.
Which parts of The Little Book of Common Sense Investing should I read?
Read ch. 1, ch. 3, ch. 4, ch. 5, ch. 7 and ch. 18. Skim the parts marked skim for their 1 idea, and skip the rest on a first read.
Who is The Little Book of Common Sense Investing for?
You want to start investing and don't know what to buy. Skip it if: You want a step by step money setup. I Will Teach You to Be Rich covers that.
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