Make Sure You Read This Book for Common Sense Investing

Last Updated June 27th 2019
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This book may be small but it packs a punch!

John C. Bogle, the author of 'The Little Book of Common Sense Investing', takes a leaf out Warren Buffet's book, and considering he is one of the most successful investors of all time, that isn't necessarily a bad thing.

The Little Book of Common Sense Investing focuses on as close to a sure fire way of making money as investment offers - over the long term. It offers a solid resource which, depending on your objectives, might represent your best book for investing.

The investment vehicle favoured by 'The Little Book of Common Sense Investing' is low-cost index funds, which are seen by Bogle as being the best wealth building strategy if you have the time to 'buy and hold'.

That the 'The Little Book of Common Sense Investing' is now in its tenth edition says a lot about the way in which its guiding principles have endured over the years. Two new chapters have been added - on retirement investing and asset allocation.

Find it on Amazon >> The Little Book of Common Sense Investing by John Bogle

'The Little Book of Common Sense Investing' encourages investors to leave aside options such as individual stocks and sector rotation, in order to establish expectations which are rational and face the reality of business. It all comes down to achieving compounding returns rather than compounding costs and letting the market work for you - so says 'The Little Book of Common Sense Investing'.

See also: 7 Steps to Reach your Financial Goals

Bogle is a big fan of keeping things simple and putting your faith in all the publically owned US companies, rather than rolling the dice with individual stocks. As the author beautifully puts it: "Don't look for the needle in the haystack. Just buy the haystack!"

Where 'The Little Book of Common Sense Investing' is a big hit is its ability to communicate just as well with first-time investors as it does with those who have a wide knowledge of investing. This determination to avoid financial jargon really plays into the hands of the reader, and means that you don't have to read sentences twice in order for them to sink in!

John C Bogle

Photo: Forbes

Bogle doesn't expect you to take his word for it in 'The Little Book of Common Sense Investing'. He uses performance numbers from the real world in order to back up his theory that low-cost index funds are the way to go. He outlines some of the things that are costing investors who favour mutual funds which are actively managed, such as the higher taxes, the expense ratio, and transaction fees. There is also the question of investor emotion, which has the ability to cloud judgement for those picking mutual funds.

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All in all, 'The Little Book of Common Sense Investing' tries to convert non-believers that safe and steady investing is the way to go, without giving too much of a plug for the author's own investment company - Vanguard. If you are unsure of the logic that comes with buying low-cost index funds, 'The Little Book of Common Sense Investing' is a book for investing which leaves you in no doubt as to why, and how, they make sense. For this reason, here at Trading Education, we think it is a worthwhile way to learn about investing.

We leave the final words to the ultimate investment endorsement - from Warren Buffett, who said about Bogle: "If a statue is ever erected to honour the person who has done the most for American investors, the hands-down choice should be Jack Bogle."

Next up: Read This Book and Start Focusing on Assets!

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