As others have mentioned, this book could be distilled down to "The only way to succeed at long term investing is to buy low-fee mutual funds that track the whole stock market". The entire rest of the book is the justification, and it's pretty hard to argue with any of it. Sure, you can beat the market sometimes, but it can't last.

As a beginning investor, I found the book informative - it helps you think about stocks and the market in ways that aren't immediately obvious to the uninformed.

I love this book. Gave it to my nephew who was content to lose money for 20 years and get into sector funds to make his riches later.

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits)I thought this book was very clearly written, and its advise quite compelling. It hammers home the long-term advantages of investing in index funds. Of course, the author sells them for Vanguard, but none-the-less, his advise makes sense. He points out how difficult it is to select a mutual fund which consitently beats the market average over a long time period. According to the book, the odds are stacked heavily against it. So I think his point is for me to let go of my ego, and admit how extraordinarily difficult it is to beat the averages, and just invest in index funds and let it ride. Piled with fact after fact, lots of statistics, and bare logic, the book makes its case superbly. I recoommend it to all who own or plan to own stocks or bonds.

Jack Bogle has written a book for the ages...in simple language with illustrations that are easily understood, he makes a compelling case for index investing. This is the single critical volume of knowledge that the typical investor will ever need.

I have been reading about investing since the current market down turn began, including several other books by John Bogle, founder and ex-CEO of the Vanguard Group. This slim volume makes the case once again for investing in low cost indexed mutual funds rather than trying to beat the market, which most of the professionals fail to do. This book is perfect as a refresher course, or for your significant other who is too busy (or too intimidated) to read more detailed books on investing.

I'm 29-going-on-30 and wishing that I had absorbed the wisdom imparted in this book when I first signed up for a 401k. But here I am, seven years later, finally having a real understanding of where I should stash my retirement nest egg.

The premise behind this book is simple - index funds have proven to be the wisest vehicle to throw your money in to achieve long-term profits. Bogle does an excellent job of explaining why this is, utilizing the "humble arithmetic" behind his thesis. For those who are like my old self and unsure of the best way to invest your retirement savings, look into low-cost index funds. And don't just throw your money in there...purchase this book and understand WHY you should.

I rec'd the book safely, in good condition, but haven't yet had a chance to read it.

Bogle presents his theory on investment and the evidence gathered over the years which backs it up. The theory is simple - own the whole market by buying index funds, OR be prepared to do a ton of in-depth research just like a full time investment advisor. He backs up this "bi-polar" recommendation through the evidence gathered on where casual investors loose out, such as market timing, advisor fees, etc.

As interesting as Bogle's research is, it gets pretty tiring listening to him toot his own horn. Minus one star.

Also, I would recommend borrowing / renting this book (or the audio CD). Once you understand why index funds are "the choice" for the casual investor, the book really doesn't offer any other detailed advice or re-read appeal. Your next stop should be a book such as Jane Bryan Quinn's "Smart and Simple Financial Strategies for Busy People."

This is an excellent book for any investor. The straight common sense advice that this book provides will help everyone with their investment portfolios. The best quote from the book is "the miracle of compounding interest is overwhelmed by the tyranny of cost". Through index funds, the author explains how to cut costs and caption the return of the entire stock market. This is an excellent book.

To anyone even remotely serious about investing, this book is MUST reading. Simple to understand and very clear in its message-most folks are on the losing end of their stock investments. Very clearly Bogle makes the case for inexpensive index funds which mathematically have proven very solid returns while minimizing the tax impact, advisor fees and trading fees that every investor faces. By following his straight-forward advice, virtually anyone can overcome the failures of the vast majority of investors and ill-advice of most brokers/planners and reap solid rewards.

Mr. Bogle has done more to help the common investor than anyone. This book is a must read for anyone new to investing. It will be the only book you will need to read to have a good understanding of how to invest effectively. It is a condensed version of Bogle on mutual funds and easier to read.

By the end of this book, it really will be common sense to you that investing in index funds is the best idea for your retirement. The facts are laid out and the point is hammered home. You certainly can't go wrong with the advice contained in this book.

However, if you desire a little more excitement (and potential returns) in your investing adventures, you will want to broaden your horizons a bit more.

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Book Big Profits)

This is a fine book for most investors. It is easy to read and gives the reader an investment philosophy which will be invaluable if followed in the future. I recommend this book highly.

I liked this book a great deal, and found it very informative. I have changed the way I invest because of this book. I recommend it highly.

In the introduction it is stated that: "Only stock market risk remains." (if you invest in index funds). The "Only" should have been been a big BUT. On page 69 Mr. Bogle writes: "Common sense tells us that we are facing an era of subdued returns in the stock market." This would have been a good place to add that index funds could in fact also guarantee you your fair share of devastating loses for a decade or two. It has happened before.
In 1990 the Japan Nikki 225 was about 40,0000. 13 years later in 2003 it was about 8,000. A decline of 80%. In 2008 it has increased by 62% to about 13,000 but still down a stunning 68%, 17 years after the peak in 1990. And here and now in America the stock market, index funds and all, is trading where it was nine year ago. The S&P 500 - stock index finished at 1352.99 on March 25, 2008, below the 1362.80 it was in April 1999. Since 1999 gold has had an annualized total return on investment of 14.51% and real estate (REITs) 14.11% (see March 26,2008 WSJ for more details). A recession and stagflation could could cause the decline to go on and on but no one knows. During the Great Depression stocks lost 90% of their value and then took 25 years to recover.
This is a fine book but the focus on just stocks and bonds, common sense should tell you is too narrow. It makes sense to be more broadly diversified. Hard assets like gold and sensibly priced (monthly rent 1% of price) income property that will protect you when index funds continue to let you down down down.
Today when I become a little sad from looking at how my index funds are doing I get cheered by reading my property manager's report about my investment in half a dozen condominiums (in fact they make me so happy I wrote a how-to book about them) and by looking up the price of gold.

In the introduction it is stated that: "Only stock market risk remains." (if you invest in index funds). The "Only" should have been been a big BUT. On page 69 Mr. Bogle writes: "Common sense tells us that we are facing an era of subdued returns in the stock market." This would have been a good place to add that index funds could in fact also guarantee you your fair share of devastating loses for a decade or two. It has happened before.
In 1990 the Japan Nikki 225 was about 40,0000. 13 years later in 2003 it was about 8,000. A decline of 80%. In 2008 it has increased by 62% to about 13,000 but still down a stunning 68%, 17 years after the peak in 1990. And here and now in America the stock market index funds and all are going down down down and when it will stop no one knows. A recession and stagflation could could cause the decline to go on and on but again no one knows. During the Great Depression stocks lost 90% of their value and then took 25 years to recover.
This is a fine book but the focus on just stocks and bonds common sense should tell you is too narrow. It makes sense to be more broadly diversified. Hard assets like gold and sensibly priced (monthly rent 1% of price) income property that will protect you when index funds continue to let you down down down.
Today when I become a little sad from looking at how my index funds are doing I get cheered by reading my property manager's report about my investment in half a dozen condominiums (in fact they make me so happy I wrote a how-to book about them) and by looking up the price of gold.

This book provides much evidence supporting the use of broadly diversified Index Funds as a primary means of investing for the long term. By following the advice in this book, you will very likely earn more than the average mutual fund investor and spend less time managing your investments. The book is a little redundant in its message, but the advice is valuable. I would also recommend the book "The Only Investment Guide You'll Ever Need" by Andrew Tobias.

Buy index funds. That is it. I have just summed up this book in three words and now you don't need to waste your time and money on it.

The title suggests this book is about investing. Well there is a lot more to invest in than index funds. Apparently the author has not heard of some of the more arcane investments such as stocks or options but you would not know it from reading this book.

The book starts out telling you how the stock market is a zero sum game and how you can't beat the market. Then it tells you your only hope is to buy into an index fund and hold for the long term if you want any chance of coming out ahead. Then in the remaining 230 pages it repeats the points and quotes other well known investors in an effort to give the author an ego boost. And the quotes are dated and incomplete. For example he attributes a quote to former hedge fund manager Jim Cramer about how wonderful index funds are and how brilliant Bogle is. Well if you watch Mad Money or have read Jim Cramers books you know he urges people to invest in index funds if they have less than $10K to invest in the stock market or don't have the time to do the homework involved in owning a stock. If you have over that limit he urges you to invest in the market because with discipline and homework you will be able to beat the index funds.

Overall I am very unimpressed with this book. If you want to read a book about investing I suggest any of these books. All of these books are excellent and provide you with the information you need to be a successful investor. And if you only want one to start I suggest the book by Mizrahi as it is outstanding.

Getting Started in Value Investing (Getting Started In.....)
Jim Cramer's Mad Money: Watch TV, Get Rich
Jim Cramer's Real Money: Sane Investing in an Insane World
The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

The book is absolutely the single, best book for most investors. I gave a copy to each of my three adult sons and told them this was the only book they would have to read to "do well" investing.

As Warren Buffett said man has a perverse habit of making simple things complex. Everyone who already invests or intends to invest must read this book. The book is well written and not heavy with any esoteric investment concepts. Sometimes it may seem like a bit repetitious, but that I believe is necessary. This is because sometimes one cannot see the obvious and the facts must be repeated to drill it in.

To some who do their extensive 'research' and pick the 'right' sectors, fund managers, stocks etc this book may seem too simplistic. Believe me, I was one like that more than a decade back. The bull market of 90s and the subsequent bear market of early 2000s and a lot of common sense reading has taught me enough. Now I have most of my and my wife's 401Ks, taxable account, my son's 529 in portfolios of index funds.

Who says indexing is boring. It is not. The real fun is comparing the index portfolio performances with actively managed fund portfolios after taking into consideration the costs, taxes and fees.

I would also recommend "The Four Pillars of Investing" by William Bernstein and if you are mathematically oriented "The Intelligent Asset Allocator" by the same author.

A little off topic: You may also want to read "Buffett: The Making Of An American Capitalist" by Roger Lowenstein. This book is not directly related to indexing, but one gets a decent understanding of the mind of the greatest investor (and also a great human being) that has ever walked on this planet. Unless you are one like Warren Buffett, stay with index funds.

Estoy leyendo este libro y me parece genial es la misma receta de los autores que creen que los mercados son eficientes podria decir que es tan bueno como cualquier libro de Malkiel sin embargo quiero decirles algo, seguramente estos autores tengan razon en lo que dicen pero le quitan la magia al juego, leer este tipo de libros es como ver los trucos de todos los magos, simplemente la inversion pierde su chiste, su sazon.

Definitivamente te lo recomiendo, metaforicamente hablando es del tipo de libros que te explican que la comida chatarra es basura y que lo que importa son las ensaldas, el atun, las proteinas etc. a fin de cuentas sabes que tienen razon, pero y que pasa con esos sitios secretos del comer delicioso que has encontrado durante un largo andar por la vida?

La leccion es: renuncia a todo eso, come bien y viviras muchos años mas.

Compralo no te arrepentiras !!!

As expected, Bogle believes in the efficient market theory, meaning you cannot consistently and over the long haul beat the market. But even if you believe you can beat the market, or that you have developed a system that when backtested against market data, you can show that you beat the market, you still lose in the real world, where there are transaction fees, and worst of all, taxes. It might seem obvious, but taxes eat up a hefty portion of your gains, and most of the "systems" that beat the market statistically require you to be able to trade as soon as their indicator tells you. In the real world, this doesn't happen. You might decide to try to hold on for long term capital gains only to see your winnings evaporate. Or, if you take the trade, you must deduct immediately the taxes due. And now you must get lucky again on the next stock you put the money into, but with 45% less (Fed + CA state). Maybe noone has calculated how much your next stock has to gain just to make up the tax loss. And that is what Bogle points out is the folly of following systems that try to beat the market (assuming someone has one that works consistently).

In the real world, investors consistently time the market incorrectly. Bogle shows mathematically that you are not guaranteed to even get the return that the fund shows as an average, if you're always buying at the top. Indeed many mutual funds expand and shrink as their relative performance goes up or down. Therefore the majority of the investors in that fund got in near the peaks, and tend to exit when the fund goes down. People are constantly switching to the Morningstar 4 or 5 star funds, not realizing that they are not getting the average gains that attracted them because they put their money in after the gains have already occurred.

Finally, as he has preached over and over again, expenses are like this little cancer that truly can devastate any actively managed fund. Expenses can eat up what dividends are paid, and reduce the amount of your capital to be put to work in compounding (assuming you reinvest).

EFT's can work for you if you buy and hold. However their very format of being traded in the secondary market encourage frequent trading. Bogle is not a fan of market timing, and this includes sector investing, which is a form of market timing. The pletora of index EFT's of all different colors and stripes allow people to easily invest in sectors that are hot and dump them when they are not. Problem again, taxes, transaction costs, and bad timing.

I suppose the old adage, "simple is best", rings true here. Bogle does admit that being humans, we would get bored if investing were only so simple. So he suggests that you split your money into Serious Money Account (95%) and Funny Money Account (5%). Then after one year, five years, ten years, compare your results. Don't forget the taxes, make sure to set them aside immediately from your profits (move them to another account, so you can't cheat!). Bogle is betting that if you put your Serious Money Account in indexs you will beat your Funny Money Account. I'm thinking you'll also sleep better and have time to pursue other hobbies, as well as have it easier during tax time. Do I follow his advice myself? Well I haven't for more than 20 years, and honestly I'm not beating the market, as the -$3000 which shows up most years tells. Problem is knowing what to do, and giving up on the dream of being above average. You do know that everyone can't possibly be above average, right? Sleep tight and get rich, what are you waiting for?

As expected, Bogle believes in the efficient market theory, meaning you cannot consistently and over the long haul beat the market. But even if you believe you can beat the market, or that you have developed a system that when backtested against market data, you can show that you beat the market, you still lose in the real world, where there are transaction fees, and worst of all, taxes. It might seem obvious, but taxes eat up a hefty portion of your gains, and most of the "systems" that beat the market statistically require you to be able to trade as soon as their indicator tells you. In the real world, this doesn't happen. You might decide to try to hold on for long term capital gains only to see your winnings evaporate. Or, if you take the trade, you must deduct immediately the taxes due. And now you must get lucky again on the next stock you put the money into, but with 45% less (Fed + CA state). Maybe noone has calculated how much your next stock has to gain just to make up the tax loss. And that is what Bogle points out is the folly of following systems that try to beat the market (assuming someone has one that works consistently).

In the real world, investors consistently time the market incorrectly. Bogle shows mathematically that you are not guaranteed to even get the return that the fund shows as an average, if you're always buying at the top. Indeed many mutual funds expand and shrink as their relative performance goes up or down. Therefore the majority of the investors in that fund got in near the peaks, and tend to exit when the fund goes down. People are constantly switching to the Morningstar 4 or 5 star funds, not realizing that they are not getting the average gains that attracted them because they put their money in after the gains have already occurred.

Finally, as he has preached over and over again, expenses are like this little cancer that truly can devastate any actively managed fund. Expenses can eat up what dividends are paid, and reduce the amount of your capital to be put to work in compounding (assuming you reinvest).

EFT's can work for you if you buy and hold. However their very format of being traded in the secondary market encourage frequent trading. Bogle is not a fan of market timing, and this includes sector investing, which is a form of market timing. The pletora of index EFT's of all different colors and stripes allow people to easily invest in sectors that are hot and dump them when they are not. Problem again, taxes, transaction costs, and bad timing.

I suppose the old adage, "simple is best", rings true here. Bogle does admit that being humans, we would get bored if investing were only so simple. So he suggests that you split your money into Serious Money Account (95%) and Funny Money Account (5%). Then after one year, five years, ten years, compare your results. Don't forget the taxes, make sure to set them aside immediately from your profits (move them to another account, so you can't cheat!). Bogle is betting that if you put your Serious Money Account in indexs you will beat your Funny Money Account. I'm thinking you'll also sleep better and have time to pursue other hobbies, as well as have it easier during tax time. Do I follow his advice myself? Well I haven't for more than 20 years, and honestly I'm not beating the market, as the -$3000 which shows up most years tells. Problem is knowing what to do, and giving up on the dream of being above average. You do know that everyone can't possibly be above average, right? Sleep tight and get rich, what are you waiting for?

Bogle's book provides great advice for those seeking low maintenance, low risk investments. This is a book that I wish I had gotten my hands on years ago, but it's practical advice for all ages. Bogle is able to dumb down the merits of index fund investments so that most minds, regardless of their financial IQ, can comprehend his arguments.

Book explains how to recover what is ours from the world of business. I wish I would have read it 20 yrs. ago. Explains how Harvard and many large endowments invest. Why pay a broker 70% of the income from growth and dividends for a 10% chance of beating a stock index when you can buy the indexes for 0.2% in yealy fees.

Great book for newbies (and others too) wanting to learn about investing, especially INDEXING. I enjoyed it thoroughly! John Bogle does an excellent job explaining the simplicity and benefits of INDEX FUND investing.
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Book Big Profits)

I can sum up the entire book in a short paragraph:

Buy low expense index funds. You probably can't beat the market, so don't spend a lot of money/time trying to do so.

The author makes his point over and over again, with frequent "I told you so" examples, which is a bit annoying. The book would have made a great 6 page magazine article.

That being said, Bogle did convince me that he is right, leading to a radical change in my investment strategy.

This book gives one the fundamental rules of investing in the safest manner possible using the 500 S and P Index fund and the least cost.The book is not for seculators but for long term investors . It is a very readable book and covers basic terms without the need to go to more analytical tombs.I must say that the author whom I have read in the past is very repetitive and could well have said the same in half the nunber of pages.

In this book, John Bogle makes a case for low cost index mutual funds as a good investment. The case is built on solid logic and the book is definitely worth a read, not only if you are interested in index mutual funds, but also to awaken you to the pitfalls of active fund management.

Regarding Exchange Traded Funds (ETF's) I would not completely dismiss them in favor of index mutual funds. If used correctly (with discipline and not traded continually) a low cost ETF could give you as good a return if not better than an index mutual fund.

I would also highlight the danger of assuming that an index fund can be bought at any price and then held for years to make a good investment. It is not explicitly discussed, but worth considering that when the market is at its most speculative, the index is likely to be high and could fall dramatically in the future. Also, when a particular stock is at its most speculative, by definition it occupies a greater part of the index (and hence the index fund), which is also a danger.

Overall the book is an easy, quick, good read that will highlight issues in fund management.

So much common sense about investing from Mr. Bogel. His approach is easy to follow and, based on his track record, an approach to use the miricle of compounding that will work.

Mike Hammel

This book goes over again his Eureka moment on how to make money on the stock market. He saw something simple and it made sense to invest! Bogle has made a lot of money and helped others on a safer way to invest - invest in all stocks (diversify) and stay in for the long term (keep fees low). Bogle emphasizes you can't win paying a middle man and hopping in and out of a market when you don't know the best time. It is a gamble and the odds are against you.

When you invest you need to know (from Keynes) that the long-term expectation for stocks is a combination of enterprise "forecasting the prospective yield of assets over their whole life") and speculation ("forecasting the psychology of the market"). These words were incorporated in Bogle's senior thesis at Princeton. He also notes that accurately forecasting swings in investor emotions is not possible. But forecasting the long-term economics of investing carries remarkably high odds of success.

The stock market is fickle and seldom does one win on speculation. Again and again the book emphasizes to forget the stock market and pay attention to dividend returns and operating results of your companies. Keep your life simple - it is easier to understand and plan.

The takeaways from the book are:

We must start to invest early and continue to put away money regularly
We know investing entails risk, but not investing dooms us to financial failure
We know the sources of returns in stock and bond markets, which is the beginning of wisdom
We know that risks can be reduced by total diversification offered by classic index fund. Only market risk remains
We know that costs matter, and taxes - and in the long-run best to stay the course to minimize
We know that neither beating the market nor successfully timing the market can be generalized without self contradiction. What may work for the few cannot work for the many.
We know that alternative asset classes such as hedge funds aren't really alternative, but simply pools of capital that invest - over or under - in the very stocks and bonds that comprise the portfolio of the typical investor.
Finally, we know what we don't know. We can never be certain how the world will look tomorrow, or in 10 years. Stay in - glide along the bumps.

I've been in a stock club for 10 years but I am still a nervous investor.

This book gave me some great direction. Some of the other reviews are right...the message is buy an index fund. They cost less and give you the best risk/reward ratio.

I got that in the first chapter. It just got repeated over and over and over.

For a novice who wants to get into the market the cost of this book will likely be a minimal cost for lifetime earnings.

If you want to save money here is the message: "buy a low cost fund that tracks the S&P 500 or the wilshire 5000. Buy it from vanguard of fidelity.

Author John Bogle makes a compelling case for index funds as THE wisest investment vehicle as opposed to active traded or managed funds. He argues persuasively that actively traded funds are fraught with costs that compromise yield and that trying to "beat the market" is a Loser's Game that only enriches the intermediaries such as stock brokers and investment managers. Two concerns, though.

The book's title somewhat overreaches, though, given its almost exclusive focus on index funds. The title implies a broader perspective on investing, whereas the laser-like focus is on index funds. As a result, I personally have a "truth in advertising" issue with the book.

Second, the book is a one-idea treatise that beats the dead horse again and again and again to the point where it is overkill and repetitious.

These are relatively small quibbles. Anyone holding investments or considering embarking on an investment program should read THE LITTLE BOOK OF COMMON SENSE INVESTING, subject to these two caveats.

This is the most important book on retirement. if you don't buy anything else, get this one!

In the Peter Lynch mode of thinking

Beat the pros with common sense!

This is the best investment book I've ever read. John Bogle's common sense approach to investing is easy to follow and very profitable. I wish I had this knowledge 25 years ago! Highly recommended!

John Bogle is an investing guru.
But this entire book is him pitching his prized mutual fund that he created 30 years ago:
The Vanguard Standard and Poor's 500 Index Mutual Fund.

That's it!

So instead of reading the 214 pages, you can just read the following sentence:

"Buy the Vanguard S&P 500 Index Mutual Fund"

I already have, directly through Vanguard, so it was not new information.

I have been "investing" for years without a sustainable strategy. The information provided in this book is educational, reassuring and eye-opening. Mr. Bogle showed that Investing need not be complicated and provided many examples and facts to support his assertions. If you need good, sound proven financial advice from an industry giant, this is invaluable and a must-read book. I bought 5 copies (one is audio CD) and gave them to my friends and sister.

As a professional portfolio manager since the 1960's [now retired] I most highly recommend this book. I have purchased copies for my adult children, as well as for some for-profit and non-profit boards on which I serve. I am telling all that this easy, one-day read has the potential to be a financial life-enhancing event, if they agree with the basic premise. And that there is no reason not to agree with the premise. I very much like that Bogle includes supporting data at the end of every section. A true five-star book.

I don't disagree with the doyen of Index investing.

There is no doubt that Index investing is the best way to maximize returns using a passive "buy and hold" strategy
and in many ways superior to most actively managed funds.

However, what the book fails to explain is the fact that Index investing is not immune to systematic risks. The index will crash if there is a bubble similar to what we witnessed in 2000. Index funds are based on efficient market hypothesis- if all known information is already factored into the price, there is no room for arbitrage.
But,if all investing were to become index based, EFT and electronic, who will actively seek information other than what is disclosed as per law by publicly traded companies? We should not forget that dot coms and Enron were also part of the index at some point. The duration of holding is also relevant, as investors close to retirement still need to follow the good old rule of thumb, your age is the %age of bond/money market holdings in your portfolio,which probably explains why even Vanguard is offering life cycle funds.

If not for John Bogle and Vanguard, we would not even had an alternative to complacent, fee-hungry fund managers.

The Facts Are In The Numbers

There is a repetitive theme in this book, not redundance. And it's supported by expert analysis, portfolio comparisons, and the numbers: "humble arithmetic." Over time Index Funds out-perform most managed mutual funds. The longer the amount of time, the more detrimental the damage - if - you own managed funds. "Where returns are concerned, time is your friend. But where costs are concerned, time is your enemy."

Bogle notes (like so many others) how fund advertisements mislead and outright lie by stating that "X fund has an annual average return of 12% per yer," but omits the costs: portfolio transaction costs, Load charges, 12-1bs, and taxes accrued on realized gains. (And inflation must always be factored.) The S&P 500 rose by an average of 12 percent for twenty years, but most managed mutual funds got far, far, lower returns than that.

The 4 E's: Enemies of Equity investors are Expenses and Emotions, according to Warren Buffet.

Financial Intermediation has created enormous fortunes for those n the fields of managing other people's money.

One example:
Merrill Lynch is the largest brokerage firm in the world. One of its biggest marketing and profitable successes also created one of the biggest losses for investors. At the height of the bubble in 2000, Lynch launched two new funds: the "Focus Twenty" and the "Internet Strategies" Fund. Like clockwork, at the height of the bubble frenzy the consumers were drawn in. The best time to sell a fund is the worst time for consumers to buy it. $2 billion dollars poured into Merrill Lynch. "Internet Strategies" sank almost immediately and lost 86 percent, while the "Focus Twenty" (which comprised the top 20 favorite stock picks of Merrill Lynch managers) lost 28% in 2000, 70% in 2001, and 39% in 2002 (p. 106). Ouch. A lot of funds declined in this three-year period, but not nearly as much. Funds chosen by managers earn 40 percent less than index funds, in general (source, NY TIMES).

But it's not just John Bogle that states this. Bogle hits home with his "Don't take it from me" passages throughout the book, quoting and sourcing what other financial minds say about managed vs. index funds, and organizational and individual investment psychology. There are tons of exhibits and tables with comparisons. Sources are provided throughout.

Relation to 401K and IRAs:
IMO, regular non-IRA (non tax deferred) index funds can be a vehicle that supersedes endangered Defined Pension Benefit Plans for those wanting to add more than the limits, or simply supplement the IRA and 401K limits to retirement accounts. Or, add more diversification and control over one's portfolio. Indexing can also be useful for those that don't have the two tax-deferred options available to them and is another choice because of low taxation and low expense costs.

Including indexing another but related topic, company pensions can inhibit and limit the worker. They often anchor employees into a company or industry. Many want to change, but stay and wait to cash out. The pension fund makes the rules. They tell you how long to stay to receive X amount.

This the best investment book I've ever read. It's also been the most honest.

What an incredible, straight forward book about investing! It should be required reading for every high school class in the country. Another great job Mr. Bogle!

Not that great. The author really only had one idea to sell, and that was to buy an Index fund. Had lots of statistics and quotes from other people.

To summarize: Don't waste your money w/active mutual funds, simply purchase the entire stock market via an index fund.

By all means save your $$$ and do not buy this book. The information is simply repeated in each and every chapter.

John Bogle created the world's first index fund in 1975. In this book, he describes why you should make index funds the core of your investment portfolio.

Bogle starts off with introducing index funds through a parable that describes how middle-man costs in finance eat away at investors' profits. He discusses why speculation doesn't work and why business reality (in his definition, divident yields plus earnings growth) is more important that market expectation (changes in P/E based on what investors are willing to pay for various equities).

Bogle spends a few chapters discussing various problems with regular actively managed mutual funds, covering issues with performance (he asserts that less than 1% of all mutual funds were able to beat the market consistently over the past half century), various costs (expense ratios, sales charges, advertising fees, turnover costs, tax implications), poor market timing, and finally the difficulty of choosing a mutual fund (he states that there's no good way to pick a fund, since we can't foretell the future, and past performance is not an indicator of what's to come). He brings the reader to the "common sense" conclusion that index funds, in their pure simplicity, are the logical choice for any investor, as they provide the diversified return of the entire market with miniscule fees and minimal effort.

The last few chapters cover bond funds, ETFs, and a few pages of investment advice - which boils down to keeping at least 50% (if not all) of your money in broad-market index funds. Interestingly, Bogle spends a chapter discussing what Benjamin Graham would have thought about index funds, citing various quotes from Graham's "The Intelligent Investor" and certain blurbs from Warren Buffet. He, of course, concludes that Graham would have praised index funds.

So, did I like the book? Yep.. it was pretty good. Bogle writes very clearly and visibly tries to keep his discussions simple and to the point, so as to appeal to the widest possible audience. And with good reason! Bogle's advice is very applicable to the many individual investors today - index funds are a great low-cost and low-maintenance way to get your share (or all, as Bogle suggests) of the market's return.

To convince the reader, Bogle uses many diagrams to illustrate returns of various mutual funds vs. index funds, and to compare what your original investment would look like after a certain time - based on how it was invested. I found an error in one of the diagrams - exhibit 10.1 (and the text around it) on page 108 lists the average fund advisor return as $188,500 instead of $88,500. Not a big deal, but it slightly undermines the point he's trying to make on that page. Overall, I feel that Bogle's diagrams illustrate some good harsh realities - he clearly illustrates how a few percentage points (i.e. the costs associated with actively managed mutual funds) can eat away enormous chunks of your money over time.

To bring more authority into his argument, Bogle provides a "Don't Take My Word for It" section at the end of each chapter, where he quotes various respected investors and professors to support the points he made in the chapter. I enjoyed this, but it's important to be aware that some quotes can often be interpreted very differently outside a certain context.

One very obvious issue with this book is that Bogle is selling his own product - Vanguard's funds. He doesn't try to hide this in any way. He uses Vanguard's funds in nearly all examples, and he often hints how his "world's first index fund" is the greatest thing since sliced bread. You can't really blame the man - his contribution to the world of finance and investing is enormous, and he damn well should be proud of his accomplishments. So I think it's okay to cut Bogle some slack in this area.

The book is short - about 215 small-size pages. You can probably sit down and read it in a few solid hours. It also goes pretty quickly, as the material is not dense and easy to follow. However, some may argue that the book is too long for what it is trying to demonstrate. True, Bogle's advice really can be summed in just a few pages - index funds are a great choice for the average investor. But I have to say that I enjoyed reading the examples and history that he provides.

In conclusion, I recommend this book to any individual investor. While Bogle's advice is in no way eye-opening or revolutionary (chances are, you already know that index funds are a very low-cost and low-maintenance way to diversify), it is good to remind yourself the reasons why you should stay away from most actively managed mutual funds. As Bogle describes, this is all common sense - but we're often blinded by flashy advertisements, hot market sectors, and seemingly-reachable dollar signs. This book is a good reality check for the average individual investors.

I wish I could give this book 4.5 stars - but since I can't due to Amazon's rating system, I feel that it is more of a 4-star book rather than a 5-star one. It has solid advice, but it should not be considered the end-all of investing, and some of the advice and quotations should be taken with a grain of salt. Overall, however, it's a great and insightful read. I plan to buy a couple extra copies to give to my family.

Pros:
+ quick and easy read
+ lots of examples and diagrams to demonstrate how high expense ratios and other hidden costs can devastate a portfolio's return
+ some good basic investment advice: buy and hold, avoid emotional decisions, don't be enticed by "new hot trends" (as by the time you find out about them, prices are already inflated), diversify into the whole market, look into costs before buying, etc.
+ great format - short chapters, useful data, neat quotation sections at the end of each chapter

Cons:
- some may be turned off by Bogle's plugs for Vanguard funds (this didn't really bother me)
- may seem lengthy to drive one main point home (but keep in mind that there are quite a few good tid-bits scattered throughout the book)
- take some citations with a grain of salt

Easy to read and common sense. Of course the author is plugging his own product (Vanguard index funds) but you can ignore that bit.

M

Convincing arguments as to why index fund investing is superior to managed mutual fund investing.

It is grim fact that pentions are going the way of dinosours and every individual must be their own money manager. Most people listening to the noise of Wall Street which is designed to make long boring process of investing look overly exciting for ratings, is making many mistakes which could be costly on the long term. Many do not have the proper financial education and when they do turn to others for help they are often taken advantage of by the brokers (which go by many fancy titles) with expensive and sometimes even inappropriate products which often benefit the seller more than the investor.

John C. Bogle gives a clear direction for investing and makes a very strong case for use of diversified index funds. He also quotes Nobel Laureates, famous investors such as Warren Buffet etc. at the end of each chapter in "Don't Take My Word for It" frames.

It is a great book for someone just learning about investing as well as for those who are recovering from their mistakes and failures.

Other books I would recommend to follow up are:

A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition (Hardcover)
The Four Pillars of Investing: Lessons for Building a Winning Portfolio (Hardcover)
Capital Ideas: The Improbable Origins of Modern Wall Street (Paperback)

Bogle has managed to reduce what you need to know about index investing into a concise, simple, "little" book. It's a useful starting point for those wondering whether and how to get into the market smartly.

Really makes you think about the HOURS one spends on research. This is a must have book. I enjoyed it so much I now have the Audio Book too.

Great Book explains Bogle's arguments for investing in Index Funds and quotes from authorities that back him up.