Summary of Mel Lindauer, Taylor Larimore, Michael LeBoeuf & John C. Bogle's The Bogleheads' Guide to Investing

Everest Media

Description

Please note: This is a companion version & not the original book.
Sample Book Insights:
#1 The government will not let you starve, but it is not committed to making your golden years golden. That is up to you. The majority of Americans who are about to retire will depend on government handouts for their retirement.
#2 The Borrowers’ financial future is headed over a cliff. Not only are they failing to build wealth, but they are building negative wealth, or debt. They rob tomorrow to pay for today.
#3 The American lifestyle more closely resembles that of Chad and Cathy Consumer than that of the Borrowers. Instead of borrowing to the max, Americans spend to the max based on their combined net incomes.
#4 The Consumers’ financial lifestyle is all about earning to spend. They never stop to consider how much they’re adding to the cost of the purchase or how long they will be paying for it. They believe they own their lifestyle, but in reality they are just renting it.

Sujets

• Personal finance
• Investment

Informations

• Publié par: Everest Media LLC
• Date de parution: 21 mars 2022
• Nombre de lectures: 0
• EAN13: 9781669356349
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Insights on Mel Lindauer, Taylor Larimore and Michael LeBoeuf & John C. Bogle's The Bogleheads' Guide to Investing
Contents Insights from Chapter 1 Insights from Chapter 2
Insights from Chapter 1

#1

The government will not let you starve, but it is not committed to making your golden years golden. That is up to you. The majority of Americans who are about to retire will depend on government handouts for their retirement.

#2

The Borrowers’ financial future is headed over a cliff. Not only are they failing to build wealth, but they are building negative wealth, or debt. They rob tomorrow to pay for today.

#3

The American lifestyle more closely resembles that of Chad and Cathy Consumer than that of the Borrowers. Instead of borrowing to the max, Americans spend to the max based on their combined net incomes.

#4

The Consumers’ financial lifestyle is all about earning to spend. They never stop to consider how much they’re adding to the cost of the purchase or how long they will be paying for it. They believe they own their lifestyle, but in reality they are just renting it.

#5

The third group of Americans has a different financial mind-set than the first two. They focus on accumulating wealth over time, and they have no higher income than the Borrowers and Consumers. They make a minimum of 10 percent of their take-home pay monthly payments toward their future financial freedom.

#6

You want to learn the basics of sound investing to achieve important life goals, such as living in a nice home, paying for your children’s college education, and having a comfortable retirement.

#7

The most important measuring stick of financial independence is not how much you make, but how much you keep. The measure of wealth is net worth: the total dollar amount of the assets you own minus the sum of your debts.

#8

If you have high-interest debts or revolving credit card balances, you should pay them off before you start investing. This is the highest, risk-free, and tax-free return on your money.

#9

The final prerequisite to investing is having a readily accessible source of cash on hand for emergencies. This means having a cash cushion of at least six months’ worth of living expenses in case you are suddenly unemployed or suffer a financial emergency.

#10

The example above demonstrates that with consistent saving and investing, you can accumulate a small fortune over time. However, very few people choose to do this, as it is a difficult process.

#11

The Rule of 72 states that to calculate how many years it will take an investment to double in value, you simply divide 72 by the annual rate of return. For example, an investment that returns 8 percent doubles every 9 years.

#12

The Rule of 72 is a mathematical equation that helps you understand the benefit of getting an early start on investing. It states that if you want to have a million dollars by age 65, you only need to deposit $4,000 a year in a Roth IRA beginning at age 25 and get an average annual return of 8 percent.

#13

The Bogleheads approach to investing is easy to understand and implement. It is not difficult to save, and the more you save, the sooner you achieve your financial goals. There is no substitute for frugality.

#14

The first rule of saving and investing is to take it off the top of your paycheck. If you wait until you have a few extra dollars to invest, you’ll likely wait forever. The best way to save is to reduce your spending right away.

#15

If you're under age 50, you can contribute up to $5,500 per year to a Roth IRA. People over age 50 can contribute up to $6,500. These contribution limits will be adjusted for inflation, so check to see if they've increased.

#16

If you are in the habit of spending all you earn, resolve to channel at least half of all future take-home pay increases to investing. This way, you will be able to maintain your standard of living and enjoy some of the benefits of a raise while investing.

#17

The most important item to consider buying used is your computer. The resale value of a new computer drops in a year. One that's a year or two old will probably do all that you want it to do for a fraction of the cost.

#18

The habit of buying a new car every few years has the potential to decrease your net worth more than any other buying habit, including credit card debt. If you buy a new luxury car or an SUV, the increased cost can easily be double that or more.

#19

You can reduce your costs of living by moving to a less expensive area. For example, a move from Newport Beach, California, to almost any Florida coastal city will reduce your cost of living by more than 50 percent according to the salary calculator at homefair. com.

#20

Creating additional sources of income is a great way to find money to invest. Do your research, and find a need or a want that needs to be filled. Find a problem and solve it. Find a hurt and heal it. People will pay money for goods and services that make them feel good and solve their problems.

#21

There are times when debt is a good investment. For example, borrowing money to buy a house or start a business is often a good idea. However, it is important to keep interest rates low, and borrow funds only when the expected payoff is higher than the cost of borrowing.

#22

Before we start investing, we need to know about the various mainstream investment options available to us. We’ll learn about stocks, bonds, mutual funds, funds-of-funds, exchange-traded funds, and annuities.

#23

Stocks represent an ownership interest in a corporation. When a company issues stock, it's actually selling a small fraction of its business to each person who purchases shares of the stock. The value of these shares depends on how much another buyer is willing to pay for a share of that company's stock.

#24

When you purchase individual bonds at initial issue, you are lending a specific amount of your money to the bond issuer. In return for lending your money to the issuer, you are promised a return on your investment that is the bond's yield to maturity and the return of the face value of the bond at a specified future date.

#25

The Treasury currently issues two types of U. S. Savings Bonds: I Bonds and EE Bonds. I Bonds have a minimum one-year holding period, which means they can't be cashed in during the first year you own them. After satisfying that first-year holding period requirement, they can be cashed in any time between the start of the second year and 30 years, with no loss of principal.

#26

Savings Bonds are ideal for holding bonds in your taxable account when you don't need the income from your bond holdings. They are also eligible for a tax-free educational benefit if you meet the income requirements.

#27

The easiest way to buy Treasury issues is through TreasuryDirect, which allows you to purchase U. S. Savings Bonds online. You can also have your bank purchase them for you, your broker purchase them for you, or open a TreasuryDirect account and use it to make your purchases.

#28

There are several government agencies that issue pools of mortgage-backed securities, such as the Government National Mortgage Association, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. These agenciesstimulate and facilitate home ownership by low- and moderate-income Americans.

#29

Corporate bonds are issued by corporations to raise money for various business purposes. The yield of the newly issued corporate bond will be primarily determined by four factors: the creditworthiness of the corporation, the current yield of bonds with comparable safety ratings and maturities, the demand for the bonds, and the call feature of the bonds.

#30

Municipal bonds are sold by local governments to pay for projects that benefit the entire community. They are typically free from federal taxation, and they are also free from taxes in the state of issue. However, some individual municipal bonds carry insurance that promises to cover both the interest and the principal payments, should the bond issuer have problems.

#31

A bond fund's duration is a measure to help investors determine if a particular fund is suitable for them, considering their time horizon and risk tolerance level. The longer the duration, the more volatile the fund will be in a changing interest rate environment.

#32

To choose the best bond fund for you, consider your investment time horizon, don’t worry about interest rate hikes, and match your fund to your risk tolerance.