#234 in Business & money books
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Reddit mentions of Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition
Sentiment score: 7
Reddit mentions: 13
We found 13 Reddit mentions of Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition. Here are the top ones.
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- John Wiley Sons
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Specs:
Height | 9.098407 Inches |
Length | 6.098413 Inches |
Number of items | 1 |
Weight | 2.19580412952 Pounds |
Width | 1.901571 Inches |
$15 to this book (I'd focus on pretty much everything but the advice related to specific investments)
$20 to this book
$50 to savings
$15 to your local coffee shop. Camp out there a few days a week, sip some coffee, and get your learn on.
If you're just looking to learn instead of fulfilling a degree requirement then it is a probably more useful to pickup a book and do it yourself.
Some useful subs:
Some useful books:
The takeaway is that when it comes to investing there is no secret that will make you rich overnight. Picking random stocks hoping they suddenly shoot up is no different than gambling. Even the most well paid people in finance with all of their years of schooling cannot consistently beat the market.
Investing is a long term commitment.
I just stumbled onto this subreddit for the first time now, so apologies if I'm not replying to the request as desired.
Investing isn't really something that you can learn, in the sense that it's not like riding a bike where you practice and then after a little bit you know how to ride a bike and that's it. Think of learning to invest more as a constant journey, where you're always growing and gaining understanding but you can't really ever know enough. Most successful investors, including Warren Buffett and Charles Munger, are voracious readers simply because there is so much out there to absorb.
Here's the start of a reading list to take a look at, listed in order of how I would tackle them in your place (though obviously skip some or jump ahead if one description catches your eye specifically):
Indexing:
Value Investing:
Those are what I would start with. I recommend reading the books on indexing first not because I think the efficient market hypothesis (one of the topics covered in all three books) is 100% correct (it isn't), but because you need to have a filter in place that makes you skeptical and able to dismiss all the garbage investing advice that's out there (technical strategies promising 10%+ yearly returns guaranteed, etc). The value investing books I include because it is the only chance you have of beating the market over the long run, though I would only recommend the active management route if you have the time and energy to dedicate to it.
Most of what's in these books does boil down to a few basic tenets that could probably be summarized in a few pages, but I would discourage you from looking for quick investing summary information because it won't be of any use to you. It's not enough to understand/know the concepts. You have to believe in them, and live them every day. If you aren't absolutely convinced of the investing strategy you're using you'll wind up capitulating at the worst possible time and losing a lot of money, or at the very least being one of the many people who 'chase winners' only to suffer from consistently mediocre performance. That's why you need to be reading regularly--to keep your conviction and refresh yourself on the fundamentals.
Best of luck.
I have no real beef with anything you said, but I wanted to harp slightly on the whole idea of
> you are trading risk for returns
I'm currently reading Jack Bogle's Common Sense on Mutual Funds and the way he describes risk-adjusted returns finally made me understand it in a way that I could relate to, so I'm paraphrasing him here (and by all means, go to your local library and pick this behemoth up):
If you can achieve 10% growth with a risk level of 1.00, and 5% growth with a risk factor of 0.25, I always thought you had two choices:
However, Bogle uses leverage to equate the two in different ways. We'll ignore the cost of that leverage for the sake of the example, but if you were actually implementing this, it would (of course) have to be factored in...
So, if you'd like to get 10% growth, you don't just have to choose investment 1- you can instead borrow money and buy 2x the second investment option, giving you a return of (5% 2 = 10%) with only (0.25 2 = 0.50) risk. In other words, you could get the same growth out of the second investment using leverage with much less risk than by simply choosing the first option.
Or, if you're comfortable with a risk level of 1, he says you'd be better off borrowing money such that you quadruple your investment in the second option, giving you a risk level of (0.25 4 = 1), and an expected return of (5% 4 = 20%).
Therefore, option 2 was the better of the two because when you adjust for risk, the returns on that second investment were superior.
Since you're under age, see if you can get a custodial Roth IRA opened with your parent(s)' help. I'd strongly encourage investing in a low cost, diversified index fund.
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If you don't know what an index fund is:
https://www.investopedia.com/terms/i/indexfund.asp
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A good book - might take some time to get through - that explains index investing:
https://www.amazon.com/Common-Sense-Mutual-Funds-Anniversary/dp/0470138130
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Also, well done for making investing a priority at your age. Future you is grateful!
If you want a thorough explanation why actively managed funds fail to beat index funds, read Bogle's classic book on the subject.
In brief: the sum total of all actively managed funds form a market index, and the distribution of gross returns of actively managed funds is a normal distribution, with the mean centered on the index. That is, 50% of actively managed funds beat the index, and 50% fall short, in gross. This is exactly what you'd expect, if actively managed funds were cumulatively a market index. However, due to the increased costs of active management, which are subtracted from the gross returns, the entire distribution curve shifts to the left, and you end up with 2/3rds of actively managed fund net returns failing to beat the index. On the other hand, index funds are designed to track the index at very low cost, which means that, 2 out of 3 times, you're better off going with the index fund, where you're guaranteed to earn very nearly the index return, rather than with actively managed funds, where you will lose 2 out of 3 times because of their added cost.
I recommend reading Common Sense on Mutual Funds by John Bogle. Lots of research and support that proves mutual funds are not working in your favour.
https://www.amazon.ca/Common-Sense-Mutual-Funds-Bogle/dp/0470138130
Common Sense on Mutual Funds: Fully Updated 10th Anniversary Edition https://www.amazon.com/dp/0470138130/ref=cm_sw_r_cp_api_i_FKX4Ab8TPHD4C
Definitely worth your time. One of my top 2.
Buy a copy of John Bogle's "Common Sense on Mutual Funds".
https://www.amazon.com/Common-Sense-Mutual-Funds-Anniversary/dp/0470138130
Add this to your reading list. https://www.amazon.com/Common-Sense-Mutual-Funds-Anniversary/dp/0470138130
It's not a well-kept secret at all.
If you really want a good idea on investments, this is a great book. It is no BS, and it gives it to you straight (like how you can't beat the market, despite what some people think). I think even just the introductory sections are full of great insight and analysis. It is also considered a classic in many circles.
https://www.amazon.com/Common-Sense-Mutual-Funds-Anniversary/dp/0470138130
Educate yourself first. Don't just throw your hat in the ring. Read some books like:
The Intelligent Investor
Common Sense on Mutual Funds
There are other books out there, but I can't recommend what I haven't read.
I would ask you, what do you wish to accomplish? Do you want to put your money somewhere and forget about it? Do you want to try to make some money?
A guy in your position, I would recommend a Roth IRA. It is a tax free investment (in the US anyway) you can set up for your retirement. If you start contributing now, it will grow over the course of your lifetime.
It is really up to you - but please educate yourself first.