The Little Book of Common Sense Investing
For anyone wanting to simply their approach to investing, index funds are about as simple as it gets. By investing in a single mutual fund you can own a piece of all of the nation's publicly held businesses. John Bogle invented the index fund, so it's no surprise that he believes such funds are "the only way to guarantee your fair share of stock market returns." But Bogle makes a compelling case, pointing to the many problems that come with investing in actively managed mutual funds: high fees and other expenses, promotion and ratings based mostly on past performance, and mostly the fact that the vast majority of actively managed funds simply fail to beat the market.
While most of the book focuses on equity index funds, at the end he touches on asset allocation, which he says is "almost universally considered the most important determinant of your long-term investment strategy." How should the average investor go about choosing the right asset allocation? Through the use of target date mutual funds comprised of various index funds, of course!
This is a good read from the man Fortune magazine named one of the four "investment giants" of the twentieth century. He'll convince you once and for all that investing in individual stocks or actively managed mutual funds may be exciting, but it's a loser's game. Buying index funds, on the other hand, may be boring, but it's the only way for most of us to invest successfully.
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