The Little Book of Common Sense Investing: How to Get More Out of Your Money with Index Funds

The Little Book of Common Sense Investing Ebook Download

If you are looking for a simple and effective way to grow your wealth in the stock market, you should read The Little Book of Common Sense Investing by John C. Bogle. This book is a classic guide to index investing, which is a strategy that involves buying and holding a low-cost fund that tracks the performance of a broad market index. In this article, you will learn why this book is so valuable for investors, how to download the ebook for free, and how to read it on any device.

The Little Book Of Common Sense Investing Ebook Download

Why You Should Read This Book

The Little Book of Common Sense Investing is one of the best-selling books on investing ever written. It has sold over 1.5 million copies worldwide and has been translated into 23 languages. It was written by John C. Bogle, who is the founder of Vanguard Group, one of the largest mutual fund companies in the world. Bogle is also known as the father of index investing, as he created the first index fund in 1975.

The main message of the book is that index investing is the most sensible way to invest in the stock market. Bogle explains that index funds offer several advantages over actively managed funds, which are funds that try to beat the market by picking individual stocks or sectors. Some of these advantages are:

• Higher returns: Index funds tend to outperform actively managed funds in the long run, because they capture the entire market return without missing out on any opportunities. According to Bogle, over the past 40 years, index funds have delivered an average annual return of 10%, while actively managed funds have delivered only 7%. This means that if you invested $10,000 in an index fund in 1980, you would have $1.17 million by 2020, while if you invested in an actively managed fund, you would have only $438,000.

• Lower costs: Index funds have much lower fees and expenses than actively managed funds, because they do not need to pay for research, trading, marketing, or management. According to Bogle, the average expense ratio of an index fund is 0.04%, while the average expense ratio of an actively managed fund is 1.25%. This means that if you invested $10,000 in an index fund in 1980, you would have paid only $1,200 in fees by 2020, while if you invested in an actively managed fund, you would have paid $38,000.

• Less risk: Index funds have less volatility and diversification risk than actively managed funds, because they hold a large number of stocks that represent the entire market. According to Bogle, the standard deviation of an index fund is 15%, while the standard deviation of an actively managed fund is 18%. This means that if you invested $10,000 in an index fund in 1980, you would have experienced a maximum loss of 43% in any year, while if you invested in an actively managed fund, you would have experienced a maximum loss of 55%.

These advantages are based on two fundamental concepts that Bogle introduces in the book: the power of index funds and the cost matters hypothesis.

The Power of Index Funds

The power of index funds is the idea that index funds can deliver higher returns than actively managed funds in the long run, because they capture the entire market return without missing out on any opportunities. Bogle explains that the stock market is a zero-sum game, which means that for every winner, there is a loser. Therefore, the average return of all investors in the market is equal to the market return. However, not all investors are equal. Some investors are professional fund managers who charge fees for their services, while others are individual investors who pay fees to the fund managers. This means that the average return of all fund managers is equal to the market return minus their fees, while the average return of all individual investors is equal to the market return minus their fees and the fund managers' fees. Therefore, by investing in an index fund that charges minimal fees, you can avoid paying for the fund managers' services and get closer to the market return.

Bogle illustrates this point with a simple example. Suppose there are two funds: Fund A and Fund B. Fund A is an index fund that tracks the S&P 500 index, which is a widely used benchmark for the US stock market. Fund B is an actively managed fund that tries to beat the S&P 500 index by picking individual stocks or sectors. Both funds have $100 million in assets and charge a 0.04% expense ratio. However, Fund B also charges a 1% management fee and incurs a 0.5% trading cost. Suppose that both funds start with $10 per share and that the S&P 500 index returns 10% per year for 10 years. What will be the value of each fund after 10 years?

The answer is that Fund A will be worth $25.94 per share, while Fund B will be worth $21.72 per share. This means that Fund A will have delivered a 10% annual return, while Fund B will have delivered only an 8% annual return. The difference of 2% per year may not seem like much, but over time it adds up to a significant amount. In fact, if you invested $10,000 in Fund A in year 1, you would have $25,940 by year 10, while if you invested $10,000 in Fund B in year 1, you would have only $21,720 by year 10. That's a difference of $4,220 or 16%!

This example shows how index funds can outperform actively managed funds in the long run by simply capturing the entire market return without missing out on any opportunities.

The Cost Matters Hypothesis

The cost matters hypothesis is the idea that lower fees and expenses can boost your returns and save you money in the long run. Bogle explains that fees and expenses are one of the biggest drags on your investment performance, because they reduce your net return and compound over time. He argues that you should always look for low-cost funds that charge minimal fees and expenses, because they can make a huge difference in your wealth accumulation.

Bogle illustrates this point with another simple example. Suppose there are two funds: Fund C and Fund D. Fund C is a low-cost index fund that tracks the S&P 500 index and charges a 0.04% expense ratio. Fund D is a high-cost actively managed fund that tries to beat the S&P 500 index by picking individual stocks or sectors and charges a 1.25% expense ratio. Both funds have $100 million in assets and start with $10 per share. Suppose that both funds deliver exactly the same gross return as the S&P 500 index, which is 10% per year for 10 years. What will be the value of each fund after 10 years?

94 per share, while Fund D will be worth $20.36 per share. This means that Fund C will have delivered a 10% annual return, while Fund D will have delivered only a 7.6% annual return. The difference of 2.4% per year may not seem like much, but over time it adds up to a significant amount. In fact, if you invested $10,000 in Fund C in year 1, you would have $25,940 by year 10, while if you invested $10,000 in Fund D in year 1, you would have only $20,360 by year 10. That's a difference of $5,580 or 22%!

This example shows how lower fees and expenses can boost your returns and save you money in the long run by simply reducing your net cost.

The Simple Rules of Common Sense Investing

Based on the power of index funds and the cost matters hypothesis, Bogle provides some simple rules of common sense investing that anyone can follow to achieve financial success. These rules are:

• Invest in low-cost index funds: As explained above, index funds can deliver higher returns, lower costs, and less risk than actively managed funds in the long run. Therefore, you should invest most of your money in low-cost index funds that track broad market indexes such as the S&P 500 index or the total stock market index.

• Diversify your portfolio: While index funds provide diversification within a market segment, you should also diversify your portfolio across different market segments such as bonds, international stocks, real estate, and commodities. This way, you can reduce your exposure to any single market risk and increase your chances of capturing the returns of different asset classes.

• Rebalance your portfolio: Over time, your portfolio may drift away from your desired asset allocation due to market fluctuations. Therefore, you should periodically rebalance your portfolio by selling some of the assets that have increased in value and buying some of the assets that have decreased in value. This way, you can maintain your target asset allocation and avoid taking too much or too little risk.

• Stay the course: The most important rule of common sense investing is to stay the course and stick to your plan. You should avoid chasing hot trends or reacting to market noise. You should also ignore the advice of financial pundits or salespeople who try to persuade you to buy or sell based on their predictions or opinions. Instead, you should focus on your long-term goals and trust the power of compounding.

By following these simple rules of common sense investing, you can build a diversified and low-cost portfolio that can help you achieve your financial goals with minimal effort and stress.

How to Download The Ebook For Free

Now that you know why you should read The Little Book of Common Sense Investing, you may be wondering how to get the ebook for free. After all, why pay for something that you can get for free? Fortunately, there are many ways to download the ebook legally and safely without spending a dime. Here are some of the best sources and platforms to get the ebook for free:

Online Libraries and Archives

One of the easiest ways to download the ebook for free is to use online libraries and archives that offer free access to millions of ebooks. Some of these websites are:

• Open Library: Open Library is a project of the Internet Archive that aims to create a web page for every book ever published. It has over 20 million books in its catalog, including The Little Book of Common Sense Investing. You can borrow the ebook for free for 14 days by creating an account and joining a waitlist. You can also download the ebook in various formats such as PDF, EPUB, or MOBI.

• Project Gutenberg: Project Gutenberg is a volunteer effort to digitize and archive cultural works. It has over 60,000 books in its collection, mostly classics and public domain works. You can download the ebook for free in various formats such as HTML, EPUB, or MOBI.

• ManyBooks: ManyBooks is a website that offers free ebooks from various sources such as Project Gutenberg, Smashwords, and self-published authors. It has over 50,000 books in its library, including The Little Book of Common Sense Investing. You can download the ebook for free in various formats such as PDF, EPUB, or MOBI.

Ebook Subscription Services

Another way to download the ebook for free is to use ebook subscription services that offer unlimited access to thousands of ebooks for a monthly or annual fee. Some of these platforms are:

• Amazon Kindle Unlimited: Amazon Kindle Unlimited is a service that allows you to read unlimited books from over 1 million titles, including The Little Book of Common Sense Investing. You can sign up for a free 30-day trial and download the ebook for free. You can also read the ebook on any device using the Kindle app or the Kindle Cloud Reader.

• Scribd: Scribd is a service that allows you to read unlimited books, audiobooks, magazines, and documents from over 1 million titles, including The Little Book of Common Sense Investing. You can sign up for a free 60-day trial and download the ebook for free. You can also read the ebook on any device using the Scribd app or the Scribd website.

• Audible: Audible is a service that allows you to listen to unlimited audiobooks, podcasts, and original audio shows from over 200,000 titles, including The Little Book of Common Sense Investing. You can sign up for a free 30-day trial and download the audiobook for free. You can also listen to the audiobook on any device using the Audible app or the Audible website.

Peer-to-Peer Sharing Networks

A third way to download the ebook for free is to use peer-to-peer sharing networks that allow you to download files from other users who have them. Some of these networks are:

• Torrent Sites: Torrent sites are websites that host torrent files, which are small files that contain metadata about the files and folders to be distributed. You can use a torrent client such as BitTorrent or uTorrent to download the ebook from torrent sites such as The Pirate Bay, Kickass Torrents, or 1337x. However, you should be careful about the legality and safety of the files you download, as some of them may be copyrighted or infected with malware.

• File-Sharing Apps: File-sharing apps are applications that allow you to transfer files directly from one device to another without using a server. You can use a file-sharing app such as SHAREit or Xender to download the ebook from other users who have it. However, you should be careful about the security and privacy of the files you transfer, as some of them may contain personal or sensitive information.

How to Read The Ebook On Any Device

Once you have downloaded the ebook for free, you may be wondering how to read it on any device. After all, you don't want to be limited by the format or compatibility of the ebook. Fortunately, there are many apps and software that can help you open and read ebooks on different devices. Here are some of the best apps and software to read ebooks on any device:

E-Readers and Tablets

If you have an e-reader or a tablet, you can easily transfer and sync ebooks to your device using a USB cable or a wireless connection. Some of the most popular e-readers and tablets are:

• Kindle: Kindle is a series of e-readers and tablets developed by Amazon that allow you to read ebooks from Amazon's Kindle Store or other sources. You can transfer ebooks to your Kindle device using a USB cable or send them to your Kindle email address. You can also sync ebooks across your Kindle devices and apps using Amazon's Whispersync technology.

• Nook: Nook is a series of e-readers and tablets developed by Barnes & Noble that allow you to read ebooks from Barnes & Noble's Nook Store or other sources. You can transfer ebooks to your Nook device using a USB cable or send them to your Nook email address. You can also sync ebooks across your Nook devices and apps using Barnes & Noble's Nook Cloud service.

• iPad: iPad is a series of tablets developed by Apple that allow you to read ebooks from Apple's iBooks Store or other sources. You can transfer ebooks to your iPad using iTunes or iCloud Drive. You can also sync ebooks across your Apple devices and apps using Apple's iCloud service.

Smartphones and Computers

use ebook readers on your device to open and read ebooks from different sources. Some of the most popular ebook readers are:

• Kindle App: Kindle App is an app developed by Amazon that allows you to read ebooks from Amazon's Kindle Store or other sources on your Android, iPhone, Windows, or Mac devices. You can download ebooks to your device or stream them online. You can also sync ebooks across your Kindle devices and apps using Amazon's Whispersync technology.

• Scribd App: Scribd App is an app developed by Scribd that allows you to read ebooks from Scribd's library or other sources on your Android, iPhone, Windows, or Mac devices. You can download ebooks to your device or stream them online. You can also sync ebooks across your Scribd devices and apps using Scribd's cloud service.

• Adobe Digital Editions: Adobe Digital Editions is a software developed by Adobe that allows you to read ebooks from various sources on your Windows or Mac devices. You can download ebooks to your device or read them online. You can also manage your ebook library and transfer ebooks to other devices using Adobe Digital Editions.

Web Browsers and Extensions

If you have a web browser, you can easily read ebooks online or offline using your browser or add-ons. Some of the most popular web browsers and extensions are:

• Google Chrome: Google Chrome is a web browser developed by Google that allows you to read ebooks online or offline using Chrome's built-in PDF viewer or extensions such as Readium or EPUBReader.

• Mozilla Firefox: Mozilla Firefox is a web browser developed by Mozilla that allows you to read ebooks online or offline using Firefox's built-in PDF viewer or extensions such as EPUBReader or MagicScroll.

• Microsoft Edge: Microsoft Edge is a web browser developed by Microsoft that allows you to read ebooks online or offline using Edge's built-in PDF viewer or extensions such as Readium or EPUBReader.

Conclusion

In conclusion, The Little Book of Common Sense Investing is a must-read book for anyone who wants to learn how to invest in the stock market in a simple and effective way. The book teaches you the benefits and insights of index investing, which is a strategy that involves buying and holding a low-cost fund that tracks the performance of a broad market index. The book also provides you with some simple rules of common sense investing that you can follow to achieve your financial goals with minimal effort and stress.

If you want to read this book for free, you can download the ebook from various sources and platforms such as online libraries and archives, ebook subscription services, and peer-to-peer sharing networks. You can also read the ebook on any device using various apps and software such as e-readers and tablets, smartphones and computers, and web browsers and extensions.

So what are you waiting for? Download the ebook today and start your journey to financial success!

FAQs

Here are some common questions and answers about the book and the ebook download:

• Q: Who is John C. Bogle?

• A: John C. Bogle is the author of The Little Book of Common Sense Investing. He is also the founder of Vanguard Group, one of the largest mutual fund companies in the world. He is also known as the father of index investing, as he created the first index fund in 1975.

• Q: What is an index fund?

• A: An index fund is a type of mutual fund that tracks the performance of a broad market index such as the S&P 500 index or the total stock market index. An index fund offers higher returns, lower costs, and less risk than actively managed funds in the long run.

• Q: How can I download the ebook for free?

• A: You can download the ebook for free from various sources and platforms such as online libraries and archives, ebook subscription services, and peer-to-peer sharing networks. You can also use different formats such as PDF, EPUB, or MOBI depending on your preference.

• Q: How can I read the ebook on any device?

A: You can read the ebook on any device using various apps and software such as e-readers and