Summary of The Bogleheads’ Guide to Investing
The Bogleheads’ Guide to Investing was set up in two parts, “Essentials of Successful Investing” and “Follow-Through Strategies to Keep You on Target.” There were 23 chapters in the book and I like the way the book was set up and the flow was very well put together. The book is written by three authors, Taylor Larimore, Mel Lindauer and Michael LeBoeuf. They are part of a group of people such as investors, lawyers, doctors, teachers, waiters and average joe’s that call themselves Bogleheads’. They get the name bogleheads’ from a man named John C. “Jack” Bogle. He is the founder and retired chairman of the Vanguard Group and has devoted his life to helping investors with their investing decisions. As well as teaching them how to invest, he created a family of low-cost mutual funds that Jack has been tirelessly advocating for individual investors. The three authors have over a century of investing experience between them. They have since, in a way, devoted part of their lives to helping others reach their investing goals. They each spend several hours a day on Moringstar.com Vanguard Diehard Forum answering questions for free.
The book begins with a brief description about how the Bogleheads’ were started. After a decade-plus of existence, they moved from a loose association of investors to a web site by Morningstar, identified there as “Vanguard Diehards.” More than 25,000 visitors are recorded daily. After a few well known investors and writers who followed Jack Bogle’s investment advice invited Jack to Miami to meet. They called this meeting Diehards I. Some 20 investors who had never met one another before quickly became friends. The following year, the group met in Valley Forge, called “Diehards II” and met with 40 Bogleheads and from there it flourished. The book talks mostly about how to save you earnings and how to invest them correctly. It seems to be revolving around retirement and living a happy and financial free retirement. They also discuss the types of stock and bond options offered through the Vanguard Group with low-fees and proven track record returns.
Chapter one discusses choosing a sound financial lifestyle. Each chapter starts off with an interesting quote usually pertaining to what the chapter is discussing. This one is no different and I find the quote sort of funny, “Drive-in banks were established so most of the cars today could see their real owners.” The very first statistic that they tell in the book is very disturbing to me,
“It’s an old statistic that has held very consistent over time. Take 100 young Americans starting out at age 25. By age 65, one will be rich and four will be financially independent. The remaining 95 will reach the traditional retirement age unable to self-sustain the lifestyle to which they have become accustomed.”
It describes that without government programs such as Social Security, Medicare, and Medicaid many people would literally starve. They expect that as soon as the baby boomers begin to retire and start collecting the government handouts, they will go broke. The first chapter tries to help the reader figure out what kind of financial lifestyle you live, from Betty Borrower to Chad Consumer to finally Ken Keeper. They describe the differences in all three and how they feel that the borrowers and the consumers have a bad view on how to life financially by taking on too much debt and spending all their paycheck after their bills are paid. The keepers live in their means and don’t finance many possessions they can’t afford to pay off and invest 10% of their paycheck first before paying themselves. They tell you three steps to take before you start investing. First, leave the paycheck mentality and go to the net worth mentality. Second, pay off credit card and high-interest debt. Third, start an emergency fund.
Chapter two is about starting early and investing regularly. The magic is compounding. The rule of 72 is extremely simple: To find out how many years it would take for an investment to double in value, divide 72 by the annual rate of return. An investment that returns 9% doubles every 8 years because of the magic of compounding. For someone to have $1 million at the age 65 and with an 8% annual return they would need to invest the amount shown in the table just one time at that certain age. This table shows the amount after expenses and taxes and what the power of compounding can do to our investments. Here is another example of how starting early is extremely beneficial:
“At age 25, Eric Early invests $4,000 per year in a Roth IRA for 10 years and stops investing. His total investment is $40,000 Larry Lately makes yearly deposits of $4,000 in his Roth IRA starting at age 35 for 30 years. His total investment is $120,000. Assuming both portfolios earn 8 percent average annual return, at age 65, Eric’s IRA will be worth $629,741, but Larry’s IRA will be worth only $489,383. By starting out 10 years earlier and making one third of the investment, Eric ends up with 29 percent more.”
An interesting point made in this chapter is that the authors say to “Pay Yourself First”. The earlier you start investing, the sooner you can reach your financial freedom. The authors discuss making smarting purchasing decisions. They explain that buying a 2-3 year old car is a smarter investment that buying a brand new car because a cars main depreciation is the first few years of its life.
Chapter three begins with talking about knowing what your buying, part one. This chapter talks about different types of Stocks and bonds. Chapter three goes into detail about all of these types of investments. Stocks are a representation of an ownership interest in a corporation. Each stock share is actually a small fraction of its business to each person who buys the stock. Bonds are actually lending a specific amount of money to the issuer of the bond. You receive 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 specific date, known as maturity date. There are also Treasury issues that are considered the safest bond investments since they are backed by the faith and credit of the U.S. government. T-bills, T-notes, T-bonds, Treasury Inflation Indexed Securities, Treasury Inflation-Protected Securities, U.S. Savings Bonds are all forms of bonds that the U.S. government sells. You might be wondering how much you should invest in bonds and Mr. Bogle suggests that you should own your age in bonds as a good starting point. I should have 25 percent of my investments in bonds.
Chapter four is very much like chapter three; however it talks about mutual funds, Exchange-Traded Funds (ETFs), and annuities. Mutual Funds pool lots of money from many investors to buy securities. There are different types of mutual funds such as equity mutual funds that invest in stocks, bond funds that invest in bonds, and hybrid/balanced funds that invest in both stocks and bonds. There are 10 strong reasons/advantages of investing in mutual funds. The ten are as listed, diversification, Professional management, low minimums, no-load or commissions, liquidity, automatic reinvestment, convenience, customer service, variety and communication and record keeping. An annuity is an investment with an insurance wrapper. There are a few different types of annuities. There are fixed, variable and immediate. Exchange-Traded Funds are mutual funds that trade like stocks on an exchange.
Chapter five talks about preserving you buying power with inflation-protected bonds and it starts off telling us that in chapter two we learned about how the power of compounding can work for us. But it can also work against us when it comes to inflation. “An inflation rate of 3 percent means that when a 25-year old investor retires in 40 years, she’ll need $3,262 to buy the same basket of goods and services that she can buy for $1,000 today.” Just imagine that if you were to keep $1,000 in a cookie jar for 40 years and then take it out and try to use it. You wouldn’t be able to buy anything close to what you thought it would. The big problem most people have understanding what real return is. Real return is the amount we have left after we subtract inflation form our rate of return. The U.S. treasury offers two choices that help fight inflation; I bonds and Treasury Inflation Indexed Securities (TIPS). The I bond works by two components, first there is a fixed rate on the bond when you purchase it that keeps the amount over and above inflation. Second is the variable inflation-adjustment rate that is recalculated and announced twice a year annually. TIPS are the same in that respect, but are purchased at Treasury auctions, in the secondary market.
Chapter six was the one I was hoping to tell me the best information. However, there is no formula to tell the investor how much they need to save for retirement. There are a lot of factors that can help us figure out the amount we need to accumulate to achieve our dream retirement: For starters, we need to save, the more the better. Next, our current age because this will help determine how many years we have to save and invest. Next, the hard one, how many years we’ll have to live off our retirement account, based on our life expectancy. Another is whether we plan to leave an estate, or if we will simply want to make sure that we don’t run out of money before we run out of breath. Another thing is a source of income in retirement and finally the rate of return on our investments. One of the toughest things to determine is our life expectancy. We would like to know when we will meet our maker so we will know how
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Don’t get caught with Scam Investments!
I receive a phone call from Simon Halloway saying I heard you lost some money at the races “how much would that be?” I say about 10k and he says how would you like to make that back and sum?
I say in a non-committed fashion “ oh yeh”. He then says how much can you spare to throw in to my guaranteed trading scheme. I say about $400. He calculates it up and says that will take about 8 months of trading to secure a recoup of 10K.
The identity simon sends through some Paperwork from the “Accord Professional Group P/L” and their Westpac bank account details 033-254 412313 to deposit the $400. He directs me to http://www.cybersportsbet.net site to view the progress of my investment. He says sports wagering is the best way to go for small amounts of money for a quick return. My attitude was well if I burn $400 it shouldn’t worry me too much if he speaks soothe then it would be a good investment.
It took about a week for the $400 to double and then i received another phone call from simon re my bank balance and would i like to deposit more to kick it along. This continued weekly till we get up to a balance of about 20k in about 5-6weeks……..with weekly happy phone calls of how i was liking the returns and progressively getting more insistent that i deposit more cash so that we could generate 300k in 6 months. I yielded to pressure of about 12k cash injection into “Accord Proffessional Group” bank account, which was supposedly deposited into my “ cybersportsbet.net” account….well the screen shot showed it had.
Simon continues to pour on more pressure to inject more funds…I’m happy to sit back and watch the existing capital grow…but that is not good enough for simon so he suspends trading of my account till I cough up more cash to APG{www.apgsports.com.au} to be deposited to my account.
Starting get peeved at this continual pressure for more cash I decide I better withdraw 20K from my account, then i could put some back in if required.
I contact cybersportsbet.net via one of their email addresses: accounts@cybersportsbet.net
And get a delayed response from Miguel Ramirez stating that I would have to Get APG to release the funds…he could do nothing his hands were tied. { Note that this supposedly multi million dollar bookmaker has no phone contact only email…the PR line they use is we can pay bigger dividends running a more efficient operation not having phone staff, all part of the scam}
I then get another phone call from simon saying he is disappointed that i wanted to withdraw cash so I better go back to customer relations and they would handle that.
Thats when the fun started we get another identity “Tom Silver” the senior trader at APG. And he starts promising the world and that if only we injected another 5k he would transfer all funds to my account…smooth talker…..so we throw in another 5k……then we need another 5k……then we need another 5k. I finally say no freeze my account. Tom then threatens your account is exposed to loss if you don’t transfer more funds then ….this was also put in writing via emails to APG and Cybersportsbet, …up to about 75k now showing up in the account what does APG do, put on a 75K losing bet in an attempt to wipe out their liability.
My Analysis:
Peter Knight & Ray Gilding get together and dream up a plan to operate scam to defraud the public.
Peter Knight uses his old database of customers from the non functioning cybertab.net website and passes these on to known associates operating tipping schemes for punters.
Free range rouges are employed by Ray gilding to collect deposits for a promise of pie in the sky. Free range rouges such as simon halloway and tom silver collect deposits in receiving a 50% commission on their sales
Peter Knight operates the Cybersportsbet.net site posting bogus wins on known sports functions using industry odds. Losses are ignored and not posted as these may scare the customer off.
Hard Won Advice:
Never place any money ever in cybersportsbet.net or allow any third party to do it on your behalf as you will never ever recover your money….it will vaporize in a sudden loss as soon as you ask for a withdrawal. The money in all likely hood never even made it to cybersportsbet.net
Remember when you wager with a bookmaker or casino if you win they lose…….as bookmakers work their turf 7 days a week its more likely they will win. And remember if anyone recommends you to a book maker that person will get paid 25 – 50% of all your losses. See any of the affiliate programs by bookmakers.
Tipping services which handle your bets may get a 10% commission from you if you win , but they pick up 20 – 50% of all you loses. Big conflict of interest.
If you are going to use a tipping service place your own bets with your own bookmaker and don’t be too successfull with any one bookmaker as they will bar you….they don’t like losing…they like mug punters.
Relevant Details of Parties Involved in colluding fraud :
Owner of domain Cybersportsbet.net Peter Knight
Peter_knight@live.com
Owner of domain apgsports.com.au Accord Professional Group PTY LTD
Accord Professional Group PTY LTD ACNumber ACN140977466
Aust. Business Number: ABN85140977466
apgsports@hotmail.com
APG P/L Director : Raymond John Gilding
Birth Place: Melbourne 04/05/1976
Address: 34 Burgess Road Kilmore Victoria Australia 3764
Business Address APG: 155 Ashmore Road Bundall Qld Australia 4217
Cybersportsbet.net bank accout details: SKM Enterprises P/L
Barclays Bank Saychelles
Tom Silver Current Phs: 0406515461 0405100140
Simon Halloway Contact Ph: 1800 799565
…………………………………………………………………………………………………………………………………..
Raymond John Gilding
Simon Halloway
Tom Silver
http://www.Cybersportsbet.net
SKM Enterprises P/L
http://www.apgsports.com.au
Peter Knight
Peter Walker
Accord Professional Group PTY LTD
http://www.wilsonrichardson.com
Name of the scammers “The Accord Professional Group”
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