Common Sense on Mutual Funds by John C. Bogle

by John C. Bogle

Common Sense on Mutual Funds by John C. Bogle is in our opinion one of the best books on techniques for long-term personal investment growth. The book is a practical guide for the personal investor on what constitutes common sense for long-term investment strategies.

Key common sense techniques for the Mutual Fund investor

The main message to the common sense investor readers are relating to the following investor techniques:-

Common sense investors start investing early (and never stop investing)
Common sense investors invest in mutual funds (especially index fund)
Common sense investors do not need to invest in foreign markets
Common sense investors know many mutual funds have marketing obsessions
Common sense investors understand their own investor risk tolerance
Common sense investors know to look at Mutual Fund costs

Each of these is briefly covered below.

Common Sense Investors Start Investing early (and Never Stop Investing)

To take long-term investment strategy seriously the investor needs to see investment as something an investor starts but never stops doing.

Common Sense Investors Invest in Mutual Funds (Especially Index Funds)

It is argued that it is a misconception that individual investments can beat the market in the long-term. Bogle argues that low-cost index funds are the best for the investor. It is worth noting however of Bogle’s involvement in low-cost index funds.

Common Sense Investors Do Not Need to Invest in Foreign Markets

The common sense American investor can benefit from growth in global markets by investing in global companies, which are quoted on the New York Stock Exchange. The same can be argued for British investors investing in the London Stock Exchange etcetera.

Common Sense Investors Know Many Mutual Funds Have Marketing Obsessions

It is argued that many Mutual Funds have become overly focused on promoting star fund managers. This approach is taken to often try and increase sales to investors, but is not necessarily in the interest of the investor.

Common Sense Investors Understand Their Own Investor Risk Tolerance

The common sense investor needs to understand their own investor risk profile (tolerance). This will then enable the common sense investor to invest in an appropriate mix of stocks (maximise returns); bonds (generating income) or cash (reduce risk).

Common Sense Investors Know to Look at Mutual Fund Costs

The common sense investor understands that it is important to look at the cost burden that mutual funds put back to investors (therefore decreasing overall investment returns).

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