Taylor Larimore - The Bogleheads Guide to Investing

This book is written with great charm, wit, and humility by a troika of retired, self-educated investors who themselves have become experts in financial planning and investing. Here they share what they have learned at the school of hard knocks. It is to trust the wisdom of their chosen mentor, John Bogle, who advocates investing in low cost, tax efficient mutual funds and using common sense in all financial decisions. Furthermore, the authors have mastered the complexities of their subject to the point where they can explain financial concepts simply and clearly. Readers and clients often ask me to recommend a book on financial planning investing. I will recommend this one.

Kay H. Kamin, president of Sutton Place Financial Inc. and financial columnist for Todays Chicago Woman

The Bogleheads Guide offers up the distilled wisdom from thousands of posts on the webs most distinguished investment board. The authors mix a heady brew of down-home common sense and advanced financial economics, while providing a clear, concise, and easily followed action plan that is highly effective, low cost, low risk, and low maintenance. Read and profit!

Frank Armstrong, III, CFP, president, Investor Solutions, Inc.

From beginning investors to those in retirement, The Bogleheads Guide to Investing is packed with simple and sophisticated investment advice, offering an abundance of resources for a winning investment strategy. It is written with wit, clarity, and wisdom, and is sure to become a treasured resource for long-term investors.

Bill Schultheis, author, The Coffeehouse Investor

Second Edition

Cover image: iStock.com / ImpaKPro

Cover design: Wiley

Copyright 2014 by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf.

All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

The First Edition was published by John Wiley & Sons, Inc. in 2006. It was then published as a paperback edition in 2007.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

ISBN 978-1-118-92128-9 (Hardcover)

ISBN 978-1-118-92235-4 (ePDF)

ISBN 978-1-118-92236-1 (ePub)

To John C. Bogle, founder of The Vanguard Group

A man whom we knew from afar for many years but have since come to know and cherish as a friend. While some mutual fund founders chose to make billions, he chose to make a difference.

Anyone who writes a book knows that many more people than the authors are responsible for turning an idea into the finished product. In bringing this particular book to fruition, we wish to acknowledge and give special thanks to the following people:

1. Bill Falloon, our editor at John Wiley & Sons, who proposed the idea of a Bogleheads book to Taylor and wouldnt take no for an answer.
2. Alexis Hurley, for being an excellent and supportive agent.
3. Rick Ferri, for the countless hours and invaluable assistance he provided critiquing the chapters and checking figures to make this a better, more accurate book. He is a quality person and a true friend.
4. Boglehead Bob Beeman, for his original work on the after-tax, real returns of I Bonds.
5. Excel wizard Alec Stanley, for his work in expanding on Bob Beemans original work and for providing other valuable spreadsheet assistance to us whenever we asked for it (and that was often).
6. Morningstar for creating the Vanguard Diehards Forum, and Alex Frakt and Larry Auton for creating the bogleheads.org website. Also, special thanks to Ralph Arveson for our Bogleheads contest and Bogleheads Local Chapter websites.
7. All those who showed so much enthusiasm for the book and offered encouragement, which made all of our hard work seem worthwhile. (You know who you are.)
8. Last, and certainly not least, we want to thank our wives, Pat Larimore (deceased), Marlene Lindauer, and Elke LeBoeuf for their patience and understanding during the long hours we spent working on our computers preparing this labor of love.

Nothing is more deserving of your attention than the intellectual and moral associations of Americans. Americans of all ages, all conditions, and all dispositions constantly form associations [of a] thousand kinds... religious, moral, serious, futile, general or restricted, enormous or diminutive. I have often admired the extreme skill with which the inhabitants of the United States succeed in proposing a common object for the exertions of a great many men and inducing them voluntarily to pursue it.

As soon as several of the inhabitants of the United States have taken up an opinion or a feeling which they wish to promote, they look out for mutual assistance, and as soon as they have found one another out, they combine. From that moment they are no longer isolated men, but a power seen from afar, whose actions serve for an example and whose language is listened to.