... to provide individual
investors—including our delightful grandchildren the
basic principles for a lifetime of fi nancial success in saving
and investing, all in 176 pages of straight talk ... earlier and taking greater
advantage of the miracle of compounding.
We could run through dozens of other examples using
actual stock market returns. One investor might start
earl...
... of the
thousands of equity and bond funds that
are sold to the public.
This simple investment strategy — indexing — has out-
performed all but a handful of the thousands of equity
and bond ... pleasure in the process of saving and
the process of keeping trim. They do not think in terms
of deprivation; they think in terms of making good
progress toward achi...
... the developed world
c03.indd 58 c03.indd 58 11/3/09 9:41:48 AM11/3/09 9:41:48 AM
56
The Elements of Investing
At the same time, it could be damaging to companies
making older competing products. ... funds. The fund pools the money from
thousands of investors and buys a portfolio of hundreds
of individual common stocks. The mutual fund collects
all the divide...
...
And most of the money that went into the market
was directed to the high technology and Internet
funds — the stocks that turned out to be the most
overpriced and then declined the most during ... persistence, and minimizing mistakes. In driv-
ing, it ’ s having no serious accidents; in tennis, the key is
getting the ball back; and in investing, it ’ s indexing...
... rate of return
produced for their investors as well as all the costs charged
and the implicit costs of portfolio turnover — the cost of
buying and selling portfolio holdings. We then divide
the ... stand there and do nothing. Keep
your eyes and your mind focused on the long
term.
8. Use low - cost index funds.
Nobody knows more than the total of all
knowle...
... markets, and money, fami-
lies should strive again and again to share their thoughts
and feelings so they can understand each other and make
decisions together.
both1.indd 126both1.indd 126 10/31/09 ... million, and you might be in a lower tax bracket
during retirement. The fi gure on page 130 shows
the dramatic advantage of investing through a tax -
advantaged plan.
Y...
... 7
D
David Copperfi eld (Dickens), 4
Debt
doubling, 13
reduction, 25 27
Demographic groups, catering, 56
Derivatives, Buffett avoidance, 74– 75
Dimensional Fund Advisors, 34
Dinner, spending advice, ... consulting fi rm. He serves as Chair of
Whitehead Institute and as a director of Vanguard and
the Robert Wood Johnson Foundation. He has taught
investing at both Harvard and Y...
... of the
thousands of equity and bond funds that
are sold to the public.
This simple investment strategy — indexing — has out-
performed all but a handful of the thousands of equity
and bond ... pleasure in the process of saving and
the process of keeping trim. They do not think in terms
of deprivation; they think in terms of making good
progress toward achi...
... the costs charged
and the implicit costs of portfolio turnover — the cost of
buying and selling portfolio holdings. We then divide
the funds into quartiles and show the average returns and ... distressed by losses than they are delighted by
gains. This leads people to discard their winners if they
need cash and hold onto their losers because they don ’ t
want t...
... – 90 25 – 10
40 – 50 s 65 – 75 35 – 25
60s 45 – 65 55 – 35
70s 35 – 50 65 – 50
80s and beyond 20 – 40 80 – 60
c 05. indd 108c 05. indd 108 11/3/09 10:16:21 AM11/3/09 10:16:21 AM
1 05
Keep ... allocation for those plan-
ning bequests should be geared to the age of the recipi-
ent, not the age of the donor, for that part of their total
investments.
c 05...