Bogleheads:Sandbox

Book summary (first edition)
The first two chapters discuss getting your personal finances in order - paying off credit card and other high interest debt, establishing an emergency fund, living frugally with a focus on saving, not borrowing and consuming, "paying yourself first", and using the power of compounding to increase your net worth over time.

The next three chapters get into the basics of stocks and bonds, mutual funds, ETFs, and annuities. There is also an explanation of the effect of inflation and on buying I Bonds and Treasury Inflation-Protected Securities (TIPS).

Chapter 6 tackles the difficult question of how much you need to save for retirement. They discuss factors such as the age of retirement, life expectancy and the length of retirement, estimated inflation and future returns, and also any expected inheritances and desire to leave an estate. They also cover the basics of retirement calculators, with a few examples.

Chapters 7-9 get to the heart of the bogleheads' philosophy: the advantages of low-cost, tax efficient index funds, the costs of active management both in fees and turnover, and hidden costs such as spread costs. It then describes setting a goal and investing timeframe and determining your risk-tolerance. The authors then tackle the subject of what percentage of your portfolio should be stocks vs. bonds, what sort of bonds, how much international stock? There are suggested portfolios for both young and middle aged investors, and for both early and late retirees.

Chapter 10 explains the tax implications of stock and bond funds: dividends, long and short-term capital gains, and the effect of turnover on taxes. They discuss ways to avoid unnecessary taxes, such as using low turnover or tax-managed funds, avoiding short-term capital gains, not buying a dividend, tax loss harvesting, and using EE/I bonds.

Chapter 11 covers 401(k), 403(b), and IRAs (Traditional, Roth and non-deductible). They discuss the pros and cons of each, rollovers and IRA conversions, choosing between Roth and Traditional IRAs. The also discuss hidden costs of 401(k) plans. The chapter ends with a discussion of asset location (placement of funds within either taxable or tax-advantaged accounts), with stock and bond classes listed in order of tax-efficiency.

Chapter 12 discusses diversification, promoting whole market funds, and provides an extensive list of correlations between Vanguard funds. Chapter 13 is an account of why market timing of stocks, bonds, and interest rates, and performance chasing of hot funds is fruitless.

Chapter 14-16 offer practical advice on saving for college (covering UGMA/UGTA, 529 and Coverdell plans), how to manage a windfall, and how to choose a financial advisor if you need one. Chapter 17 starts with a lengthy discussion on rebalancing your portfolio to reduce risk, and doing so in a tax-efficient manner.

Practical examples are given Chapter 18, which goes in-depth on "tuning out the noise" of much of the financial media. Included is television, internet, newsletters, radio shows, seminars and books, which they label "financial porn." Chapter 19 is an excellent review of the basics of behavioral finance: greed and fear, loss aversion and regret, ego and overconfidence, following the herd, the endowment effect, mental accounting, and more. The authors discuss strategies to avoid these traps.

Chapters 20 through 22 discuss retirement: when to take social security, what is a safe withdrawal rate, given longevity and health, market returns, inflation, etc. They urge the importance of remaining flexible. Next is an overview of insurance: life, health, disability, property and auto, and long term care: how much do I need, and for how long do I need it? Finally they discuss wills, living trusts, powers of attorney and gifting.

This final chapter encourages the investor to get started, and assures them that they can rely on the bogleheads online forum and local boglehead groups for support. Appendices: There are several appendices with a glossary, recommended books and websites, and a Vanguard Risk-Assessment/Asset Allocation questionnaire and charts.

Book summary (first edition)
The first two chapters discuss getting your personal finances in order - paying off credit card and other high interest debt, establishing an emergency fund, living frugally with a focus on saving, not borrowing and consuming, "paying yourself first", and using the power of compounding to increase your net worth over time.

The next three chapters get into the basics of stocks and bonds, mutual funds, ETFs, and annuities. There is also an explanation of the effect of inflation and on buying I Bonds and Treasury Inflation-Protected Securities (TIPS).

Chapter 6 tackles the difficult question of how much you need to save for retirement. They discuss factors such as the age of retirement, life expectancy and the length of retirement, estimated inflation and future returns, and also any expected inheritances and desire to leave an estate. They also cover the basics of retirement calculators, with a few examples.

Chapters 7-9 get to the heart of the bogleheads' philosophy: the advantages of low-cost, tax efficient index funds, the costs of active management both in fees and turnover, and hidden costs such as spread costs. It then describes setting a goal and investing timeframe and determining your risk-tolerance. The authors then tackle the subject of what percentage of your portfolio should be stocks vs. bonds, what sort of bonds, how much international stock? There are suggested portfolios for both young and middle aged investors, and for both early and late retirees.

Chapter 10 explains the tax implications of stock and bond funds: dividends, long and short-term capital gains, and the effect of turnover on taxes. They discuss ways to avoid unnecessary taxes, such as using low turnover or tax-managed funds, avoiding short-term capital gains, not buying a dividend, tax loss harvesting, and using EE/I bonds.

Chapter 11 covers 401(k), 403(b), and IRAs (Traditional, Roth and non-deductible). They discuss the pros and cons of each, rollovers and IRA conversions, choosing between Roth and Traditional IRAs. The also discuss hidden costs of 401(k) plans. The chapter ends with a discussion of asset location (placement of funds within either taxable or tax-advantaged accounts), with stock and bond classes listed in order of tax-efficiency.

Chapter 12 discusses diversification, promoting whole market funds, and provides an extensive list of correlations between Vanguard funds. Chapter 13 is an account of why market timing of stocks, bonds, and interest rates, and performance chasing of hot funds is fruitless.

Chapter 14-16 offer practical advice on saving for college (covering UGMA/UGTA, 529 and Coverdell plans), how to manage a windfall, and how to choose a financial advisor if you need one. Chapter 17 starts with a lengthy discussion on rebalancing your portfolio to reduce risk, and doing so in a tax-efficient manner.

Practical examples are given Chapter 18, which goes in-depth on "tuning out the noise" of much of the financial media. Included is television, internet, newsletters, radio shows, seminars and books, which they label "financial porn." Chapter 19 is an excellent review of the basics of behavioral finance: greed and fear, loss aversion and regret, ego and overconfidence, following the herd, the endowment effect, mental accounting, and more. The authors discuss strategies to avoid these traps.

Chapters 20 through 22 discuss retirement: when to take social security, what is a safe withdrawal rate, given longevity and health, market returns, inflation, etc. They urge the importance of remaining flexible. Next is an overview of insurance: life, health, disability, property and auto, and long term care: how much do I need, and for how long do I need it? Finally they discuss wills, living trusts, powers of attorney and gifting.

This final chapter encourages the investor to get started, and assures them that they can rely on the bogleheads online forum and local boglehead groups for support. Appendices: There are several appendices with a glossary, recommended books and websites, and a Vanguard Risk-Assessment/Asset Allocation questionnaire and charts.