As a personal finance blogger I get the opportunity of receiving books about well, personal finance from time to time. I don’t always get to read them all (yet) but some I do while others are moved to the front of my reading list for when I get a chance. I wanted to tell you about one that’s on my short list to read.
The Power of Passive Investing by Rick Ferri
I haven’t read this book yet but I will soon. In The Power of Passive Investing, Ferri makes the case for owning only low-cost index funds and ETF’s. I’ve heard a lot about how active funds tend to not beat the market and that most of us would do better with low-cost index funds (Warren Buffet and Tom Gardner come to mind).
I certainly don’t want to have my returns eaten up by commissions and taxes. Investing in ETF index funds is something I’ve slowly been doing but I want to learn more. I was excited to get a copy of this book and start expanding my investing knowledge.
This is from the press release:
The Power of Passive Investing offers clear insight into the index fund world and the intellectual framework behind passive investment. Written for the inquisitive retail investor who doesn’t want to read dense academic papers or sift through fund documents, the book highlights the major issues in clear, sharp prose:
- Defines passive investing, differentiates between passive and active strategies, and walks readers through the basic concepts and terminology needed to understand passive investing
- Compares the returns from portfolios of active funds to portfolios of index funds with startling conclusions
- Argues for redefining the relationship between the money manager and the investor, lowering costs and shifting the balance of power back toward the investor
- Gives a detailed history of the origins of passive investing and a thorough survey of academic material comparing passive and active strategies
- Identifies the shortfall from active fund investing across all asset classes and all regions of the world
- Punctures myths about alpha and talks about what’s really behind Wall Street’s battle against indexing and low-cost investment options
The Power of Passive Investing shows investors the way forward: higher returns with less effort.
Remember how I told you I got to meet The Motley Fool’s Tom Gardner a little while back? Well one of the things he talked about was the fact that the guys on Wall Street spend their days selling people their “hot” mutual funds while the Wall St. folk themselves buy index funds for their investing. Why? They make money on the fees and commissions their active funds generate while the index funds are better suited to generate real returns in your portfolio. Interesting, huh?
I’m finding that I want to learn a lot more about investing and get more involved in it. I don’t want to buy and sell a lot of stocks though. I want to learn how to better diversify and allocate as well as make the most of my investments.
The Power of Passive Investing sounds like a good book to help me along in that quest for learning.
The forward to the book is by none other than mister index fund himself, John C. Bogle, founder of the Vanguard Group.
Inside, Ferri backs up his argument with research showing how index funds are a better choice than active funds.
Looking through the book, it seems there may be terminology that could be above the heads of the most basic investors and those who don’t know much about investing yet. It looks easy to read though so don’t let a few terms stop you from reading this.
It geared for those investing in mutual funds, those who want to know how ETF’s work, and those who are wondering if their money managers are doing all they can with your money. As I said in the beginning, this will be one of the next few books I read.
For more information on Rick Ferri visit www.rickferri.com.
You can read more about The Power of Passive Investing and buy a copy at Amazon.
Still with me?
Here’s some more reading for you from some great personal finance sites:
Financial Highway | Your Thoughts: The Gold Bubble?.
Own The Dollar | Recapping My Predictions For The Economy and Our Wallets In 2010.
Budgeting In The Fun Stuff | How to Save on Heating Bill AND Stay Warm!.
Oblivious Investor | Does This Count As Market Timing?.
Amateur Asset Allocator | Congress Can’t Beat The Market, Even When It Cheats.
Frugal Dad | Brace Yourself for $5-per-Gallon Gas.
Money Help for Christians | 21 Best Money Blogs of 2010.
The Financial Blogger | Best Stock Picks 2011 Contest – Add your picks in the comments to join!
Free Money Finance | Where to Get Income These Days.
The Millionaire Nurse Blog | Groupon: What, Why, and Where!.
The Wisdom Journal | A Resolution Worth Keeping: Find a new or better job.
Money Smarts Blog | My 2010 Couch Potato Investment Return .
Personal Dividends | Giving Back During the Holidays – The holidays are over but there’s always time to give.
Lending Club Blog | Get a Peer-to-Peer Personal Loan for the Holidays.
Investor Junkie | Why You Shouldn’t Prepay Your Mortgage.
Man Vs Debt | Debt-Free for Life: An Interview with David Bach – Read this interview!
Wealth Pilgrim | Can You Retire Now?
Soldier of Finance | 400,000 Miles? No Problem. How Driving a Tank Can Make You a Millionaire .
Studenomics | Vagabonding 101: Everything You Need to Know to Travel the World .
PT Money | Roth IRA Contribution Limits.
Good Financial Cents | 7 Things You Must Know Roth IRA Rules for 2011.
Bible Money Matters | 2011 Home Improvement Tax Credits For Energy Efficient Products (Insulation, Windows, Heaters, Etc).
Moolanomy | 2011 IRA Contribution Limits for Traditional and Roth IRAs.
And these are the blog carnivals Free From Broke took part in:
1st Ever Carnival of Passive Investing – December 31, 2010 – Hittin’ The Open Road Again Edition.
2010 Year-end Carnival of Credit Card Blog Posts | Credit Cards Canada.
Dodgeblogium » BoMSing into the new year….
Carnival of Wealth #19 – The New Year Edition — Personal Dividends – Money+Lifestyle.
Carnival of Financial Planning – Edition #169 – January 2, 2011.
Carnival of Money Stories #86: New Year’s Resolution Edition.
Carnival of Personal Finance – It’s a New Year Edition | Sustainable Personal Finance.
Cheapest Man Alive Edition of the Festival of Frugality.
Carnival of Wealth – December 26th, 2010 – Fantabulous YouTube Christmas Videos Edition.